Such statements are based on managements current expectations and are subject to uncertainty and changes in
circumstances. Actual results may differ materially from those included in these statements due to a variety of factors, including without limitation the precautionary statements included in this prospectus and the accompanying prospectus
supplement, and the factors and uncertainties listed under Forward-Looking Statements in Citigroups most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q and described under Risk Factors in
Citigroups most recent Annual Report on Form 10-K.
Citigroup Inc. is a global diversified financial services holding company whose businesses provide a broad range of financial products and
services to consumers, corporations, governments and institutions. Citigroup has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citigroups activities are conducted through the
Global Consumer Banking, Institutional Clients Group, Citi Holdings and Corporate/Other business segments. Its businesses conduct their activities across the North America, Latin America, Asia and Europe, Middle East and Africa regions.
Citigroups principal subsidiaries are Citibank, N.A., Citigroup Global Markets Inc. and Grupo Financiero Banamex, S.A. de C.V., each of which is a wholly owned, indirect subsidiary of Citigroup. Citigroup was incorporated in 1988 under the
laws of the State of Delaware as a corporation with perpetual duration.
Citigroup is a holding company and services its obligations
primarily by earnings from its operating subsidiaries. Citigroup may augment its capital through issuances of common stock, perpetual preferred stock and equity issued through awards under employee benefits plans, among other issuances. Citigroup
and Citigroups subsidiaries that operate in the banking and securities businesses can only pay dividends if they are in compliance with the applicable regulatory requirements imposed on them by federal and state bank regulatory authorities and
securities regulators. Citigroups subsidiaries may be party to credit agreements that also may restrict their ability to pay dividends. Citigroup currently believes that none of these regulatory or contractual restrictions on the ability of
its subsidiaries to pay dividends will affect Citigroups ability to service its own debt. Citigroup must also maintain the required capital levels of a bank holding company, and must submit a capital plan, subjected to stress testing, to the
Federal Reserve, to which the Federal Reserve does not object, before it may pay dividends on its stock.
Under the regulations of the
Board of Governors of the Federal Reserve System (the Federal Reserve), a bank holding company is expected to act as a source of financial strength for its subsidiary banks. As a result of this regulatory policy, the Federal Reserve
might require Citigroup to commit resources to its subsidiary banks when doing so is not otherwise in the interests of Citigroup or its shareholders or creditors.
The principal office of Citigroup is located at 399 Park Avenue, New York, New York 10022, and its telephone number is (212) 559-1000.
DESCRIPTION OF DEBT SECURITIES
The debt securities offered by this prospectus will be unsecured obligations of Citigroup and will be either senior or subordinated debt.
Senior debt securities will be issued under a senior debt indenture to be executed in November 2013. Subordinated debt securities will be issued under a subordinated debt indenture executed in April 2001. The senior debt indenture and the
subordinated debt indenture are sometimes referred to in this prospectus individually as an indenture and collectively as the indentures. The indentures (or forms thereof) have been filed with the SEC and are incorporated by
reference or included in the registration statement on Form S-3 under the Securities Act of 1933, as amended, of which this prospectus forms a part.
The following briefly summarizes the material provisions of the indentures and the debt securities, other than pricing and related terms
disclosed in the accompanying prospectus supplement or pricing supplement, as the case may be. You should read the more detailed provisions of the applicable indenture, including the defined terms, for provisions that may be important to you. You
should also read the particular terms of an offering of debt securities, which will be described in more detail in the applicable prospectus supplement or pricing supplement, as the case may be. Copies of the indentures may be obtained from
Citigroup or the applicable trustee. So that you may easily locate the more detailed provisions, the numbers in parentheses below refer to sections in the applicable indenture or, if no indenture is specified, to sections in each of the indentures.
Wherever particular sections or defined terms of the applicable indenture are referred to, such sections or defined terms are incorporated into this prospectus by reference, and the statements in this prospectus are qualified by that reference. If
any debt securities are to be issued under an indenture having terms that differ from those described below, the terms of such indenture will be as described in the applicable supplement for the offering of such debt securities.
As used in this prospectus, the term supplement means either a prospectus supplement or a pricing supplement, as applicable.
Unless otherwise specified in connection with a particular offering of debt securities, the trustee under the senior debt indenture and under
the subordinated indenture will be The Bank of New York Mellon. Citigroup has appointed, Citibank, N.A. to act as paying agent under each such indenture.
General
The indentures provide that
unsecured senior or subordinated debt securities of Citigroup may be issued in one or more series, with different terms, in each case as authorized from time to time by Citigroup. Citigroup also has the right to reopen a previous issue
of a series of debt securities by issuing additional debt securities of such series.
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United States federal income tax consequences and other special considerations applicable to any
debt securities issued by Citigroup at a discount or a premium will be described in the applicable supplement.
Because Citigroup is a
holding company, the claims of creditors of Citigroups subsidiaries will have a priority over Citigroups equity rights and the rights of Citigroups creditors, including the holders of debt securities, to participate in the assets
of the subsidiary upon the subsidiarys liquidation. Moreover, the debt securities may be fully subordinated to interests held by the U.S. government in the event of a receivership, insolvency, liquidation or similar proceeding with respect to
Citigroup, including a proceeding under the orderly liquidation authority provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
The applicable supplement relating to any offering of debt securities will describe the following terms, where applicable:
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the title of the debt securities;
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whether the debt securities will be senior or subordinated debt;
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the indenture under which the debt securities are being issued;
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the total principal amount of the debt securities;
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the percentage of the principal amount at which the debt securities will be sold and, if applicable, the method of determining the price;
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the maturity date or dates;
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the interest rate or the method of computing the interest rate;
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the date or dates from which any interest will accrue, or how such date or dates will be determined, and the interest payment date or dates and any related record dates;
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if other than in U.S. dollars, the currency or currency unit in which payment will be made;
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if the amount of any payment may be determined with reference to an index or formula based on a currency or currency unit other than that in which the debt securities are payable, the manner in which the amounts will be
determined;
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if the amount of any payment may be determined with reference to an index or formula based on securities, commodities, intangibles, articles or goods, or any other financial, economic or other measure or instrument,
including the occurrence or non-occurrence of any event or circumstance, the manner in which the amount will be determined;
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if any payments may be made at the election of Citigroup or a holder of debt securities in a currency or currency unit other than that in which the debt securities are stated to be payable, the periods within which, and
the terms upon which, such election may be made;
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if other than the principal amount, the portion of the principal amount of the debt securities payable if the maturity is accelerated;
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the date of any global security if other than the original issuance of the first debt security to be issued;
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any material provisions of the applicable indenture described in this prospectus that do not apply to the debt securities; and
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any other specific terms of the debt securities (
Senior Debt Indenture, Section 3.01; Subordinated Debt Indenture, Section 2.02
).
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The terms on which debt securities may be convertible into or exchangeable for common stock or
other securities of Citigroup will be set forth in the supplement relating to such offering. Such terms will include provisions as to whether conversion or exchange is mandatory, at the option of the holder or at the option of Citigroup. The terms
may include provisions pursuant to which the number of shares of common stock or other securities of Citigroup to be received by the holders of such debt securities may be adjusted.
Unless otherwise specified in connection with a particular offering of debt securities, the debt securities are not redeemable prior to
maturity, except upon the occurrence of certain tax events described below under Redemption for Tax Purposes. The redemption price for the debt securities upon the occurrence of certain tax events will be 100% of the principal
amount thereof plus accrued interest to the date of the redemption.
Unless otherwise specified in connection with a particular offering
of debt securities, the debt securities are not subject to any sinking fund.
Unless otherwise specified in connection with a
particular offering of debt securities, debt securities denominated in U.S. dollars will be issued only in denominations of $1,000 and whole multiples of $1,000 in excess thereof (
Section 2.01
). The supplement relating to debt securities
denominated in a foreign currency will specify the denomination of such debt securities.
The currency for payment for book-entry
debt securities denominated in a foreign currency will be specified in the applicable supplement. However, when interests in such debt securities are held through The Depository Trust Company (DTC), all payments in respect of such debt
securities will be made in U.S. dollars, unless the holder of a beneficial interest in the DTC debt securities elects to receive payment in the foreign currency specified in the applicable supplement. See Book-Entry Procedures and
Settlement and Currency Conversions and Foreign Exchange Risks Affecting Debt Securities Denominated in a Foreign Currency Currency Conversion below.
Citigroup may, without notice to or consent of the holders or beneficial owners of a series of debt securities, issue additional debt
securities having the same ranking, interest rate, maturity and other terms as the debt securities initially issued. Any such debt securities could be considered part of the same series of debt securities under the indenture as the debt securities
initially issued.
The senior debt securities will be issued only in registered form. The subordinated debt securities may be issued in
registered form, bearer form, or both; however, unless otherwise specified in connection with a particular offering of subordinated debt securities, the subordinated debt securities will be issued in registered form. If bearer securities are issued,
the United States federal income tax consequences and other special considerations, procedures and limitations applicable to such bearer securities will be described in the applicable supplement. As currently anticipated, debt securities of a series
will trade in book-entry form, and global notes will be issued in physical (paper) form, as described below under Book-Entry Procedures and Settlement.
Unless otherwise specified in connection with a particular offering of debt securities, the debt securities may be presented for
exchange, and debt securities other than a global security may be presented for registration of transfer, at the principal trust office of the relevant trustee in New York City. Holders will not have to pay any service charge for any registration of
transfer or exchange of debt securities, but Citigroup may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with such registration of transfer. (
Senior Debt Indenture, Section 3.06;
Subordinated Debt Indenture, Section 2.05
) Debt securities in bearer form will be transferable by delivery. Provisions with respect to the exchange of debt securities in bearer form will be described in the applicable supplement.
Unless otherwise specified in connection with a particular offering of debt securities denominated in a foreign currency, a fiscal
agency agreement will be entered into in relation to the debt securities between Citigroup and Citibank, N.A., London office, as registrar, fiscal agent and principal paying agent. The terms
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registrar, fiscal agent, and principal paying agent shall include any successors appointed from time to time in accordance with the provisions of the fiscal
agency agreement, and any reference to an agent or agents shall mean any or all (as applicable) of such persons. The holders of the debt securities are bound by, and are deemed to have notice of, the provisions of the fiscal
agency agreement. Unless otherwise specified in connection with a particular offering of debt securities, copies of the fiscal agency agreement are available for inspection during usual business hours at the principal office of Citibank, N.A. London
office, located at Citigroup Centre, Canada Square, Canary Wharf, London, England, and at the office of Banque Internationale à Luxembourg S.A., as long as the debt securities are listed on the Luxembourg Stock Exchange.
Payments of Principal and Interest
Payments of principal and interest on debt securities issued in book-entry form will be made as described below under Book-Entry
Procedures and Settlement. Payments of principal and interest on debt securities issued in definitive form, if any, will be made as described below under Definitive Notes and Paying Agents.
Unless otherwise specified in connection with a particular offering of debt securities, interest on the debt securities will be paid as
follows:
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Interest Payment Frequency
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Interest Payment Dates
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Monthly
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Fifteenth day of each calendar month, beginning in the first calendar month following the month the debt security was issued.
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Quarterly
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Fifteenth day of every third month, beginning in the third calendar month following the month the debt security was issued.
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Semi-annually
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Fifteenth day of every sixth month, beginning in the sixth calendar month following the month the debt security was issued.
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Annually
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Fifteenth day of every twelfth month, beginning in the twelfth calendar month following the month the debt security was issued.
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Unless otherwise specified in connection with a particular offering of debt securities, all payments of
interest on the debt securities will be made to the persons in whose names the notes are registered at the close of business on the Business Day preceding an interest payment date.
If an interest payment date for a fixed rate note or the maturity date of the debt securities falls on a day that is not a Business Day, the
payment due on such interest payment date or on the maturity date will be postponed to the next succeeding Business Day, and no further interest will accrue in respect of such postponement. Unless otherwise specified in connection with a particular
offering of debt securities, if an interest payment date for a floating rate note falls on a day that is not a Business Day, such interest payment date will be the next following Business Day unless that day falls in the next calendar month, in
which case the interest payment date will be the first preceding Business Day.
Unless otherwise specified in connection with a particular
offering of debt securities, in this section, Business Day means any day which is a day on which commercial banks settle payments and are open for general business (a) in New York, in the case of U.S. dollar-denominated debt
securities; (b) in New York, London and Tokyo, in the case of Yen-denominated debt securities; (c) in New York and London and which is also a TARGET business day (TARGET), in the case of Euro-denominated debt securities. A
TARGET business day is a day on which TARGET 2 is open for the settlement of payment in Euro, and TARGET 2 is the Trans-European Automated Real-Time Gross Settlement Express Transfer payment system which utilizes a single
shared platform and which was launched on November 19, 2007. Unless otherwise specified in connection with a particular offering of debt securities, in the case of Canadian dollar-denominated debt securities,
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Business Day shall mean any Toronto business day which is a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including
dealings in foreign currency deposits and foreign exchange) in Toronto.
If a date for payment of interest or principal on the debt
securities falls on a day that is not a business day in the place of payment, such payment will be made on the next succeeding business day in such place of payment as if made on the date the payment was due. No interest will accrue on any amounts
payable for the period from and after the due date for payment of such principal or interest.
Interest Rate Determination
Fixed Rate Notes
Unless otherwise
specified in connection with a particular offering of debt securities, each fixed rate note will bear interest from its original issue date, or from the last interest payment date to which interest has been paid or duly provided for, at the rate per
annum stated in the applicable supplement until its principal amount is paid or made available for payment.
Unless otherwise specified in
connection with a particular offering of debt securities, interest on each fixed rate note will be payable semi-annually in arrears on the dates set forth in the applicable supplement, with each such day being an interest payment date, and at
maturity. Unless otherwise specified in connection with a particular offering of debt securities, interest on U.S.-dollar-denominated fixed rate notes will be calculated on the basis of a 360-day year comprised of twelve 30-day months or, in the
case of an incomplete month, the number of days elapsed. The day-count for fixed rate notes denominated in any other currency will be set forth in the applicable supplement. All U.S. dollar, Canadian dollar and Euro amounts resulting from this
calculation will be rounded to the nearest cent, with one-half cent being rounded upward. All Yen amounts resulting from this calculation will be rounded to the nearest Yen, with five-tenths or more of ¥1 to be rounded upwards to the nearest
¥1 per debt security. The rounding convention for any other currency will be set forth in the applicable supplement.
Floating Rate Notes
Each floating rate note will bear interest at the interest rate specified in the supplement relating to a particular series of debt
securities. Unless otherwise specified in connection with a particular offering of debt securities, interest on each floating rate note will be payable quarterly in arrears on the dates set forth in the applicable supplement, with each such day
being an interest payment date, and at maturity. Unless otherwise specified in connection with a particular offering of debt securities, interest on floating rate notes will be calculated on the basis of the actual number of days in an interest
period and a 360-day year. An interest period is the period commencing on an interest payment date and ending on the day preceding the next following interest payment date.
The first interest period will commence on the day the floating rate notes are issued and will end on the day preceding the next following
interest payment date.
The interest rate for each offering of floating rate notes for a particular interest period will be a per annum
rate equal to the base rate specified in the applicable supplement, as determined on the relevant interest determination date (defined below for each base rate), plus or minus any spread or multiplied by any spread multiplier. A basis point, or bp,
equals one-hundredth of a percentage point. The spread is the number of basis points specified in the applicable supplement and the spread multiplier is the percentage specified in the applicable supplement.
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Each floating rate note will bear interest for each interest period at a rate determined by
Citibank, N.A., acting as calculation agent. Promptly upon determination, the calculation agent will inform the trustee and Citigroup of the interest rate for the next interest period. Absent manifest error, the determination of the interest rate by
the calculation agent shall be binding and conclusive on the holders of such floating rate notes, the trustee and Citigroup. As long as the floating rate notes are listed on the Luxembourg Stock Exchange, the Luxembourg Stock Exchange shall be
notified of the interest rate, the amount of the interest payment and the interest payment date for a particular interest period not later than the first day of such interest period. Upon request from any noteholder, the calculation agent will
provide the interest rate in effect on the notes for the current interest period and, if it has been determined, the interest rate to be in effect for the next interest period.
The applicable supplement will designate one of the following base rates as applicable to an offering of floating rate notes:
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such other rate or interest rate formula as is set forth in the applicable supplement and in such floating rate note.
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The following terms are used in describing the various base rates:
The index maturity is the period of maturity of the instrument or obligation from which the base rate is
calculated.
H.15(519) means the publication entitled Statistical Release H.15(519), Selected Interest
Rates, or any successor publication, published by the Federal Reserve.
H.15 Daily Update means the daily
update of the Federal Reserve at http://www.federalreserve.gov/releases/H15/update or any successor site or publication.
Unless otherwise
specified in connection with a particular offering of debt securities, in this section, business day means:
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for any floating rate note, any day that is not a Saturday or Sunday and that is not a day on which banking institutions generally are authorized or obligated by law or executive order to close in New York City, London,
or the place in which the floating rate note or its coupon is to be presented for payment;
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for LIBOR floating rate notes only, a London business day, which shall be any day on which dealings in deposits in the specified currency are transacted in the London interbank market;
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for floating rate notes having a specified currency other than U.S. dollars only, other than Euro-denominated floating rate notes, any day that, in the principal financial center (as defined below) of the country of the
specified currency, is not a day on which banking institutions generally are authorized or obligated by law to close; and
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for EURIBOR floating rate notes and Euro-denominated floating rate notes, a TARGET business day.
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As used above, a principal financial center means the capital city of the country issuing the specified currency. However, for
Australian dollars, Canadian dollars, New Zealand dollars and Swiss francs, the principal financial center may be specified in the applicable supplement as Sydney, Toronto, Auckland and Zurich, respectively.
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Unless otherwise specified in connection with a particular offering of debt securities, each of
the following base rates will be determined by the calculation agent as described below. Unless otherwise specified in connection with a particular offering of debt securities, all percentages resulting from any calculation of the rate of interest
on a floating rate note will be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage point rounded upward. All currency amounts used in, or resulting from, the calculation on floating rate notes
will be rounded to the nearest one-hundredth of a unit. For purposes of rounding, .005 of a unit shall be rounded upward.
LIBOR
Notes.
Each LIBOR note will bear interest for each interest period at an interest rate equal to LIBOR and any spread or spread multiplier specified in the note and the applicable supplement.
The calculation agent will determine LIBOR on each interest determination date. The interest determination date is the second London business
day prior to each interest period.
On an interest determination date, the calculation agent will determine LIBOR for each interest period
as follows.
The calculation agent will determine the offered rates for deposits in a principal amount equal to at least $1,000,000 or the
approximate equivalent in the specified currency for the period of the index maturity specified in the applicable supplement commencing on the interest determination date, which appear on the designated LIBOR page at approximately 11:00
a.m., London time, on that date.
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If Reuters LIBOR01 is designated, or if no LIBOR page is specified in the applicable supplement as the method for calculating LIBOR, designated LIBOR page means the display on Reuters 3000 Xtra
Service (Reuters) on page LIBOR01 for the purpose of displaying the London interbank offered rates of major banks for the specified currency. If the relevant Reuters page is replaced by another page, or if Reuters is replaced by a
successor service, then Reuters LIBOR01 means the replacement page or service selected to display the London interbank offered rates of major banks for the specified currency.
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If LIBOR cannot be determined on an interest determination date as described above, then the calculation agent will determine LIBOR as
follows.
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The calculation agent (after consultation with Citigroup) will select four major banks in the London interbank market.
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The calculation agent will request that the principal London offices of those four selected banks provide their offered quotations to prime banks in the London interbank market at approximately 11:00 a.m., London time,
on the interest determination date. These quotations shall be for deposits in the specified currency for the period of the specified index maturity, commencing on the interest determination date. Offered quotations must be based on a principal
amount equal to at least $1,000,000 or the approximate equivalent in the specified currency that is representative of a single transaction in such market at that time.
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(1)
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If two or more quotations are provided, LIBOR for the interest period will be the arithmetic average of those quotations.
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(2)
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If fewer than two quotations are provided, the calculation agent (after consultation with Citigroup) will select three major banks in New York City and follow the steps in the two bullet points below.
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The calculation agent will then determine LIBOR for the interest period as the arithmetic average of rates quoted by those three major banks in New
York City to leading European banks at approximately 11:00 a.m., New York City time, on the interest determination date. The rates quoted will be for loans in the specified currency, for the period of the specified index maturity, commencing on the
interest
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determination date. Rates quoted must be based on a principal amount of at least $1,000,000 or the approximate equivalent in the specified currency that is representative of a single transaction
in such market at that time.
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If fewer than three New York City banks selected by the calculation agent are quoting rates, LIBOR for the interest period will be the same as for the immediately preceding interest period.
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Treasury Rate Notes.
Each Treasury Rate note will bear interest for each interest period at an interest rate
equal to the Treasury Rate and any spread or spread multiplier, specified in the note and the applicable supplement.
The
calculation agent will determine the Treasury Rate on each interest determination date. The interest determination date for each interest period will be the day of the week in which the beginning of that interest period falls on which treasury
securities are normally auctioned. Treasury securities are normally sold at auction on Monday of each week unless that day is a legal holiday. In that case the auction is normally held on the following Tuesday, except that the auction may be held on
the preceding Friday. If, as the result of a legal holiday, an auction is held on the Friday of the week preceding an interest period, that Friday will be the interest determination date pertaining to the interest period commencing in the next
succeeding week. If an auction date falls on any day that would otherwise be an interest determination date for a Treasury Rate note, then that interest determination date will instead be the business day immediately following the auction date.
Unless Constant Maturity is specified in the applicable supplement, the Treasury Rate for each interest period will be the rate
for the auction held on the Treasury Rate determination date for such interest period of treasury securities (as defined below) as such rate appears on Reuters (or any successor service) on page USAUCTION10 (or any other page as may replace such
page on such service) (Reuters Page USAUCTION10) or page USAUCTION11 (or any other page as may replace such page on such service) (Reuters Page USAUCTION11 opposite the caption INVEST RATE. Treasury securities are
direct obligations of the United States that have the index maturity specified in the applicable Note or supplement.
If the Treasury Rate
cannot be determined as described above, the following procedures will be followed in the order set forth below.
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If the Treasury rate is not published prior to 3:00 p.m., New York City time on the earlier of 1) the tenth calendar day after the interest determination date or, if that day is not a business day, the next succeeding
business day, or 2) the business day immediately preceding the applicable interest payment date or maturity date, as the case may be (the calculation date), then the Treasury Rate will be the Bond Equivalent Yield (as defined below) of
the rate for the applicable treasury securities as published in H.15 Daily Update, or another recognized electronic source used for the purpose of displaying the applicable rate, opposite the caption U.S. Government Securities/Treasury
Bills/Auction High on the interest determination date.
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(2)
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If the rate referred to in clause (1) is not so published by 3:00 p.m., New York City time, on the calculation date, the Treasury Rate will be the Bond Equivalent Yield of the auction rate of the applicable
treasury securities as announced by the United States Department of the Treasury on the interest determination date.
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(3)
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If the rate referred to in clause (2) above is not so announced by the United States Department of the Treasury, or if the auction is not held, then the Treasury Rate will be the Bond Equivalent Yield of the rate
on the interest determination date of the applicable treasury securities published in H.15(519) opposite the caption U.S. Government Securities/Treasury Bills/Secondary Market.
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(4)
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If the rate referred to in clause (3) is not so published by 3:00 p.m., New York City time, on the calculation date, then the Treasury Rate will
be the rate on the calculation date of the applicable
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treasury securities as published in H.15 Daily Update, or another recognized electronic source used for the purpose of displaying the applicable rate, opposite the caption U.S. Government
Securities/Treasury Bills/Secondary Market on the interest determination date.
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(5)
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If the rate referred to in clause (4) is not so published by 3:00 p.m., New York City time, on the calculation date, then the Treasury Rate will be the rate calculated by the calculation agent as the Bond
Equivalent Yield of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on the interest determination date, of three primary United States government securities dealers selected by the
calculation agent (after consultation with Citigroup), for the issue of treasury securities with a remaining maturity closest to the index maturity specified in the applicable supplement.
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(6)
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If the dealers selected by the calculation agent are not quoting bid rates as mentioned in (5) above, then the Treasury Rate for such interest period will be the same as the Treasury Rate for the immediately
preceding interest period. If there was no preceding interest period, the Treasury Rate will be the initial interest rate.
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Bond Equivalent Yield will be expressed as a percentage and calculated as follows:
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Bond Equivalent Yield
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=
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D × N
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× 100
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360 − (D × M)
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where D refers to the applicable per annum rate for treasury securities quoted on a bank discount basis and
expressed as a decimal, N refers to 365 or 366, as the case may be, and M refers to the actual number of days in the applicable interest period.
Prime Rate Notes.
Prime Rate notes will bear interest at a rate equal to the Prime Rate and any spread or spread
multiplier specified in the Prime Rate notes and the applicable supplement.
The calculation agent will determine the Prime Rate
for each interest period on each interest determination date. The interest determination date is the second business day prior to each interest period. The Prime Rate will be the rate made available and subsequently published on that date in
H.15(519) opposite the caption Bank Prime Loan.
The following procedures will be followed if the Prime Rate cannot be
determined as described above.
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If the rate is not published prior to 3:00 p.m., New York City time, on the calculation date, then the Prime Rate will be the rate on the interest determination date that is published in the H.15 Daily Update other
recognized electronic source used for the purpose of displaying that rate, opposite the caption Bank Prime Loan.
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If the rate referred to above is not published prior to 3:00 p.m., New York City time, on the calculation date, then the Prime Rate will be the arithmetic mean of the rates of interest that appear on the USPRIME1 page
(or such other page as may replace such page on such service for the purpose of displaying prime rates or base lending rates of major United States banks) as such banks prime rate or base lending rate as of 11:00 a.m., New York City time, on
the interest determination date.
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If fewer than four such rates appear on the Reuters Screen USPRIME1 page, then the calculation agent will select three major banks in New York City (after consultation with Citigroup). The Prime Rate will be the
arithmetic average of the prime rates quoted by those three banks on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on the interest determination date.
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If the banks that the calculation agent selects do not provide quotations as described above, then the Prime Rate will remain the same as the Prime Rate for the immediately preceding interest period, or if there was no
interest period, the rate of interest payable will be the initial interest rate.
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Reuters Screen USPRIME1 page means the display which appears on the display on
Reuters (or any successor service) as page USPRIME1 (or any other page as may replace such page), for the purpose of displaying prime rates or base lending rates of major United States banks.
EURIBOR Notes.
Each EURIBOR note will bear interest for each interest period at an interest rate equal to
EURIBOR and any spread or spread multiplier specified in the note and the applicable supplement.
The calculation agent will
determine EURIBOR on each interest determination date. The interest determination date is the second TARGET business day prior to each interest period.
On an interest determination date, the calculation agent will determine EURIBOR for each interest period as follows.
The calculation agent will determine the offered rates for deposits in euros for the period of the index maturity specified in the applicable
supplement, in amounts of at least 1,000,000, commencing on the interest determination date, which appears on the display on Reuters (or any successor service) on EURIBOR1 (or any other page as may replace such page on such service) as of
11:00 a.m., Brussels time, on that date.
If EURIBOR cannot be determined on an interest determination date as described above, then the
calculation agent will determine EURIBOR as follows.
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The calculation agent (after consultation with Citigroup) will select four major banks in the Euro-zone interbank market.
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The calculation agent will request that the principal Euro-zone offices of those four selected banks provide their offered quotations to prime banks in the Euro-zone interbank market at approximately 11:00 a.m.,
Brussels time, on the interest determination date. These quotations shall be for deposits in Euros for the period of the specified index maturity, commencing on the interest determination date. Offered quotations must be based on a principal amount
equal to at least 1,000,000 that is representative of a single transaction in such market at that time.
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(1)
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If two or more quotations are provided, EURIBOR will be the arithmetic average of those quotations.
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(2)
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If less than two quotations are provided, the calculation agent (after consultation with Citigroup) will select three major banks in the Euro-zone and follow the steps in the two bullet points below.
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The calculation agent will then determine EURIBOR for the interest period as the arithmetic average of rates quoted by those three major banks in the Euro-zone to leading European banks at approximately 11:00 a.m.,
Brussels time, on the interest determination date. The rates quoted will be for loans in Euros, for the period of the specified index maturity, commencing on the interest determination date. Rates quoted must be based on a principal amount of at
least 1,000,000 that is representative of a single transaction in such market at that time.
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If the banks so selected by the calculation agent are not quoting rates as described above, EURIBOR for the interest period will be the same as for the immediately preceding interest period.
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Euro-zone means the region comprised of member states of the European Union that adopted the Euro as their single currency.
CDOR Rate Notes.
Each CDOR note will bear interest for each interest period at an interest rate equal to the
Canadian dollar three-month Bankers Acceptance Rate (CDOR) and any spread or spread multiplier specified in the note and the applicable supplement.
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The calculation agent will determine CDOR on each interest determination date. The interest
determination date is the first day of such interest period. CDOR will be the offered rate for Canadian dollar bankers acceptances having a maturity of three months, as such rate appears on the Reuters Screen CDOR page, or such other replacing
service or such other service that may be nominated by the person sponsoring the information appearing there for the purpose of displaying offered rates for Canadian dollar bankers acceptances having a maturity of three months, at
approximately 10:00 a.m., Toronto time, on such interest determination date.
The following procedures will be followed if CDOR cannot be
determined as described above.
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If the rate is not published prior to 10:00 a.m., Toronto time, on the interest determination date, then CDOR will be the average of the bid rates of interest for Canadian dollar bankers acceptances with
maturities of three months for same day settlement as quoted by such of the Schedule I banks (as defined in the Bank Act (Canada)) as may quote such a rate as of 10:00 a.m., Toronto time, on such interest determination date.
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If no offered rate appears on Reuters Screen CDOR page on an interest determination date at approximately 10:00 a.m., Toronto time, then CDOR will be the average of the bid rates of interest for Canadian dollar
bankers acceptances with maturities of three months for same day settlement as quoted by such of the Schedule I banks (as defined in the Bank Act (Canada)) as may quote such a rate as of 10:00 a.m., Toronto time, on such interest determination
date. If at least two quotations are provided, CDOR will be the arithmetic average of the quotations provided.
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If the Schedule I banks so selected by the calculation agent are not quoting as mentioned above, CDOR for the next interest period will be the rate in effect for the preceding interest period.
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Floating/Fixed Rate Notes.
The applicable supplement may provide that a debt security will be a floating rate
note for a specified portion of its term and a fixed rate note for the remainder of its term. In such an event, the interest rate on the debt security will be determined as if it were a floating rate note and a fixed rate note for each respective
period, all as specified herein and in the applicable supplement.
Dual Currency Debt Securities
Citigroup may from time to time offer dual currency debt securities on which Citigroup has the option of making all payments of principal and
interest on such debt securities, the payments on which would otherwise be made in the specified currency of those debt securities, in the optional payment currency specified in the applicable supplement. This option will be exercisable in whole but
not in part on an option election date, which will be any of the dates specified in the applicable supplement. Information as to the relative value of the specified currency compared to the optional payment currency will be set forth in the
applicable supplement.
The supplement for each issuance of dual currency debt securities will specify, among other things, the specified
currency; the optional payment currency; and the designated exchange rate. The designated exchange rate will be a fixed exchange rate used for converting amounts denominated in the specified currency into amounts denominated in the optional payment
currency. The supplement will also specify the option election dates and interest payment dates for the related issuance of dual currency debt securities. Each option election date will be a particular number of days before an interest payment date
or maturity, as set forth in the applicable supplement. Each option election date will be the date on which Citigroup may select whether to make all scheduled payments due thereafter in the optional payment currency rather than in the specified
currency.
If Citigroup makes such an election, the amount payable in the optional payment currency will be determined using the
designated exchange rate specified in the applicable supplement. Unless otherwise specified in connection with a particular offering of debt securities, if such an election is made, notice of the election will be provided in accordance with the
terms of the dual currency debt securities within two business days of the option election date. The notice will state (1) the first date, whether an interest payment date and/or maturity, on
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which scheduled payments in the optional payment currency will be made and (2) the designated exchange rate. Unless otherwise specified in the applicable supplement, any such notice by
Citigroup, once given, may not be withdrawn. The equivalent value in the specified currency of payments made after such an election may be less, at the then current exchange rate, than if Citigroup had made the payment in the specified currency.
For United States federal income tax purposes, holders of dual currency debt securities may need to comply with rules which differ from
the general rules applicable to holders of other types of debt securities offered by this prospectus. The United States federal income tax consequences of the purchase, ownership and disposition of dual currency debt securities will be set forth in
the applicable supplement.
Extension of Maturity
If so stated in the supplement relating to a particular offering of debt securities, Citigroup may extend the stated maturity of those debt
securities for an extension period. Unless otherwise specified in connection with a particular offering of debt securities, such an extension period will be one or more periods of one to five whole years, up to but not beyond the final maturity date
set forth in the supplement.
Unless otherwise specified in connection with a particular offering of debt securities, Citigroup may
exercise its option for a particular offering of debt securities by notifying the trustee for that series at least 45 but not more than 60 days prior to the original stated maturity of the debt security. Not later than 40 days prior to the original
stated maturity of the debt security, the trustee for the debt securities will provide notice of the extension to the holder, in accordance with Book-Entry Procedures and Settlement Notices below. The extension notice will
set forth among other items: the election of Citigroup to extend the stated maturity of the debt security; the new stated maturity; in the case of a fixed rate note, the interest rate applicable to the extension period; in the case of a floating
rate note, the spread, spread multiplier or method of calculation applicable to the extension period; and any provisions for redemption during the extension period, including the date or dates on which, or the period or periods during which, and the
price or prices at which, a redemption may occur during the extension period.
Unless otherwise specified in connection with a particular
offering of debt securities, upon the provision by such trustee of an extension notice in accordance with Book-Entry Procedures and Settlement Notices below, the stated maturity of the debt security will be extended automatically,
and, except as modified by the extension notice and as described in the next paragraph, the debt security will have the same terms as prior to the extension notice.
Despite the foregoing and unless otherwise specified in connection with a particular offering of debt securities, not later than 20 days prior
to the original stated maturity of the debt security, Citigroup may, at its option, revoke the interest rate, or the spread or spread multiplier, as the case may be, provided for in the extension notice for the debt security and establish for the
extension period a higher interest rate, in the case of a fixed rate note, or a higher spread or spread multiplier, in the case of a floating rate note. Citigroup may so act by causing the trustee for the debt security to provide notice of the
higher interest rate or higher spread or spread multiplier, as the case may be, in accordance with Book-Entry Procedures and Settlement Notices below, to the holder of the debt security. Unless otherwise specified in
connection with a particular offering of debt securities, the notice will be irrevocable. Unless otherwise specified in connection with a particular offering of debt securities, all debt securities for which the stated maturity is extended will bear
the higher interest rate, in the case of fixed rate notes, or higher spread or spread multiplier, in the case of floating rate notes, for the extension period, whether or not tendered for repayment.
If so stated in the supplement relating to a particular offering of debt securities, the holder of a debt security of which Citigroup elects
to extend maturity may have the option of early redemption, repayment or repurchase.
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Listing
Unless otherwise specified in connection with a particular offering of debt securities, application will be made to list the debt securities on
the Official List of the Luxembourg Stock Exchange and to admit them to trading on the regulated market of the Luxembourg Stock Exchange.
Directive 2006/43/EC of the European Parliament and of the Council of May 17, 2006 on statutory audits of annual accounts and
consolidated accounts, (the Statutory Audit Directive) entered into force on 29 June 2006. It requires member states to take measures necessary to comply with the Statutory Audit Directive by June 29, 2008.
Amongst other things, the Statutory Audit Directive requires that, where an issuers securities are admitted to trading on a regulated
market in any member state of the European Economic Area (the EEA) and its auditor is from a country outside the EEA then, unless covered by an exemption or derogation, that auditor must be registered in that member state and be subject
to that member states system of oversight, quality assurance, investigation and penalties. The Statutory Audit Directive further provides that audit reports issued by auditors from countries outside the EEA which are not so registered (or
covered by an exemption or derogation) shall have no legal effect in the relevant member state.
As a result of having securities admitted
to trading on the Regulated Market of the Luxembourg Stock Exchange, Citigroup will be required by Directive 2004/109/EC of the European Parliament and of the Council of December 15, 2004 on the harmonization of transparency requirements in
relation to information about issuers whose securities are admitted to trading on a regulated market, as amended (the Transparency Directive) and implementing measures in Luxembourg to publish at the latest four months after the end of
each of its financial years an annual financial report containing, amongst other things, its audited financial statements.
As of the date
of this prospectus, Citigroups auditors are registered pursuant to the Statutory Audit Directive and implementing measures in Luxembourg. However, if Citigroup determines it is impracticable or unduly burdensome to maintain such a listing of
any series of debt securities due to changes in applicable law or listing requirements occurring after the original issue date of the relevant series of debt securities, application may be made to de-list such debt securities from the regulated
market of the Luxembourg Stock Exchange. In such event, Citigroup may obtain an alternative admission to listing, trading and/or quotation of such debt securities by another listing authority, exchange or system within or outside the European Union
as it may decide. If such an alternative admission is not available or is, in Citigroups opinion, unduly burdensome, an alternative admission may not be obtained, and Citigroup will have no further obligation in respect of any listing, trading
or quotation for such debt securities.
Notice of any de-listing and/or alternative admission will be given as described under
Book-Entry Procedures and Settlement Notices below.
Payment of Additional Amounts
Obligation to Pay Additional Amounts
Unless otherwise specified in connection with a particular offering of debt securities, Citigroup will pay additional amounts to the beneficial
owner of any debt security that is a non-United States person in order to ensure that every net payment on such debt security will not be less, due to payment of U.S. withholding tax, than the amount then due and payable. For this purpose, a
net payment on a debt security means a payment by Citigroup or a paying agent, including payment of principal and interest, after deduction for any present or future tax, assessment or other governmental charge of the United States.
These additional amounts will constitute additional interest on the debt security.
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Exceptions
Unless otherwise specified in connection with a particular offering of debt securities, Citigroup will not be required to pay additional
amounts, however, in any of the circumstances described in items (1) through (14) below.
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(1)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld solely by reason of the beneficial owner:
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having a relationship with the United States as a citizen, resident or otherwise;
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having had such a relationship in the past; or
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being considered as having had such a relationship.
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(2)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld solely by reason of the beneficial owner:
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being treated as present in or engaged in a trade or business in the United States;
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being treated as having been present in or engaged in a trade or business in the United States in the past; or
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having or having had a permanent establishment in the United States.
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(3)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld in whole or in part by reason of the
beneficial owner being or having been any of the following (as these terms are defined in the Internal Revenue Code of 1986, as amended):
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personal holding company;
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foreign private foundation or other foreign tax-exempt organization;
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passive foreign investment company;
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controlled foreign corporation; or
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corporation which has accumulated earnings to avoid United States federal income tax.
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(4)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld solely by reason of the beneficial owner
owning or having owned, actually or constructively, 10 percent or more of the total combined voting power of all classes of stock of Citigroup entitled to vote or by reason of the beneficial owner being a bank that has invested in a debt security as
an extension of credit in the ordinary course of its trade or business.
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For purposes of items (1) through
(4) above, beneficial owner means a fiduciary, settlor, beneficiary, member or shareholder of the holder if the holder is an estate, trust, partnership, limited liability company, corporation or other entity, or a person holding a
power over an estate or trust administered by a fiduciary holder.
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(5)
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Additional amounts will not be payable to any beneficial owner of a debt security that is a:
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limited liability company; or
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other fiscally transparent entity
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or that is not the sole beneficial owner of the debt security, or any portion of the debt
security. However, this exception to the obligation to pay additional amounts will only apply to the extent that a beneficiary or settlor in relation to the fiduciary, or a beneficial owner or member of the partnership, limited liability company or
other fiscally transparent entity, would not have been entitled to the payment of an additional amount had the beneficiary, settlor, beneficial owner or member received directly its beneficial or distributive share of the payment.
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(6)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld solely by reason of the failure of the
beneficial owner or any other person to comply with applicable certification, identification, documentation or other information reporting requirements. This exception to the obligation to pay additional amounts will only apply if compliance with
such reporting requirements is required by statute or regulation of the United States or by an applicable income tax treaty to which the United States is a party as a precondition to exemption from such tax, assessment or other governmental charge.
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(7)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any tax, assessment or other governmental charge that is collected or imposed by any method other than by withholding from
a payment on a debt security by Citigroup or a paying agent.
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(8)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld by reason of a change in law, regulation, or
administrative or judicial interpretation that becomes effective more than 15 days after the payment becomes due or is duly provided for, whichever occurs later.
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(9)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any tax, assessment or other governmental charge that is imposed or withheld by reason of the presentation by the
beneficial owner of a debt security for payment more than 30 days after the date on which such payment becomes due or is duly provided for, whichever occurs later.
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(10)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any:
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personal property tax; or
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any similar tax, assessment, withholding, deduction or other governmental charge.
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(11)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any tax, assessment, or other governmental charge required to be withheld by any paying agent from a payment of principal
or interest on a note if such payment can be made without such withholding by any other paying agent.
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(12)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any tax, assessment or other governmental charge that is required to be made pursuant to any European Union directive on
the taxation of savings income or any law implementing or complying with, or introduced to conform to, any such directive. See EU Directive on the Taxation of Savings Income below.
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(13)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any withholding, deduction, tax, duty assessment or other governmental charge that would not have been imposed but for a
failure by the holder or beneficial owner of a debt security (or any financial institution through which the holder or beneficial owner holds the debt security or through which payment on the debt security is made) to take any action (including
entering into an agreement with the Internal Revenue Service (IRS)) or to comply with any applicable certification, documentation, information or other reporting requirement or agreement concerning accounts maintained by the holder or
beneficial owner (or any such financial institution), or concerning ownership of the holder or beneficial owner, or any substantially similar requirement or agreement.
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(14)
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Additional amounts will not be payable if a payment on a debt security is reduced as a result of any combination of items (1) through (13) above.
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Except as specifically provided in this section (Payment of Additional Amounts) and under Redemption for Tax
Purposes below, Citigroup will not be required to make any payment of any tax, assessment or other governmental charge imposed by any government or a political subdivision or taxing authority of such government.
Relevant Definitions
As used in this
prospectus, United States person means:
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any individual who is a citizen or resident of the United States;
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any corporation, partnership or other entity treated as a corporation or a partnership created or organized in or under the laws of the United States or any political subdivision thereof;
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any estate if the income of such estate falls within the federal income tax jurisdiction of the United States regardless of the source of such income; and
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a trust if (a) a United States court is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of the substantial decisions of the
trust; or (b) it has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.
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Additionally, non-United States person means a person who is not a United States person, and United States means the
United States of America, including the states of the United States of America and the District of Columbia, but excluding its territories and possessions.
Redemption for Tax Purposes
Redemption Procedure
Unless otherwise specified in connection with a particular offering of debt securities, Citigroup may, at its option, redeem a series
of debt securities as a whole, but not in part, on not less than 30 nor more than 60 days prior notice, only in the circumstances described in items (1) or (2) below under Redemption Circumstances. To redeem,
Citigroup must pay a redemption price equal to 100% of the principal amount of the debt securities, together with accrued interest to the redemption date.
Redemption Circumstances
Unless
otherwise specified in connection with a particular offering of debt securities, there are two sets of circumstances in which Citigroup may redeem the debt securities in the manner described above under Redemption Procedure:
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(1)
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Citigroup may redeem a series of debt securities if:
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Citigroup becomes or will become obligated to pay additional amounts as described under Payment of Additional Amounts above;
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the obligation to pay additional amounts arises as a result of any change in the laws, regulations or rulings of the United States, or an official position regarding the application or interpretation of such laws,
regulations or rulings, which change is announced or becomes effective on or after the date of the supplement relating to the original issuance of notes which form a series; and
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Citigroup determines, in its business judgment, that the obligation to pay such additional amounts cannot be avoided by the use of reasonable measures available to it, other than substituting the obligor under the notes
or taking any action that would entail a material cost to Citigroup.
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(2)
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Citigroup may also redeem a series of debt securities if:
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any act is taken by a taxing authority of the United States on or after the date of the supplement relating to the original issuance of notes which form a series, whether or not such act is taken in relation to
Citigroup or any subsidiary, that results in a substantial probability that Citigroup will or may be required to pay additional amounts as described under Payment of Additional Amounts above;
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Citigroup determines, in its business judgment, that the obligation to pay such additional amounts cannot be avoided by the use of reasonable measures available to it, other than substituting the obligor under the notes
or taking any action that would entail a material cost to Citigroup; and
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Citigroup receives an opinion of independent counsel to the effect that an act taken by a taxing authority of the United States results in a substantial probability that Citigroup will or may be required to pay the
additional amounts described under Payment of Additional Amounts above, and delivers to the trustee a certificate, signed by a duly authorized officer, stating that based on such opinion Citigroup is entitled to redeem a series of
debt securities pursuant to their terms.
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Book-Entry Procedures and Settlement
Unless otherwise specified in connection with a particular offering of debt securities, we will issue debt securities under a book-entry system
in the form of one or more global securities. We will register the global securities in the name of a depositary or its nominee and deposit the global securities with that depositary. Unless otherwise specified in connection with a particular
offering of debt securities, The Depository Trust Company, New York, New York, or DTC, will be the depositary if we use a depositary.
Following the issuance of a global security in registered form, the depositary will credit the accounts of its participants with the debt
securities upon our instructions. Only persons who hold directly or indirectly through financial institutions that are participants in the depositary can hold beneficial interests in the global securities. Because the laws of some jurisdictions
require certain types of purchasers to take physical delivery of such securities in definitive form, you may encounter difficulties in your ability to own, transfer or pledge beneficial interests in a global security.
So long as the depositary or its nominee is the registered owner of a global security, we and the relevant trustee will treat the depositary
as the sole owner or holder of the debt securities for purposes of the applicable indenture. Therefore, except as set forth below, you will not be entitled to have debt securities registered in your name or to receive physical delivery of
certificates representing the debt securities. Accordingly, you will have to rely on the procedures of the depositary and the participant in the depositary through whom you hold your beneficial interest in order to exercise any rights of a holder
under the indenture. We understand that under existing practices, the depositary would act upon the instructions of a participant or authorize that participant to take any action that a holder is entitled to take.
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You may elect to hold interests in the global securities either in the United States through DTC
or outside the United States through Clearstream Banking, société anonyme (Clearstream) or Euroclear Bank, S.A./N.V., or its successor, as operator of the Euroclear System, (Euroclear) if you are a participant
of such system, or indirectly through organizations that are participants in such systems. Interests held through Clearstream and Euroclear will be recorded on DTCs books as being held by the U.S. depositary for each of Clearstream and
Euroclear, which U.S. depositaries will in turn hold interests on behalf of their participants customers securities accounts.
As long as the debt securities are represented by the global securities, we will pay principal of and interest and premium, if any, on those
securities to or as directed by DTC as the registered holder of the global securities. Payments to DTC will be in immediately available funds by wire transfer. DTC, Clearstream or Euroclear, as applicable, will credit the relevant accounts of their
participants on the applicable date. Neither we nor the relevant trustee will be responsible for making any payments to participants or customers of participants or for maintaining any records relating to the holdings of participants and their
customers, and you will have to rely on the procedures of the depositary and its participants.
If an issue of debt securities is
denominated in a currency other than the U.S. dollar, we will make payments of principal and any interest in the foreign currency in which the debt securities are denominated or in U.S. dollars. DTC has elected to have all payments of principal and
interest paid in U.S. dollars unless notified by any of its participants through which an interest in the debt securities is held that it elects, in accordance with, and to the extent permitted by, the applicable supplement and the relevant debt
security, to receive payment of principal or interest in the foreign currency. On or prior to the third business day after the record date for payment of interest and 12 days prior to the date for payment of principal, a participant will be required
to notify DTC of (a) its election to receive all, or the specified portion, of payment in the foreign currency and (b) its instructions for wire transfer of payment to a foreign currency account. See Currency Conversions and Foreign
Exchange Risks Affecting Debt Securities Denominated in a Foreign Currency Currency Conversion below.
Settlement
You will be required to make your initial payment for the debt securities in immediately available funds. Secondary market trading between DTC
participants will occur in the ordinary way in accordance with DTC rules and will be settled in immediately available funds using DTCs Same-Day Funds Settlement System. Secondary market trading between Clearstream customers and/or Euroclear
participants will occur in the ordinary way in accordance with the applicable rules and operating procedures of Clearstream and Euroclear and will be settled using the procedures applicable to conventional eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through
Clearstream customers or Euroclear participants, on the other, will be effected in DTC in accordance with DTC rules on behalf of the relevant European international clearing system by U.S. depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadlines (based on European time). The relevant
European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to the U.S. depositary to take action to effect final settlement on its behalf by delivering or receiving debt securities in DTC,
and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream customers and Euroclear participants may not deliver instructions directly to their respective U.S. depositaries.
Because of time-zone differences, credits of debt securities received in Clearstream or Euroclear as a result of a transaction with a DTC
participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions in such debt securities settled during such processing will be reported to the
relevant Clearstream customers or Euroclear participants on such business day. Cash received in Clearstream or Euroclear as a result of sales of debt securities by or through
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a Clearstream customer or a Euroclear participant to a DTC participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream or Euroclear cash
account only as of the business day following settlement in DTC.
Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of debt securities among participants of DTC, Clearstream and Euroclear, they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued at any time.
Definitive Notes and Paying Agents
A beneficial owner of book-entry securities represented by a global security may exchange the securities for definitive (paper) securities only
if:
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(a)
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the depositary is unwilling or unable to continue as depositary for such global security and Citigroup is unable to find a qualified replacement for the depositary within 90 days;
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(b)
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at any time the depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934; or
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(c)
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Citigroup in its sole discretion decides to allow some or all book-entry securities to be exchangeable for definitive securities in registered form.
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Unless otherwise specified in connection with a particular offering of debt securities, any global security that is exchangeable will be
exchangeable in whole for definitive securities in registered form, with the same terms and of an equal aggregate principal amount, in denominations of $1,000 and whole multiples of $1,000. Definitive notes will be registered in the name or names of
the person or persons specified by the depositary in a written instruction to the registrar of the securities. The Depositary may base its written instruction upon directions it receives from its participants.
If any of the events described above occurs, then the beneficial owners will be notified through the chain of intermediaries that definitive
debt securities are available and notice will be published as described below under Notices. Beneficial owners of book-entry debt securities will then be entitled (1) to receive physical delivery in certificated form of
definitive debt securities equal in principal amount to their beneficial interest and (2) to have the definitive debt securities registered in their names. Thereafter, the holders of the definitive debt securities will be recognized as the
holders of the debt securities under the applicable indenture.
The applicable indenture provides for the replacement of a
mutilated, lost, stolen or destroyed definitive debt security, so long as the applicant furnishes to Citigroup and the trustee such security or indemnity and such evidence of ownership as they may require.
In the event definitive debt securities are issued, the holders of definitive debt securities will be able to receive payments of principal
and interest on their debt securities at the office of Citigroups paying agent maintained in the Borough of Manhattan (in the case of holders of U.S. dollar-denominated debt securities or holders of debt securities denominated in a foreign
currency electing to receive payments in U.S. dollars) and in London (in the case of holders of debt securities denominated in a foreign currency not electing to receive payments in U.S. dollars) and, if the definitive debt securities are listed on
the Luxembourg Stock Exchange, at the offices of the paying agent in Luxembourg. Payment of principal of a definitive debt security may be made only against surrender of the debt security to one of Citigroups paying agents. Citigroup also has
the option of making payments of interest by mailing checks to the registered holders of the debt securities.
Unless otherwise specified
in connection with a particular offering of debt securities, Citigroups paying agent in the Borough of Manhattan will be the corporate trust office of Citibank, N.A., located at 388 Greenwich Street, 14th Floor, New York, New York.
Citigroups paying agent in London is Citibank, N.A. London office,
28
located at Citigroup Centre, Canada Square, Canary Wharf, London, England. Citigroups paying agent and transfer agent in Luxembourg is Banque Internationale à Luxembourg S.A.,
currently located at 69, route dEsch, L-2953 Luxembourg. As long as the debt securities are listed on the Luxembourg Stock Exchange and the rules of that exchange so require, Citigroup will maintain a paying agent and transfer agent in
Luxembourg. Any change in the Luxembourg paying agent and transfer agent will be published in London and Luxembourg. See Notices below.
In the event definitive debt securities are issued, the holders of definitive debt securities will be able to transfer their securities, in
whole or in part, by surrendering the debt securities for registration of transfer at the office of Citibank, N.A., listed above and, so long as definitive debt securities are listed on the Luxembourg Stock Exchange, at the offices of the transfer
agent in Luxembourg, duly endorsed by or accompanied by a written instrument of transfer in form satisfactory to Citigroup and the securities registrar. A form of such instrument of transfer will be obtainable at the relevant office of Citibank,
N.A. and the Luxembourg transfer agent. Upon surrender, Citigroup will execute, and the trustee will authenticate and deliver, new debt securities to the designated transferee in the amount being transferred, and a new debt security for any amount
not being transferred will be issued to the transferor. Such new securities will be delivered free of charge at the relevant office of Citibank, N.A. or the Luxembourg transfer agent, as requested by the owner of such new debt securities. Citigroup
will not charge any fee for the registration of transfer or exchange, except that it may require the payment of a sum sufficient to cover any applicable tax or other governmental charge payable in connection with the transfer.
Notices
So long as the global securities
are held on behalf of DTC or any other clearing system, notices to holders of securities represented by a beneficial interest in the global securities may be given by delivery of the relevant notice to DTC or the alternative clearing system, as the
case may be. In addition, so long as the securities are listed on the Luxembourg Stock Exchange, notices will also be made by publication in a leading newspaper of general circulation in Luxembourg, which is expected to be the Luxemburger Wort. Any
notice will be deemed to have been given on the date of publication or, if published more than once, on the date of the first publication.
Governing
Law
The senior debt indenture, the subordinated debt indenture and the debt securities for all purposes shall be governed by and
construed in accordance with the laws of the State of New York.
Unclaimed Funds
Unless otherwise specified in connection with a particular offering of debt securities, all funds deposited with the relevant trustee or any
paying agent for the payment of principal, interest, premium or additional amounts in respect of the debt securities that remain unclaimed for two years after the maturity date of the debt securities will be repaid to Citigroup upon its request.
Thereafter, any right of any noteholder to such funds shall be enforceable only against Citigroup, and the trustee and paying agents will have no liability therefor.
Prescription
Under New Yorks
statute of limitations, any legal action to enforce Citigroups payment obligations evidenced by the debt securities must be commenced within six years after payment is due. Thereafter Citigroups payment obligations will generally become
unenforceable.
EU Directive on the Taxation of Savings Income
As of the date of this prospectus, under the European Council Directive 2003/48/EC (the Savings Directive) on the taxation of
savings income, as amended, Member States of the European Union are required to provide to the tax authorities of another Member State details of payments of interest (or similar income) paid by
29
a person within its jurisdiction to, or collected by such a person for, an individual resident or certain types of entities called residual entities within the meaning of article 4.2
of the Savings Directive (the Residual Entities), established in that other Member State. For a transitional period, however, Austria, and Luxembourg may instead apply a withholding system in relation to such payments, deducting tax at
35%. In the case of Luxembourg, the recipient of the interest payment may opt for one of the two information exchange procedures available instead of the application of the above withholding system.
The transitional period is to terminate at the end of first full fiscal year following agreement by certain non-European Union countries to
the exchange of information relating to such payment. On April 10, 2013, Luxembourg officially announced that it will no longer apply the withholding tax system from January 1, 2015 and will provide details of payment of interest (or
similar income) as from this date.
A number of non-European Union countries, and certain dependent or associated territories of certain
Member States, have adopted similar measures (either provision of information or transitional withholding) in relation to payments made by a person within its jurisdiction to, or collected by such a person for, an individual resident or Residual
Entities established in a Member State. In addition, the Member States have entered into provision of information or transitional withholding arrangements with certain of those dependent or associated territories in relation to payments made by a
person in a Member State to, or collected by such a person for, an individual resident or Residual Entities established in one of those territories.
The European Commission has proposed certain amendments to the Savings Directive, which may, if implemented, amend or broaden the scope of the
requirements described above.
As indicated above under Payment of Additional Amounts Exceptions, no additional amounts will be
payable with respect to a debt security if a payment on a debt security is reduced as a result of any tax, assessment or other governmental charge that is required to be made pursuant to any European Union directive on the taxation of savings income
or any law implementing or complying with, or introduced in order to conform to, any such directive. Holders should consult their tax advisers regarding the implications of the directive in their particular circumstances.
Senior Debt
The senior debt securities
will be issued under the senior debt indenture, will be unsecured obligations of Citigroup and will rank on an equal basis with all other unsecured senior indebtedness of Citigroup, whether existing at the time of issuance or created thereafter.
Subordinated Debt
The subordinated
debt securities will be issued under the subordinated debt indenture, will be unsecured obligations of Citigroup, will rank subordinated and junior in right of payment, to the extent set forth in the subordinated debt indenture, to all Senior
Indebtedness (as defined below) of Citigroup and will rank equally with all other unsecured and subordinated indebtedness of Citigroup, whether existing at the time of issuance or created thereafter, other than subordinated indebtedness which
is designated as junior to the subordinated debt securities.
If Citigroup defaults in the payment of any principal of, or premium, if
any, or interest on any Senior Indebtedness when it becomes due and payable after any applicable grace period, then, unless and until the default is cured or waived or ceases to exist, Citigroup cannot make a payment on account of or redeem or
otherwise acquire the subordinated debt securities. Nevertheless, holders of subordinated debt securities may still receive and retain:
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securities of Citigroup or any other corporation provided for by a plan of reorganization or readjustment that are subordinate, at least to the same extent that the subordinated debt securities are subordinate to Senior
Indebtedness; and
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payments made from a defeasance trust as described below.
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If there is any insolvency, bankruptcy, liquidation or other similar proceeding relating
to Citigroup, its creditors or its property, then all Senior Indebtedness must be paid in full before any payment may be made to any holders of subordinated debt securities. Holders of subordinated debt securities must return and deliver any
payments received by them, other than in a plan of reorganization or through a defeasance trust as described
below, directly to the holders of Senior Indebtedness until all Senior Indebtedness is paid in full. (
Subordinated Debt Indenture,
Section 14.01
).
Senior Indebtedness means:
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(1)
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the principal, premium, if any, and interest in respect of (A) indebtedness for money borrowed and (B) indebtedness evidenced by securities, notes, debentures, bonds or other similar instruments issued by
Citigroup, including all indebtedness (whether now or hereafter outstanding) issued under (i) the senior debt indenture, as the same may be amended, modified or supplemented from time to time or (ii) an indenture dated March 15, 1987,
between Citigroup and The Bank of New York Mellon, as successor trustee, as the same has been or may be amended, modified or supplemented from time to time;
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(2)
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all capital lease obligations of Citigroup;
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(3)
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all obligations of Citigroup issued or assumed as the deferred purchase price of property, all conditional sale obligations of Citigroup and all obligations of Citigroup under any conditional sale or title retention
agreement, but excluding trade accounts payable in the ordinary course of business;
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(4)
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all obligations, contingent or otherwise, of Citigroup in respect of any letters of credit, bankers acceptance, security purchase facilities and similar credit transactions;
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(5)
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all obligations of Citigroup in respect of interest rate swap, cap or other agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar
agreements;
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(6)
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all obligations of the type referred to in clauses (1) through (5) above of other persons for the payment of which Citigroup is responsible or liable as obligor, guarantor or otherwise; and
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(7)
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all obligations of the type referred to in clauses (1) through (6) above of other persons secured by any lien on any property or asset of Citigroup whether or not such obligation is assumed by Citigroup;
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except that Senior Indebtedness does not include:
(A) any other indebtedness issued under the subordinated debt indenture;
(B) all indebtedness (whether now or hereafter outstanding) issued to a Citigroup Trust under (i) the indenture, dated as
of October 7, 1996, between Citigroup and The Bank of New York Mellon, as successor trustee to JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as trustee, as the same has been or may be amended, modified or supplemented from
time to time, (ii) the indenture, dated as of July 23, 2004, between Citigroup and The Bank of New York Mellon, as successor trustee to JPMorgan Chase Bank, as trustee, as the same has been or may be amended, modified, or supplemented from
time to time, and (iii) the indenture, dated as of July 30, 2009, between Citigroup and The Bank of New York Mellon, as trustee, as the same has been or may be amended, modified, or supplemented from time to time (collectively, the
junior subordinated debt indentures);
(C) all indebtedness (whether nor or hereafter outstanding) issued to a
Citigroup Trust under (i) the indenture, dated as of June 30, 2006, between Citigroup and The Bank of New York Mellon, as successor trustee to JPMorgan Chase Bank, N.A., as trustee, as the same has been or may be amended, modified, or
supplemented from time to time; (ii) the indenture, dated as of September 15, 2006, between Citigroup and The Bank of New York Mellon, as successor trustee to JPMorgan Chase Bank, N.A., as the same has been or may be amended, modified, or
supplemented from time to time; and (iii) the indenture, dated as of June 28, 2007, between Citigroup and The Bank of New York Mellon (formerly The Bank of New York), as trustee, as the same has been or may be amended, modified, or
supplemented from time to time (collectively, the junior junior subordinated debt indentures);
31
(D) any guarantee in respect of any preferred securities, capital securities or
preference stock of a Citigroup Trust;
(E) any indebtedness or any guarantee that is by its terms subordinated to, or
ranks equally with, the subordinated notes and the issuance of which (x) has received the concurrence or approval of the staff of the Federal Reserve Bank of New York or the staff of the Board of Governors of the Federal Reserve System or
(y) does not at the time of issuance prevent the subordinated notes from qualifying for Tier 2 capital treatment (irrespective of any limits on the amount of Citigroups Tier 2 capital) under the applicable capital adequacy guidelines,
regulations, policies or published interpretations of the Board of Governors of the Federal Reserve System or any applicable concurrence or approval of the Federal Reserve Bank of New York or its staff.
Citigroup Trust means each of Citigroup Capital III, Citigroup Capital IX, Citigroup Capital XI, Citigroup Capital XIII, Citigroup
Capital XVII and Citigroup Capital XVIII, each a Delaware statutory trust, or any other similar trust created for the purpose of issuing preferred securities in connection with the issuances of junior subordinated notes under the junior subordinated
debt indentures or the junior junior subordinated debt indentures.
Such Senior Indebtedness shall continue to be Senior Indebtedness and
be entitled to the benefits of these subordinated provisions irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness.
Covenants
Limitations on
Liens.
The senior debt indenture provides that Citigroup will not, and will not permit any Subsidiary to, incur, issue, assume or guarantee any indebtedness for money borrowed if such indebtedness is secured by a pledge
of, lien on, or security interest in any shares of Voting Stock of any Significant Subsidiary, without providing that each series of senior debt securities and, at Citigroups option, any other senior indebtedness ranking equally with such
series of senior debt securities, is secured equally and ratably with such indebtedness. This limitation shall not apply to indebtedness secured by a pledge of, lien on or security interest in any shares of Voting Stock of any corporation at the
time it becomes a Significant Subsidiary, including any renewals or extensions of such secured indebtedness (
Senior Debt Indenture
,
Section 5.04
). The subordinated debt indenture does not contain a similar provision.
Significant Subsidiary means a Subsidiary, including its Subsidiaries, which meets any of the following conditions:
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Citigroups and its other Subsidiaries investments in and advances to the Subsidiary exceed 10 percent of the total assets of Citigroup and its Subsidiaries consolidated as of the end of the most recently
completed fiscal year;
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Citigroups and its other Subsidiaries proportionate share of the total assets of the Subsidiary after intercompany eliminations exceeds 10 percent of the total assets of Citigroup and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or
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Citigroups and its other Subsidiaries equity in the income from continuing operations before income taxes, extraordinary items and cumulative effect of a change in accounting principles of the Subsidiary
exceeds 10 percent of such income of Citigroup and its Subsidiaries consolidated for the most recently completed fiscal year.
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Subsidiary means any corporation of which securities entitled to elect at least a majority of the corporations directors
shall at the time be owned, directly or indirectly, by Citigroup, and/or one or more Subsidiaries, except securities entitled to vote for directors only upon the happening of a contingency.
32
Voting Stock means capital stock, the holders of which have general voting
power under ordinary circumstances to elect at least a majority of the board of directors of a corporation, except capital stock that carries only the right to vote conditioned on the happening of an event regardless of whether such event shall have
happened (
Senior Debt Indenture
,
Section 5.04
).
Limitations on Mergers and Sales of
Assets.
The indentures provide that Citigroup will not merge or consolidate with another corporation or sell other than for cash or lease all or substantially all its assets to another corporation unless:
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either (1) Citigroup is the continuing corporation, or (2) the successor corporation, if other than Citigroup, is a U.S. corporation and expressly assumes by supplemental indenture the obligations evidenced by
the securities issued pursuant to the indenture; and
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in the case of the senior debt indenture or if provided in the applicable supplement for a series of subordinated debt, immediately after the transaction, there would not be any default in the performance of any
covenant or condition of the indenture
(Senior Debt Indenture
,
Sections 5.05 and 16.05
;
Subordinated Debt Indenture
,
Section 15.01
).
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Limitations on Future Issuances of Subordinated Debt Securities under the Subordinated Debt Indenture.
The subordinated debt indenture
provides that any subordinated debt securities issued under the subordinated debt indenture shall either (x) be issued with the concurrence or approval of the staff of the Federal Reserve Bank of New York or the staff of the Federal Reserve
System or (y) qualify at the time of issuance for Tier 2 capital treatment (irrespective of any limits on the amount of Citigroups Tier 2 capital) under the applicable capital adequacy guidelines, regulations, policies or published
interpretations of the Federal Reserve System.
Other than the restrictions described above, the indentures do not contain any
covenants or provisions that would protect holders of the debt securities in the event of a highly leveraged transaction.
Modification of the
Indentures
Under the indentures, Citigroup and the relevant trustee can enter into supplemental indentures to establish the form and
terms of any series of debt securities without obtaining the consent of any holder of debt securities.
Citigroup and the trustee may,
with the consent of the holders of at least a majority in aggregate principal amount of the senior debt securities of a series or at least a majority in aggregate principal amount of the subordinated debt securities of a series that, in each case,
are affected by such modification, modify the applicable indenture or the rights of the holders of the securities of such series to be affected.
No such modification may, without the consent of the holder of each security so affected:
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change the fixed maturity of any such securities;
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reduce the rate of interest on such securities;
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reduce the principal amount of such securities or the premium, if any, on such securities;
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reduce the amount of the principal of any securities issued originally at a discount;
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change the currency in which any such securities are payable; or
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impair the right to sue for the enforcement of any such payment on or after the maturity of such securities.
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In addition, no such modification may:
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reduce the percentage of securities referred to above whose holders need to consent to the modification without the consent of such holders; or
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change the rights, duties or immunities of the trustee under the indentures unless the trustee agrees to such change
(Senior Debt Indenture, Sections 15.01, 15.02 and 15.03; Subordinated Debt Indenture, Sections
13.01, 13.02 and 13.03
).
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In addition, the subordinated debt indenture may not be amended without the
consent of each holder of subordinated debt securities affected thereby to modify the subordination of the subordinated debt securities issued under that indenture in a manner adverse to the holders of the subordinated debt securities
(
Subordinated Debt Indenture, Section 13.02
).
Events of Default and Defaults
Events of default under the senior debt indenture and defaults under the subordinated debt indenture are:
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failure to pay required interest on any debt security of such series for 30 days;
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failure to pay principal, other than a scheduled installment payment to a sinking fund or premium, if any, on any debt security of such series when due;
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failure to make any required scheduled installment payment to a sinking fund for 30 days on debt securities of such series;
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failure to perform for 90 days after notice any other covenant in the relevant indenture other than a covenant included in the relevant indenture solely for the benefit of a series of debt securities other than such
series; and
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certain events of bankruptcy or insolvency, whether voluntary or not
(Senior Debt Indenture, Section 6.01; Subordinated Debt Indenture, Section 6.07
).
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Unless otherwise specified in connection with a particular offering of subordinated debt, the only events of default specified in the
subordinated debt indenture are events of insolvency or bankruptcy, whether voluntary or not, with respect to Citigroup. There is no event of default, and accordingly there is no right of acceleration, in the case of a default in the payment of
principal of, premium, if any, or interest on, subordinated debt securities, the performance of any other covenant of Citigroup in the subordinated indenture or any other default that is not also an event of default (
Subordinated Debt Indenture,
Sections 6.01 and 6.02
).
If an event of default regarding debt securities of any series issued under the indentures
should occur and be continuing, either the trustee or the holders of 25% in the principal amount of outstanding debt securities of such series may declare each debt security of that series due and payable (
Section 6.02
). Citigroup is required
to file annually with the trustee a statement of an officer as to the fulfillment by Citigroup of its obligations under the indenture during the preceding year (
Senior Debt Indenture, Section 5.06; Subordinated Debt Indenture, Section
5.04
).
No event of default regarding one series of senior debt securities issued under the senior debt indenture is
necessarily an event of default regarding any other series of senior debt securities (
Senior Debt Indenture, Section 6.02
). For purposes of this section, series refers to debt securities having identical terms, except as to
issue date, principal amount and, if applicable, the date from which interest begins to accrue.
Holders of a majority in
principal amount of the outstanding debt securities of any series will be entitled to control certain actions of the trustee under the indentures and to waive past defaults regarding such series (
Sections 6.02 and 6.06
). The trustee generally
will not be under any obligation to act at the request, order or direction of any of the holders of debt securities, unless one or more of such holders shall have offered to the trustee security or indemnity reasonably satisfactory to it (
Section
10.01
).
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If an event of default occurs regarding a series of debt securities, the trustee may use
any sums that it collects under the relevant indenture for its own reasonable compensation and expenses incurred prior to paying the holders of debt securities of such series (
Section 6.05
).
Before any holder of any series of debt securities may institute action for any remedy, except payment on such holders debt
security when due, the holders of not less than 25% in principal amount of the debt securities of that series outstanding must request the trustee to take action. Holders must also offer security and indemnity reasonably satisfactory to the trustee
against liabilities incurred by the trustee for taking such action (
Section 6.07
).
Defeasance
Senior Debt Indenture.
Unless otherwise specified in connection with a particular offering of debt securities,
after Citigroup has deposited with the trustee cash and/or U.S. government securities or, in the case of debt securities denominated in a currency other than U.S. dollars, after Citigroup has deposited with the trustee funds in the currency
specified in the applicable supplement and/or other government securities specified in the applicable supplement in trust for the benefit of the holders sufficient to pay the principal of, premium, if any, and interest on the senior debt securities
of such series when due, then Citigroup, at its option:
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will be deemed to have paid and satisfied its obligations on all outstanding senior debt securities of such series, which is known as defeasance and discharge (
Senior Debt Indenture,
Section 12.02
); or
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will cease to be under any obligation under specific covenants, relating to the senior debt securities of such series, which is known as covenant defeasance (
Senior Debt Indenture,
Section 12.03
).
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In the case of both defeasance and discharge and covenant defeasance, Citigroup must also
deliver to the trustee an opinion of counsel to the effect that the holders of the senior debt securities of such series will have no United States federal income tax consequences as a result of such deposit
(Senior Debt Indenture, Section
12.04)
.
When there is a defeasance and discharge, (1) the senior debt indenture will no longer govern the senior debt
securities of such series, (2) Citigroup will no longer be liable for payment and (3) the holders of such senior debt securities will be entitled only to the deposited funds. When there is a covenant defeasance, however, Citigroup will
continue to be obligated to make payments when due if the deposited funds are not sufficient.
The obligations and rights under the
senior debt indenture regarding compensation, reimbursement and indemnification of the trustee, optional redemption, mandatory or optional sinking fund payments, if any, registration of transfer and exchange of the senior debt securities of such
series, replacement of mutilated, destroyed, lost or stolen senior debt securities and certain other administrative provisions will continue even if Citigroup exercises its defeasance and discharge or covenant defeasance options (
Senior Debt
Indenture, Sections 12.02 and 12.03
).
Under current United States federal income tax law, defeasance and discharge should be
treated as a taxable exchange of the senior debt securities for an interest in the trust. As a consequence, each holder of the senior debt securities would recognize gain or loss equal to the difference between the value of the holders
interest in the trust and holders adjusted tax basis for the senior debt securities deemed exchanged, except to the extent attributable to accrued but unpaid interest, which will be taxable as ordinary income. Each holder would then be
required to include in income his share of any income, gain and loss recognized by the trust. Even though United States federal income tax on the deemed exchange would be imposed on a holder, the holder would not receive any cash until the maturity
or an earlier redemption of the senior debt securities, except for any current interest payments. Prospective investors are urged to consult their tax advisors as to the specific consequences of a defeasance and discharge, including the
applicability and effect of tax laws other than the United States federal income tax law.
35
Under current United States federal income tax law, a covenant defeasance would not be treated as
a taxable exchange of senior debt securities.
Subordinated Debt Indenture.
Unless otherwise specified in
connection with a particular offering of subordinated debt securities, the defeasance and discharge and covenant defeasance provisions contained in the subordinated debt indenture will apply and are substantially the same as those described above
for the senior debt indenture (
Subordinated Debt Indenture, Sections 11.01, 11.02, 11.03, 11.04 and 11.05
).
Under the
subordinated debt indenture, in the case of both defeasance and discharge and covenant defeasance, Citigroup must also deliver to the trustee an opinion of counsel to the effect that the holders of the subordinated senior debt securities will have
no United States federal income tax consequences as a result of such deposit.
Concerning the Trustees
Citigroup has had and may continue to have banking relationships with the trustees in the ordinary course of business.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Introduction
The following is a general
summary of United States federal income tax considerations that may be relevant to a beneficial owner of a debt security. The summary is based on:
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decisions now in effect,
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all of which may change, possibly with retroactive effect. This summary deals only
with beneficial owners that will hold debt securities as capital assets. This summary does not address all of the United States federal income tax considerations that may be relevant to a beneficial owner of debt securities. For example, this
summary does not address tax considerations applicable to investors to whom special tax rules may apply, including:
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banks or other financial institutions;
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regulated investment companies;
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controlled foreign corporations;
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dealers in securities or currencies;
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persons that will hold debt securities as a hedge or in order to hedge against currency risk or as a part of an integrated investment, including a straddle or conversion transaction, comprised of
a debt security and one or more other positions; or
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United States holders (as defined below) that have a functional currency other than the U.S. dollar.
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Any special United States federal income tax considerations relevant to a particular issue of
debt securities, including any indexed notes, floating rate notes, dual currency notes or notes providing for contingent payments, will be provided in the applicable supplement. Purchasers of such notes should carefully examine the applicable
supplement and should consult with their tax advisors with respect to such notes.
Prospective investors should consult their tax advisors
in determining the tax consequences to them of purchasing, holding, and disposing of the debt securities, including the application to their particular situation of the United States federal income tax considerations discussed below, as well as the
application of state, local, foreign or other tax laws.
As used in this summary, the term United States holder means a beneficial owner of a
debt security (other than a partnership or other entity taxable as a partnership for United States federal income tax purposes) who is a United States person. The term non-United States holder means a beneficial owner of a debt security
(other than a partnership or other entity taxable as a partnership for United States federal income tax purposes) who is not a United States holder.
If a
partnership (including any entity or arrangement taxable as a partnership for United States federal income tax purposes) owns debt securities, the tax treatment of a partner in the partnership will depend upon the status of the partner and the
activities of the partnership. Partners in a partnership that owns debt securities should consult their tax advisors as to the particular United States federal income tax consequences applicable to them.
United States Holders
Payments of Interest
Payments of qualified stated interest, as defined below under Original Issue Discount, on a debt security will be taxable to a
United States holder as ordinary interest income at the time that such payments are accrued or are received, in accordance with the United States holders method of tax accounting.
If such payments of interest are made in foreign currency with respect to a debt security that is denominated in such foreign currency, the
amount of interest income realized by a United States holder that uses the cash method of tax accounting will be the U.S. dollar value of the specified currency payment based on the spot rate of exchange on the date of receipt regardless of whether
the payment is in fact converted into U.S. dollars. No exchange gain or loss will be recognized with respect to the receipt of such payment (other than exchange gain or loss realized on the disposition of the foreign currency so received, see
Transactions in Foreign Currency, below). A United States holder of DTC debt securities that uses the cash method of tax accounting and receives a payment of interest in U.S. dollars should include in income the amount of U.S. dollars
received. A United States holder that uses the accrual method of tax accounting will accrue interest income on the foreign currency debt security in the relevant foreign currency and translate the amount accrued into U.S. dollars based on:
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the average exchange rate in effect during the interest accrual period, or portion thereof, within such holders taxable year; or
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at such holders election, at the spot rate of exchange on (i) the last day of the accrual period, or the last day of the taxable year within such accrual period if the accrual period spans more than one
taxable year, or (ii) the date of receipt, if such date is within five business days of the last day of the accrual period.
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Such election must be applied consistently by the United States holder to all debt instruments from year to year and can be changed only with
the consent of the IRS. A United States holder that uses the accrual method of tax accounting will recognize foreign currency gain or loss on the receipt of an interest payment made relating to a foreign currency debt security if the spot rate of
exchange on the date the payment is received differs from the rate applicable to a previous accrual of that interest income. Such foreign currency gain or loss will be treated as ordinary income or loss, but generally will not be treated as an
adjustment to interest income received on the debt securities.
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Purchase, Sale and Retirement of Debt Securities
A United States holders tax basis in a debt security generally will equal the cost of such debt security to such holder
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increased by any amounts includible in income by the holder as original issue discount (OID) and market discount (each as described below); and
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reduced by any amortized premium and any payments other than payments of qualified stated interest (each as described below) made on such debt security.
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In the case of a foreign currency debt security, the cost of such debt security to a United States holder will generally be the U.S. dollar
value of the foreign currency purchase price on the date of purchase calculated at the spot rate of exchange on that date. In the case of a foreign currency debt security that is traded on an established securities market, a United States holder
generally should determine the U.S. dollar value of the cost of such debt security by translating the amount paid in foreign currency into its U.S. dollar value at the spot rate of exchange (i) on the settlement date of the purchase in the case
of a United States holder using the cash method of tax accounting or (ii) on the trade date, in the case of a United States holder using the accrual method of tax accounting, unless such holder elects to use the spot rate applicable to cash
method United States holders. The amount of any subsequent adjustments to a United States holders tax basis in a foreign currency debt security in respect of OID, market discount and premium will be determined in the manner described under
Original Issue Discount, Market Discount and Debt Securities Purchased at a Premium below. The conversion of U.S. dollars to another specified currency and the immediate use of such specified currency to purchase
a foreign currency debt security generally will not result in any exchange gain or loss for a United States holder.
Upon the sale,
exchange, retirement or other taxable disposition (collectively, a disposition) of a debt security, a United States holder generally will recognize gain or loss equal to the difference between (i) the amount realized on the
disposition, less any accrued qualified stated interest, which will be taxable as ordinary income in the manner described above under Payments of Interest, and (ii) the United States holders adjusted tax basis in such debt
security. If a United States holder receives a specified currency other than the U.S. dollar in respect of such disposition of a debt security, the amount realized will be the U.S. dollar value of the specified currency received calculated at the
spot rate of exchange on the date of disposition of the debt security.
In the case of a foreign currency debt security that is traded on
an established securities market, a United States holder that receives a specified currency other than the U.S. dollar in respect of such disposition generally should determine the amount realized (as determined on the trade date) by translating
that specified currency into its U.S. dollar value at the spot rate of exchange (i) on the settlement date of the disposition in the case of a United States holder using the cash method of tax accounting or (ii) on the trade date, in the
case of a United States holder using the accrual method of tax accounting, unless such holder elects to use the spot rate applicable to cash method United States holders. The election available to accrual basis United States holders in respect of
the purchase and sale of foreign currency debt securities traded on an established securities market, discussed above, must be applied consistently by the United States holder to all debt instruments from year to year and can be changed only with
the consent of the IRS.
Except as discussed below in connection with foreign currency gain or loss, market discount and short-term debt
securities, gain or loss recognized by a United States holder on the disposition of a debt security will generally be long term capital gain or loss if the United States holders holding period for the debt security exceeds one year at the time
of such disposition.
Gain or loss recognized by a United States holder on the disposition of a foreign currency debt security generally
will be treated as ordinary income or loss to the extent that the gain or loss is attributable to changes in exchange rates during the period in which the holder held such debt security.
38
Transactions in Foreign Currency
Foreign currency received as interest on, or on a disposition of, a debt security will have a tax basis equal to its U.S. dollar value at the
time such interest is received or at the time such proceeds are received. The amount of gain or loss recognized on a sale or other disposition of such foreign currency will be equal to the difference between (i) the amount of U.S. dollars, or
the fair market value in U.S. dollars of the other property received in such sale or other disposition, and (ii) the United States holders tax basis in such foreign currency.
A United States holder that purchases a debt security with previously owned foreign currency will generally recognize gain or loss in an
amount equal to the difference, if any, between such holders tax basis in such foreign currency and the U.S. dollar fair market value of such debt security on the date of purchase. Any such gain or loss generally will be ordinary income or
loss and will not be treated as interest income or expense. The conversion of U.S. dollars to foreign currency and the immediate use of such currency to purchase a debt security generally will not result in any exchange gain or loss for a United
States holder.
Original Issue Discount
In General.
Debt securities with a term greater than one year may be issued with OID for United States federal income tax purposes. Such
debt securities are called OID debt securities in this prospectus. United States holders generally must accrue OID in gross income over the term of the OID debt securities on a constant yield basis, regardless of their regular method of tax
accounting. As a result, United States holders generally will recognize taxable income in respect of an OID debt security in advance of the receipt of cash attributable to such income.
OID generally will arise if the stated redemption price at maturity of the debt security exceeds its issue price by at least a de minimis
amount of 0.25% of the debt securitys stated redemption price at maturity multiplied by the number of complete years to maturity. OID may also arise if a debt security has particular interest payment characteristics, such as interest holidays,
interest payable in additional securities or stepped interest. For this purpose, the issue price of a debt security is the first price at which a substantial amount of debt securities is sold for cash, other than to bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters, placement agents or wholesalers. The stated redemption price at maturity of a debt security is the sum of all payments due under the debt security, other than payments of qualified
stated interest. The term qualified stated interest generally means stated interest that is unconditionally payable in cash or property, other than debt instruments of the issuer, at least annually during the entire term of the OID debt security at
a single fixed rate of interest or, under particular conditions, based on one or more interest indices.
For each taxable year of a United
States holder, the amount of OID that must be included in gross income in respect of an OID debt security will be the sum of the daily portions of OID for each day during such taxable year or any portion of such taxable year in which such a United
States holder held the OID debt security. Such daily portions are determined by allocating to each day in an accrual period a pro rata portion of the OID allocable to that accrual period. Accrual periods may be of any length and may vary in length
over the term of an OID debt security. However, accrual periods may not be longer than one year and each scheduled payment of principal or interest must occur on the first day or the final day of a period.
The amount of OID allocable to any accrual period generally will equal (i) the product of the OID debt securitys adjusted issue
price at the beginning of such accrual period multiplied by its yield to maturity (as adjusted to take into account the length of such accrual period), less (ii) the amount, if any, of qualified stated interest allocable to that accrual period.
The adjusted issue price of an OID debt security at the beginning of any accrual period will equal the issue price of the OID debt security, as defined above, (i) increased by previously accrued OID from prior accrual periods, and
(ii) reduced by any payment made on such debt security, other than payments of qualified stated interest, on or before the first day of the accrual period. The yield to maturity of an OID debt security is the discount rate (appropriately
adjusted to reflect the length of accrual periods) that causes the present value on the issue date of all payments on the OID debt security to equal the issue price. In the case of
39
an OID debt security that is a floating rate debt security, both the yield to maturity and the qualified stated interest will be determined for these purposes as though the OID debt security will
bear interest in all periods at a fixed rate generally equal to the value, as of the issue date, of the floating interest rate on the OID debt security or, in the case of some floating rate debt securities, the rate that reflects the yield that is
reasonably expected for the OID debt security. (Additional rules may apply if interest on a floating rate debt security is based on more than one interest index.)
Foreign Currency Debt Securities.
In the case of an OID debt security that is also a foreign currency debt
security, a United States holder should determine the U.S. dollar amount includible in income as OID for each accrual period by
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calculating the amount of OID allocable to each accrual period in the specified currency using the constant-yield method described above; and
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translating the amount of the specified currency so derived at the average exchange rate in effect during that accrual period, or portion of such accrual period within a United States holders taxable year, or, at
the United States holders election (as described above under Payments of Interest), at the spot rate of exchange on (i) the last day of the accrual period, or the last day of the taxable year within such accrual period if the
accrual period spans more than one taxable year, or (ii) on the date of receipt, if such date is within five business days of the last day of the accrual period.
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All payments on an OID debt security, other than payments of qualified stated interest, will generally be viewed first as payments of
previously accrued OID, to the extent thereof, with payments attributed first to the earliest accrued OID, and then as payments of principal. Upon the receipt of an amount attributable to OID, whether in connection with a payment of an amount that
is not qualified stated interest or the disposition of the OID debt security, a United States holder will recognize ordinary income or loss measured by the difference between (i) the amount received and (ii) the amount accrued. The amount
received will be translated into U.S. dollars at the spot rate of exchange on the date of receipt or on the date of disposition of the OID debt security. The amount accrued will be determined by using the spot rate of exchange applicable to such
previous accrual.
Acquisition Premium.
A United States holder that purchases an OID debt security for an
amount less than or equal to the remaining redemption amount, but in excess of the OID debt securitys adjusted issue price, generally is permitted to reduce the daily portions of OID by a fraction. The numerator of such fraction is the excess
of the United States holders adjusted tax basis in the OID debt security immediately after its purchase over the OID debt securitys adjusted issue price. The denominator of such fraction is the excess of the remaining redemption amount
over the OID debt securitys adjusted issue price. For purposes of this prospectus,
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remaining redemption amount means the sum of all amounts payable on an OID debt security after the purchase date other than payments of qualified stated interest.
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The debt securities may have special redemption, repayment or interest rate reset features, as indicated in the applicable supplement. Debt
securities containing such features, in particular OID debt securities, may be subject to special rules that differ from the general rules discussed above. Accordingly, purchasers of debt securities with such features should carefully examine the
applicable supplement, and should consult their tax advisors relating to such debt securities.
Market Discount
If a United States holder purchases a debt security, other than a short-term debt security, for an amount that is less than the debt
securitys stated redemption price at maturity or, in the case of an OID debt security, for an amount that is less than the debt securitys revised issue price, i.e., the debt securitys issue price increased by the amount of accrued
OID, the debt security will be considered to have market discount. The market discount rules are subject to a de minimis rule similar to the rule relating to de minimis OID, described above (in the second
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paragraph under Original Issue Discount). Any gain recognized by the United States holder on the disposition of debt securities having market discount generally will be treated as
ordinary income to the extent of the market discount that accrued on the debt security while held by such United States holder.
Alternatively, the United States holder may elect to include market discount in income currently over the life of the debt security. Such an
election will apply to market discount debt securities acquired by the United States holder on or after the first day of the first taxable year to which such election applies and is revocable only with the consent of the IRS. Market discount will
accrue on a straight-line basis unless the United States holder elects to accrue the market discount on a constant-yield method. Such an election will apply to the debt security to which it is made and is irrevocable. Unless the United States holder
elects to include market discount in income on a current basis, as described above, the United States holder could be required to defer the deduction of a portion of the interest paid on any indebtedness incurred or maintained to purchase or carry
the debt security.
Market discount on a foreign currency debt security will be accrued by a United States holder in the specified
currency. The amount includible in income by a United States holder in respect of such accrued market discount will be the U.S. dollar value of the amount accrued. This is generally calculated at the spot rate of exchange on the date that the debt
security is disposed of by the United States holder. Any accrued market discount on a foreign currency debt security that is currently includible in income will be translated into U.S. dollars at the average exchange rate for the accrual period or
portion of such accrual period within the United States holders taxable year.
Short-Term Debt Securities
The rules set forth above also will generally apply to debt securities having maturities of not more than one year from the date of issuance.
Those debt securities are called short-term debt securities in this prospectus. Modifications apply to these general rules.
First, none
of the interest on a short-term debt security is treated as qualified stated interest but instead is treated as part of the short-term debt securitys stated redemption price at maturity, thereby giving rise to OID. Thus, all short-term debt
securities will be OID debt securities. OID will be treated as accruing on a short-term debt security ratably, or at the election of a United States holder, under a constant yield method.
Second, a United States holder of a short-term debt security that uses the cash method of tax accounting will generally not be required to
include OID in respect of the short-term debt security in income on a current basis. Such a United States holder may not be allowed to deduct all of the interest paid or accrued on any indebtedness incurred or maintained to purchase or carry such
debt security until the maturity of the debt security or its earlier disposition in a taxable transaction. In addition, such a United States holder will be required to treat any gain realized on a disposition of the debt security as ordinary income
to the extent of the holders accrued OID on the debt security, and short-term capital gain to the extent the gain exceeds accrued OID. A United States holder of a short-term debt security using the cash method of tax accounting may, however,
elect to accrue OID into income on a current basis. In such case, the limitation on the deductibility of interest described above will not apply. A United States holder using the accrual method of tax accounting and some cash method holders
generally will be required to include OID on a short-term debt security in income on a current basis.
Third, any United States holder of
a short-term debt security, whether using the cash or accrual method of tax accounting, can elect to accrue the acquisition discount, if any, on the debt security on a current basis. If such an election is made, the OID rules will not apply to the
debt security. Acquisition discount is the excess of the debt securitys stated redemption price at maturity over the holders purchase price for the debt security. Acquisition discount will be treated as accruing ratably or, at the
election of the United States holder, under a constant-yield method based on daily compounding.
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As described above, the debt securities may have special redemption features. These features may
affect the determination of whether a debt security has a maturity of not more than one year and thus is a short-term debt security. Purchasers of debt securities with such features should carefully examine the applicable supplement, and should
consult their tax advisors in relation to such features.
Debt Securities Purchased at a Premium
A United States holder that purchases a debt security for an amount in excess of the remaining redemption amount will be considered to have
purchased the debt security at a premium and the OID rules will not apply to such holder. Such holder may elect to amortize such premium, as an offset to interest income, using a constant-yield method, over the remaining term of the debt security.
Such election, once made, generally applies to all debt instruments held by the United States holder at the beginning of the first taxable year to which the election applies and to all debt instruments subsequently acquired by the United States
holder. Such election may be revoked only with the consent of the IRS. A United States holder that elects to amortize such premium must reduce its tax basis in a debt security by the amount of the premium amortized during its holding period. For a
United States holder that does not elect to amortize bond premium, the amount of such premium will be included in the United States holders tax basis when the debt security matures or is disposed of by the United States holder. Therefore, a
United States holder that does not elect to amortize premium and holds the debt security to maturity will generally be required to treat the premium as capital loss when the debt security matures.
Amortizable bond premium in respect of a foreign currency debt security will be computed in the specified currency and will reduce interest
income in the specified currency. At the time amortized bond premium offsets interest income, exchange gain or loss, which will be taxable as ordinary income or loss, will be realized on the amortized bond premium on such debt security based on the
difference between (i) the spot rate of exchange on the date or dates such premium is recovered through interest payments on the debt security and (ii) the spot rate of exchange on the date on which the United States holder acquired the
debt security. See Original Issue Discount Acquisition Premium above for a discussion of the treatment of a debt security purchased for an amount less than or equal to the remaining redemption amount but in excess of the debt
securitys adjusted issue price.
Information Reporting and Backup Withholding
Information returns may be required to be filed with the IRS relating to payments made to particular United States holders of debt securities.
In addition, United States holders may be subject to a backup withholding tax on such payments if they do not provide their taxpayer identification numbers in the manner required, fail to certify that they are not subject to backup withholding tax,
or otherwise fail to comply with applicable backup withholding tax rules. United States holders may also be subject to information reporting and backup withholding tax with respect to the proceeds from a disposition of the debt securities. Any
amounts withheld under the backup withholding rules will be allowed as a credit against the United States holders United States federal income tax liability provided the required information is timely furnished to the IRS.
Non-United States Holders
Subject to the
discussion below under FATCA Legislation May Impose Withholding Tax on Debt Securities Held by or through Foreign Entities, under current United States federal income tax law:
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withholding of United States federal income tax will not apply to payments of interest on a debt security to a non-United States holder, provided that,
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(1)
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the holder does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of Citigroup entitled to vote and is not a controlled foreign corporation related to Citigroup
through stock ownership;
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(2)
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the beneficial owner provides its name and address and certifies (generally on IRS Form W-8BEN), under penalties of perjury, that it is a non-United States holder in compliance with applicable requirements; and
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(3)
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neither Citigroup nor its paying agent has actual knowledge or reason to know that the beneficial owner of the debt security is a United States holder.
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withholding of United States federal income tax will generally not apply to any gain realized on the disposition of a debt security.
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Despite the above, if a non-United States holder is engaged in a trade or business in the United States (and, if certain tax treaties apply,
the non-United States holder maintains a permanent establishment within the United States) and the interest on the debt securities is effectively connected with the conduct of that trade or business (and, if certain tax treaties apply, attributable
to that permanent establishment), such non-United States holder will be subject to United States federal income tax on the interest on a net income basis in the same manner as if such non-United States holder were a United States holder. In
addition, a non-United States holder that is a foreign corporation engaged in a trade or business in the United States may be subject to a 30% (or, such lower rates if certain tax treaties apply) branch profits tax. A non-United States holder
described in this paragraph can obtain an exemption from the withholding tax described above by providing a properly completed IRS Form W-8ECI signed under penalties of perjury, but only if neither Citigroup nor its paying agent has actual knowledge
or reason to know that the holder is not eligible for the exemption.
Any gain realized on the disposition of a debt security generally
will not be subject to United States federal income tax unless:
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that gain is effectively connected with the non-United States holders conduct of a trade or business in the United States (and, if certain tax treaties apply, is attributable to a permanent establishment
maintained by the non-United States holder within the United States); or
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the non-United States holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met.
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In general, backup withholding and information reporting will not apply to a payment of interest on a debt security to a non-United States
holder, or to proceeds from the disposition of a debt security by a non-United States holder, in each case, if the holder certifies under penalties of perjury that it is a non-United States holder and neither Citigroup nor its paying agent has
actual knowledge, or reason to know, to the contrary. Any amounts withheld under the backup withholding rules will be refunded or credited against the non-United States holders United States federal income tax liability provided the required
information is timely furnished to the IRS. In certain circumstances, if a debt security is not held through a qualified intermediary, the amount of payments made on such debt security, the name and address of the beneficial owner and the amount, if
any, of tax withheld may be reported to the IRS.
FATCA Legislation May Impose Withholding Tax on Debt Securities Held by or through Foreign Entities
Under legislation enacted in 2010 and existing guidance issued thereunder (collectively known as FATCA), a United States
holder or non-United States holder of a debt security may be subject to withholding of United States federal income tax at the current rate of 30% on payments of interest after June 30, 2014, and on the gross proceeds from the disposition of a
debt security after December 31, 2016, if (i) the holder is, or holds the debt security through, a foreign financial institution, unless such foreign financial institution has entered into an agreement with the United States
government to report, on an annual basis, certain information regarding accounts with or interests in the institution held by certain United States persons and by certain non-United States entities that are wholly or partially owned by United States
persons, and the holder has provided any required information to the foreign financial institution or (ii) the holder is a non-financial foreign entity, unless the holder has provided any required information with respect to its
direct and indirect United States owners. An
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intergovernmental agreement between the United States and an applicable foreign country, or future Treasury regulations or other guidance, may modify these requirements. Under current law, FATCA
applies to debt securities issued after June 30, 2014. An applicable pricing supplement may provide additional tax considerations regarding the application of FATCA to the debt securities as further guidance may become available. Prospective
holders are encouraged to consult their tax advisors regarding the possible implications of FATCA on an investment in debt securities.
CURRENCY CONVERSIONS AND FOREIGN EXCHANGE RISKS AFFECTING DEBT SECURITIES DENOMINATED IN A FOREIGN CURRENCY
Currency Conversions
Unless otherwise specified in connection with a particular offering of debt securities, debt securities denominated in a foreign currency which
are offered and sold in the United States (DTC debt securities) will be represented by beneficial interests in fully registered permanent global debt securities (DTC global debt securities) which will be deposited with
Citibank, N.A. London office, as custodian for, and registered in the name of Cede & Co., as nominee for, DTC. While interests in the DTC debt securities are held through the DTC global debt securities, all payments in respect of such debt
securities will be made in U.S. dollars, except as otherwise provided in this section, in Description of Debt Securities Book-Entry Procedures and Settlement above or in the applicable supplement.
As determined by the exchange agent under the terms of the fiscal agency agreement, in accordance with reasonable market practice, the amount
of U.S. dollars payable in respect of any particular payment under the DTC debt securities will be equal to the amount of the relevant foreign currency/ U.S.$ rate of exchange prevailing as of 11:00 a.m. (London time) on the day which is two
Business Days prior to the relevant payment date, less any costs incurred by the exchange agent for such conversion (to be shared pro rata among the holders of DTC debt securities accepting U.S. dollar payments in the proportion of their respective
holdings), all in accordance with the fiscal agency agreement. If an exchange rate bid quotation is not available, the exchange agent shall obtain a bid quotation from a leading foreign exchange bank in London selected by the exchange agent for such
purpose after consultation with Citigroup. If no bid quotation from a leading foreign exchange bank is available, payment will be in the relevant foreign currency to the account or accounts specified by DTC to the exchange agent. For purposes of
this paragraph, a Business Day is a day on which commercial banks and foreign exchange markets settle payments in each of New York City and London.
Notwithstanding the above and unless otherwise specified in connection with a particular offering of debt securities, the holder of a
beneficial interest in the DTC debt securities may elect to receive payments under such DTC debt securities in the relevant foreign currency by notifying the DTC participant through which its debt securities are held on or prior to the applicable
record date of (1) such investors election to receive all or a portion of such payment in the relevant foreign currency and (2) wire instructions to a relevant foreign currency account outside the United States. DTC must be notified
of such election and wire transfer instructions on or prior to the third New York business day after such record date for any payment of interest and on or prior to the twelfth day prior to the payment of principal. DTC will notify the fiscal agent
and the paying agent of such election and wire transfer instructions on or prior to 5:00 p.m. New York City time on the fifth New York business day after such record date for any payment of interest and on or prior to 5:00 p.m. New York City time on
the tenth day prior to the payment of principal. For purposes of this paragraph, New York business day means any day other than a Saturday or Sunday or a day on which banking institutions in New York City are authorized or required by
law or executive order to close.
If complete instructions are forwarded to DTC through DTC participants and by DTC to the fiscal agent
and the paying agent on or prior to such dates, such holder will receive payment in the relevant foreign currency outside DTC; otherwise, only U.S. dollar payments will be made by the fiscal agent to DTC, unless otherwise
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specified in connection with a particular offering of debt securities. All costs of such payment by wire transfer will be borne by holders of beneficial interests receiving such payments by
deduction from such payments.
Although DTC has agreed to the foregoing procedures, it is under no obligation to perform or continue to
perform these procedures, and these procedures may be modified or discontinued at any time.
Holders of the debt securities will be
subject to foreign exchange risks as to payments of principal and interest that may have important economic and tax consequences to them. For further information as to such consequences, see Foreign Exchange Risks below.
Judgments in a Foreign Currency
The debt
securities will be governed by, and construed in accordance with, the laws of New York State. Courts in the United States customarily have not rendered judgments for money damages denominated in any currency other than the U.S. dollar. A 1987
amendment to the Judiciary Law of New York State provides, however, that an action based upon an obligation denominated in a currency other than U.S. dollars will be rendered in the foreign currency of the underlying obligation. Any judgment awarded
in such an action will be converted into U.S. dollars at the rate of exchange prevailing on the date of the entry of the judgment or decree.
Foreign
Exchange Risks
An investment in debt securities which are denominated in, and all payments in respect of which are to be made in, a
currency other than the currency of the country in which the purchaser is a resident or the currency in which the purchaser conducts its business or activities (the home currency) entails significant risks that are not associated with a
similar investment in a security denominated in the home currency. Such risks include, without limitation, the possibility of significant changes in the rates of exchange between the home currency and the relevant foreign currency and the
possibility of the imposition or modification of foreign exchange controls with respect to the relevant foreign currency. Such risks generally depend on economic and political events over which Citigroup has no control. In recent years, rates of
exchange for foreign currencies have been volatile and such volatility may be expected to continue in the future. Fluctuations in any particular exchange rate that have occurred in the past are not necessarily indicative, however, of fluctuations in
such rate that may occur during the term of the debt securities. Depreciation of the relevant foreign currency against the relevant home currency could result in a decrease in the effective yield of such relevant foreign denominated debt security
below its coupon rate and, in certain circumstances, could result in a loss to the investor on a home currency basis.
This description of
foreign currency risks does not describe all the risks of an investment in debt securities denominated in a currency other than the home currency. Prospective investors should consult with their financial and legal advisors as to the risks involved
in an investment in a particular offering of debt securities.
DESCRIPTION OF CAPITAL STOCK
General
As of the date of this
prospectus, Citigroups authorized capital stock consists of 6 billion shares of common stock and 30 million shares of preferred stock. The following briefly summarizes the material terms of Citigroups common stock and outstanding
preferred stock. You should read the more detailed provisions of Citigroups certificate of incorporation and the certificate of designation relating to a series of preferred stock for provisions that may be important to you.
Common Stock
As of September 30,
2013, Citigroup had outstanding approximately 3.033 billion shares of its common stock. Each holder of common stock is entitled to one vote per share for the election of directors and for all other matters to be voted on by Citigroups
stockholders. Except as otherwise provided by law, the holders of shares of common stock vote as one class. Holders of common stock may not cumulate their votes in the election of directors, and are entitled to share equally in the dividends that
may be declared by the board of directors, but only after payment of dividends required to be paid on outstanding shares of preferred stock.
Upon voluntary or involuntary liquidation, dissolution or winding up of Citigroup, the holders of the common stock share ratably in the assets
remaining after payments to creditors and provision for the preference of any preferred stock. There are no preemptive or other subscription rights, conversion rights or redemption or scheduled installment payment provisions relating to shares of
common stock. All of the outstanding shares of common stock are fully paid and nonassessable. The transfer agent and registrar for the common stock is Computershare Inc. and Computershare Trust Company, N.A. The common stock is listed on the NYSE
under the symbol C.
Preferred Stock
The general terms of Citigroups preferred stock are described below under Description of Preferred Stock.
As of the date of this prospectus, Citigroup had outstanding the following series of preferred stock with the following terms:
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Title of Series
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Number of
Shares
Outstanding
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Dividend
Rate
Per Year
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Redemption
Price Per
Share ($)
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Date Next
Redeemable by
Citigroup
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8.125% Non-Cumulative Preferred Stock, Series AA
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3,870
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8.125
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%
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25,000
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February 15, 2018
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8.40% Fixed Rate/Floating Rate Non-Cumulative Preferred Stock, Series E
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4,850
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8.400
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%
(1)
|
|
|
25,000
|
|
|
April 30, 2018
|
5.950% Fixed Rate/Floating Rate Noncumulative Preferred Stock, Series A
|
|
|
60,000
|
|
|
|
5.950
|
%
(2)
|
|
|
25,000
|
|
|
January 30, 2023
|
5.90% Fixed Rate/Floating Rate Noncumulative Preferred Stock, Series B
|
|
|
30,000
|
|
|
|
5.900
|
%
(3)
|
|
|
25,000
|
|
|
February 15, 2023
|
5.80% Noncumulative Preferred Stock, Series C
|
|
|
23,000
|
|
|
|
5.800
|
%
|
|
|
25,000
|
|
|
April 22, 2018
|
5.350% Fixed Rate/Floating Rate Noncumulative Preferred Stock, Series D
|
|
|
50,000
|
|
|
|
5.350
|
%
(4)
|
|
|
25,000
|
|
|
May 15, 2023
|
7.125% Fixed Rate/Floating Rate Noncumulative Preferred Stock, Series J
|
|
|
38,000
|
|
|
|
7.125
|
%
(5)
|
|
|
25,000
|
|
|
September 30, 2023
|
6.875% Fixed Rate/Floating Rate Noncumulative Preferred Stock, Series K
|
|
|
59,800
|
|
|
|
6.875
|
%
(6)
|
|
|
25,000
|
|
|
November 15, 2023
|
(1)
|
Dividends payable at the fixed rate until April 30, 2018, and thereafter at a rate equal to the greater of (a) a floating rate equal to three-month LIBOR plus 4.0285% and (b) 7.7575%.
|
(2)
|
Dividends payable at the fixed rate until January 30, 2023, and thereafter at a rate equal to a floating rate equal to three-month LIBOR plus 4.068%.
|
50
(3)
|
Dividends payable at the fixed rate until February 15, 2023, and thereafter at a rate equal to a floating rate equal to three-month LIBOR plus 4.23%.
|
(4)
|
Dividends payable at the fixed rate until May 15, 2023, and thereafter at a rate equal to a floating rate equal to three-month LIBOR plus 3.466%.
|
(5)
|
Dividends payable at the fixed rate until September 30, 2023, and thereafter at a rate equal to a floating rate equal to three-month LIBOR plus 4.040%.
|
(6)
|
Dividends payable at the fixed rate until November 15, 2023, and thereafter at a rate equal to a floating rate equal to three-month LIBOR plus 4.130%.
|
The following summary of each series of Citigroups preferred stock outstanding on the date hereof is qualified in its entirety by
reference to the description of those securities contained in the Restated Certificate of Incorporation of Citigroup and the applicable certificate of designations for each series.
Series AA Preferred Stock
Preferential Rights.
The Series AA Preferred Stock ranks senior to Citigroup common stock and ranks
equally with each other series of Citigroup preferred stock outstanding on the date hereof as to dividends and distributions upon the liquidation, dissolution or winding up of Citigroup. The Series AA Preferred Stock is not convertible into or
exchangeable for any shares of common stock or any other class of Citigroup capital stock. Holders of the Series AA Preferred Stock do not have any preemptive rights. Citigroup may issue stock with preferences equal with or junior to the Series AA
Preferred Stock without the consent of the holders of the Series AA Preferred Stock.
Dividends
.
Holders of the Series AA Preferred Stock are entitled to receive cash dividends when
and as declared by the board of directors of Citigroup or a duly authorized committee of the board out of assets legally available for payment, at an annual dividend rate per share of 8.125% on the liquidation preference of $25,000 per share.
Dividends on the Series AA Preferred Stock are noncumulative and are payable quarterly in arrears. As long as shares of Series AA Preferred Stock remain outstanding, unless full noncumulative dividends for the dividend period then ending have been
paid or declared and set apart for payment on all outstanding shares of Series AA Preferred Stock, Citigroup cannot declare or pay any cash dividends on any shares of common stock or other capital stock ranking junior to the Series AA Preferred
Stock during the next succeeding dividend period.
Voting Rights.
Holders of Series AA Preferred
Stock do not have voting rights other than those described below and as specifically required by Delaware law.
If any
quarterly dividend payable on any Series AA Preferred Stock is in arrears for six or more quarterly dividend periods, whether or not for consecutive dividend periods, the holders of the Series AA Preferred Stock will be entitled to vote as a class,
together with the holders of all series of preferred stock ranking equally with the Series AA Preferred Stock as to payment of dividends and upon which voting rights equivalent to those granted to the holders of Series AA Preferred Stock have been
conferred and are exercisable, for the election of two Preferred Stock Directors. The voting rights of the holders of the Series AA Preferred Stock to elect the Preferred Stock Directors will continue until all dividend arrearages on the Series AA
Preferred Stock have been paid or declared and set apart for payment.
Also, without the consent of the holders of shares entitled to cast
at least two-thirds of the votes entitled to be cast by the holders of the total number of shares of Series AA Preferred Stock then outstanding, Citigroup may not create any class of stock having preference as to dividends or distributions of the
assets over the Series AA Preferred Stock, or alter or change the provisions of Citigroups certificate of incorporation (including any certificate of amendment or certificate of designations relating to the Series AA Preferred Stock) so as to
adversely affect the powers, preferences or rights of the holders of shares of Series AA Preferred Stock.
51
Distributions.
In the event of the voluntary or involuntary
liquidation, dissolution or winding up of Citigroup, holders of Series AA Preferred Stock are entitled to receive out of assets available for distribution to stockholders, before any distribution of assets may be made to or set aside to holders of
capital stock ranking junior to the Series AA Preferred Stock as to distributions, a liquidating distribution in an amount equal to $25,000 per share, plus any accrued and accumulated but unpaid dividends thereon to the date of final
distribution.
Redemption.
Citigroup may redeem the Series AA Preferred Stock, in whole
or in part, at its option, at any time or from time to time on any dividend payment date on or after February 15, 2018 as to which Citigroup has declared a dividend in full on the Series AA Preferred Stock, at the redemption price equal to
$25,000 per share.
Series E Preferred Stock
Preferential Rights.
The Series E Preferred Stock ranks senior to Citigroup common stock and ranks equally
with each other series of Citigroup preferred stock outstanding on the date hereof as to dividends and distributions upon the liquidation, dissolution or winding up of Citigroup. The Series E Preferred Stock is not convertible into or exchangeable
for any shares of common stock or any other class of Citigroup capital stock. Holders of the Series E Preferred Stock do not have any preemptive rights. Citigroup may issue stock with preferences equal with or junior to the Series E Preferred Stock
without the consent of the holders of the Series E Preferred Stock.
Dividends.
Holders
of the Series E Preferred Stock are entitled to receive cash dividends when and as declared by the board of directors of Citigroup or a duly authorized committee of the board out of assets legally available for payment, (i) from the date of
issuance to, but excluding, April 30, 2018, at an annual rate of 8.400% on the liquidation preference amount of $25,000 per share of Series E Preferred Stock, semi-annually in arrears, on April 30 and October 30 of each year,
beginning on October 30, 2008, and (ii) from and including April 30, 2018, at an annual rate equal to the greater of (a) three-month LIBOR plus 4.0285% and (b) 7.7575%, on the liquidation preference amount of $25,000 per
share of Series E Preferred Stock, quarterly in arrears, on January 30, April 30, July 30, and October 30 of each year, beginning on July 30, 2018. Dividends on the Series E Preferred Stock are noncumulative.
As long as shares of Series E Preferred Stock remain outstanding, unless full noncumulative dividends for the dividend period
then ending have been paid or declared and set apart for payment on all outstanding shares of Series E Preferred Stock, Citigroup cannot declare or pay any cash dividends on any shares of common stock or other capital stock ranking junior to the
Series E Preferred Stock during the next succeeding dividend period.
Voting Rights.
Holders of
Series E Preferred Stock do not have voting rights other than those described below and as specifically required by Delaware law.
If any
dividend payable on any Series E Preferred Stock is in arrears for at least three semi-annual or six quarterly dividend periods, whether or not for consecutive dividend periods, the holders of the Series E Preferred Stock will be entitled to vote as
a class, together with the holders of all series of preferred stock ranking equally with the Series E Preferred Stock as to payment of dividends and upon which voting rights equivalent to those granted to the holders of Series E Preferred Stock have
been conferred and are exercisable, for the election of two Preferred Stock Directors. The voting rights of the holders of the Series E Preferred Stock to elect the Preferred Stock Directors will continue until all dividend arrearageson the Series E
Preferred Stock have been paid or declared and set apart for payment.
Also, without the consent of the holders of shares entitled to cast
at least two-thirds of the votes entitled to be cast by the holders of the total number of shares of Series E Preferred Stock then outstanding, Citigroup may not create any class of stock having preference as to dividends or distributions of the
assets over the Series E Preferred Stock, or alter or change the provisions of Citigroups certificate of incorporation (including any certificate of amendment or certificate of designation relating to the Series E Preferred Stock) so as to
adversely affect the powers, preferences or rights of the holders of shares of Series E Preferred Stock.
52
Distributions.
In the event of the voluntary or involuntary
liquidation, dissolution or winding up of Citigroup, holders of Series E Preferred Stock are entitled to receive out of assets available for distribution to stockholders, before any distribution of assets may be made to or set aside to holders of
capital stock ranking junior to the Series E Preferred Stock as to distributions, a liquidating distribution in an amount equal to $25,000 per share, plus any accrued and accumulated but unpaid dividends thereon to the date of final
distribution.
Redemption.
Citigroup may redeem the Series E Preferred Stock, in whole
or in part, at its option, at any time or from time to time on any dividend payment date on or after April 30, 2018 as to which Citigroup has declared a dividend in full on the Series E Preferred Stock at a redemption price equal to $25,000 per
share.
Series A Preferred Stock
Preferential Rights.
The Series A Preferred Stock ranks senior to Citigroup common stock and ranks equally
with each other series of Citigroup preferred stock outstanding on the date hereof as to dividends and distributions upon the liquidation, dissolution or winding up of Citigroup. The Series A Preferred Stock is not convertible into or exchangeable
for any shares of common stock or any other class of Citigroup capital stock. Holders of the Series A Preferred Stock do not have any preemptive rights. Citigroup may issue stock with preferences equal with or junior to the Series A Preferred Stock
without the consent of the holders of the Series A Preferred Stock.
Dividends.
Holders
of the Series A Preferred Stock are entitled to receive cash dividends when and as declared by the board of directors of Citigroup or a duly authorized committee of the board out of assets legally available for payment, (i) from the date of
issuance to, but excluding, January 30, 2023, at an annual rate of 5.950% on the liquidation preference of $25,000 per share of Series A Preferred Stock, semi-annually in arrears, on January 30 and July 30 of each year, beginning on
July 30, 2013, and (ii) from and including January 30, 2023, at an annual rate equal to three-month LIBOR plus 4.068% on the liquidation preference amount of $25,000 per share of Series A Preferred Stock, quarterly in arrears, on
January 30, April 30, July 30, and October 30 of each year, beginning on April 30, 2023. Dividends on the Series A Preferred Stock are noncumulative.
As long as shares of Series A Preferred Stock remain outstanding, unless full noncumulative dividends for the dividend period then ending have
been paid or declared and set apart for payment on all outstanding shares of the Series A Preferred Stock, Citigroup cannot declare or pay any cash dividends on any shares of common stock or other capital stock ranking junior to the Series A
Preferred Stock during the next succeeding dividend period.
Voting Rights
. Holders of Series A
Preferred Stock do not have voting rights other than those described below and as specifically required by Delaware law.
If
any quarterly dividend payable on any Series A Preferred Stock is in arrears for six or more quarterly dividend periods, whether or not for consecutive dividend periods, the holders of the Series A Preferred Stock will be entitled to vote as a
class, together with the holders of all series of preferred stock ranking equally with the Series A Preferred Stock as to payment of dividends and upon which voting rights equivalent to those granted to the holders of Series A Preferred Stock have
been conferred and are exercisable, for the election of two Preferred Stock Directors. The voting rights of the holders of the Series A Preferred Stock to elect the Preferred Stock Directors will continue until all dividend arrearages on the Series
A Preferred Stock have been paid or declared and set apart for payment.
Also, without the consent of the holders of shares entitled to
cast at least two-thirds of the votes entitled to be cast by the holders of the total number of shares of Series A Preferred Stock then outstanding, Citigroup may not create any class of stock having preference as to dividends or distributions of
the assets over the Series A Preferred Stock, or alter or change the provisions of Citigroups certificate of incorporation (including any certificate of amendment or certificate of designations relating to the Series A Preferred Stock) so as
to adversely affect the powers, preferences or rights of the holders of shares of Series A Preferred Stock.
53
Distributions
. In the event of the voluntary or involuntary
liquidation, dissolution or winding up of Citigroup, holders of Series A Preferred Stock are entitled to receive out of assets available for distribution to stockholders, before any distribution of assets may be made to or set aside to holders of
capital stock ranking junior to the Series A Preferred Stock as to distributions, a liquidating distribution in an amount equal to $25,000 per share, plus any accrued and accumulated but unpaid dividends thereon to the date of final
distribution.
Redemption.
Citigroup may redeem the Series A Preferred Stock,
(i) in whole or in part, at its option, at any time or from time to time on any dividend payment date on or after January 30, 2023, or (ii) in whole but not in part at any time within 90 days following a Regulatory Capital Event (as
defined in the Series A Preferred Stock certificate of designations), in each case at the redemption price equal to $25,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends, to, but excluding, the
date fixed for redemption.
Series B Preferred Stock
Preferential Rights.
The Series B Preferred Stock ranks senior to Citigroup common stock and ranks equally
with each other series of Citigroup preferred stock outstanding on the date hereof as to dividends and distributions upon the liquidation, dissolution or winding up of Citigroup. The Series B Preferred Stock is not convertible into or exchangeable
for any shares of common stock or any other class of Citigroup capital stock. Holders of the Series B Preferred Stock do not have any preemptive rights. Citigroup may issue stock with preferences equal with or junior to the Series B Preferred Stock
without the consent of the holders of the Series B Preferred Stock.
Dividends. Holders of the Series
B Preferred Stock are entitled to receive cash dividends when and as declared by the board of directors of Citigroup or a duly authorized committee of the board out of assets legally available for payment, (i) from the date of issuance to, but
excluding February 15, 2023, at an annual rate of 5.90% on the liquidation preference amount of $25,000 per share of Series B Preferred Stock, semi-annually in arrears, on February 15 and August 15 of each year, beginning on
August 15, 2013, and (ii) from, and including, February 15, 2023, at an annual rate equal to three-month LIBOR plus 4.23% on the liquidation preference amount of $25,000 per share of Series B Preferred Stock, quarterly in arrears, on
February 15, May 15, August 15, and November 15 of each year, beginning on May 15, 2023. Dividends on the Series B Preferred Stock are noncumulative.
As long as shares of Series B Preferred Stock remain outstanding, unless full noncumulative dividends for the dividend period then ending have
been paid or declared and set apart for payment on all outstanding shares of the Series B Preferred Stock, Citigroup cannot declare or pay any cash dividends on any shares of common stock or other capital stock ranking junior to the Series B
Preferred Stock during the next succeeding dividend period.
Voting Rights
. Holders of Series B
Preferred Stock do not have voting rights other than those described below and as specifically required by Delaware law.
If
any quarterly dividend payable on any Series B Preferred Stock is in arrears for six or more quarterly dividend periods, whether or not for consecutive dividend periods, the holders of the Series B Preferred Stock will be entitled to vote as a
class, together with the holders of all series of preferred stock ranking equally with the Series B Preferred Stock as to payment of dividends and upon which voting rights equivalent to those granted to the holders of Series B Preferred Stock have
been conferred and are exercisable, for the election of two Preferred Stock Directors. The voting rights of the holders of the Series B Preferred Stock to elect the Preferred Stock Directors will continue until all dividend arrearages on the Series
B Preferred Stock have been paid or declared and set apart for payment.
Also, without the consent of the holders of shares entitled to
cast at least two-thirds of the votes entitled to be cast by the holders of the total number of shares of Series B Preferred Stock then outstanding, Citigroup may not create any class of stock having preference as to dividends or distributions of
the assets over the Series B
54
Preferred Stock, or alter or change the provisions of Citigroups certificate of incorporation (including any certificate of amendment or certificate of designations relating to the Series B
Preferred Stock) so as to adversely affect the powers, preferences or rights of the holders of shares of Series B Preferred Stock.
Distributions
.
In the event of the voluntary or involuntary liquidation, dissolution or
winding up of Citigroup, holders of Series B Preferred Stock are entitled to receive out of assets available for distribution to stockholders, before any distribution of assets may be made to or set aside to holders of capital stock ranking junior
to the Series B Preferred Stock as to distributions, a liquidating distribution in an amount equal to $25,000 per share, plus any accrued and accumulated but unpaid dividends thereon to the date of final distribution.
Redemption.
Citigroup may redeem the Series B Preferred Stock, (i) in whole or in part, at its
option, at any time or from time to time on any dividend payment date on or after February 15, 2023, or (ii) in whole but not in part at any time within 90 days following a Regulatory Capital Event (as defined in the Series B Preferred
Stock certificate of designations), in each case at the redemption price equal to $25,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends, to, but excluding, the date fixed for redemption.
Series C Preferred Stock
Preferential Rights.
The Series C Preferred Stock ranks senior to Citigroup common stock and ranks equally
with each other series of Citigroup preferred stock outstanding on the date hereof as to dividends and distributions upon the liquidation, dissolution or winding up of Citigroup. The Series C Preferred Stock is not convertible into or exchangeable
for any shares of common stock or any other class of Citigroup capital stock. Holders of the Series C Preferred Stock do not have any preemptive rights. Citigroup may issue stock with preferences equal with or junior to the Series C Preferred Stock
without the consent of the holders of the Series C Preferred Stock.
Dividends.
Holders
of the Series C Preferred Stock are entitled to receive cash dividends when and as declared by the board of directors of Citigroup or a duly authorized committee of the board out of assets legally available for payment, at an annual rate of 5.80% on
the liquidation preference amount of $25,000 per share quarterly in arrears on January 22, April 22, July 22 and October 22 of each year, beginning on July 22, 2013. Dividends on the Series C Preferred Stock are
noncumulative and are payable quarterly in arrears. As long as shares of Series C Preferred Stock remain outstanding, unless full noncumulative dividends for the dividend period then ending have been paid or declared and set apart for payment on all
outstanding shares of the Series C Preferred Stock, Citigroup cannot declare or pay any cash dividends on any shares of common stock or other capital stock ranking junior to the Series C Preferred Stock during the next succeeding dividend
period.
Voting Rights
. Holders of Series C Preferred Stock do not have voting rights
other than those described below and as specifically required by Delaware law.
If any quarterly dividend payable on any
Series C Preferred Stock is in arrears for six or more quarterly dividend periods, whether or not for consecutive dividend periods, the holders of the Series C Preferred Stock will be entitled to vote as a class, together with the holders of all
series of preferred stock ranking equally with the Series C Preferred Stock as to payment of dividends and upon which voting rights equivalent to those granted to the holders of Series C Preferred Stock have been conferred and are exercisable, for
the election of two Preferred Stock Directors. The voting rights of the holders of the Series C Preferred Stock to elect the Preferred Stock Directors will continue until all dividend arrearages on the Series C Preferred Stock have been paid or
declared and set apart for payment.
Also, without the consent of the holders of shares entitled to cast at least two-thirds of the votes
entitled to be cast by the holders of the total number of shares of Series C Preferred Stock then outstanding, Citigroup may not create any class of stock having preference as to dividends or distributions of the assets over the Series C
55
Preferred Stock, or alter or change the provisions of Citigroups certificate of incorporation (including any certificate of amendment or certificate of designations relating to the Series C
Preferred Stock) so as to adversely affect the powers, preferences or rights of the holders of shares of Series C Preferred Stock.
Distributions
. In the event of the voluntary or involuntary liquidation, dissolution or winding up of
Citigroup, holders of Series C Preferred Stock are entitled to receive out of assets available for distribution to stockholders, before any distribution of assets may be made to or set aside to holders of capital stock ranking junior to the Series C
Preferred Stock as to distributions, a liquidating distribution in an amount equal to $25,000 per share, plus any accrued and accumulated but unpaid dividends thereon to the date of final distribution.
Redemption.
Citigroup may redeem the Series C Preferred Stock, (i) in whole or in part, at its
option, at any time or from time to time, on any dividend payment date on or after April 22, 2018 or (ii) in whole but not in part at any time within 90 days following a Regulatory Capital Event (as defined in the Series C Preferred Stock
certificate of designations), in each case at the redemption price equal to $25,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends, to, but excluding, the date fixed for redemption.
Series D Preferred Stock
Preferential Rights.
The Series D Preferred Stock ranks senior to Citigroup common stock, ranks equally
with the Series AA Preferred Stock, the Series E Preferred Stock, the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and the Series J Preferred Stock, as to dividends and distributions upon the liquidation,
dissolution or winding up of Citigroup. The Series D Preferred Stock is not convertible into or exchangeable for any shares of common stock or any other class of Citigroup capital stock. Holders of the Series D Preferred Stock do not have any
preemptive rights. Citigroup may issue stock with preferences equal with or junior to the Series D Preferred Stock without the consent of the holders of the Series D Preferred Stock.
Dividends.
Holders of the Series D Preferred Stock are entitled to receive cash dividends when and as
declared by the board of directors of Citigroup or a duly authorized committee of the board out of assets legally available for payment, (i) from the date of issuance to, but excluding, May 15, 2023, at an annual rate of 5.350% on the
liquidation preference amount of $25,000 per share of Series D Preferred Stock, semi-annually in arrears, on May 15 and November 15 of each year, beginning on November 15, 2013, and (ii) from, and including, May 15, 2023, at
an annual rate equal to three-month LIBOR plus 3.466% on the liquidation preference amount of $25,000 per share of Series D Preferred Stock, quarterly in arrears, on February 15, May 15, August 15 and November 15 of
each year, beginning on August 15, 2023. Dividends on the Series D Preferred Stock are noncumulative.
As long as
shares of Series D Preferred Stock remain outstanding, unless full noncumulative dividends for the dividend period then ending have been paid or declared and set apart for payment on all outstanding shares of the Series D Preferred Stock, Citigroup
cannot declare or pay any cash dividends on any shares of common stock or other capital stock ranking junior to the Series D Preferred Stock during the next succeeding dividend period.
Voting Rights.
Holders of Series D Preferred stock do not have voting rights other than those described
below and as specifically required by Delaware law. If any quarterly dividend payable on any Series D Preferred Stock is in arrears for six or more quarterly dividend periods, whether or not for consecutive dividend periods, the holders of the
Series D Preferred Stock will be entitled to vote as a class, together with the holders of all series of preferred stock ranking equally with the Series D Preferred Stock as to payment of dividends and upon which voting rights equivalent to those
granted to the holders of Series D Preferred Stock have been conferred and are exercisable, for the election of two Preferred Stock Directors. The voting rights of the holders of the Series D Preferred Stock to elect the Preferred Stock Directors
will continue until all dividend arrearages on the Series D Preferred Stock have been paid or declared and set apart for payment.
Also, without the consent of the holders of shares entitled to cast at least two-thirds of the votes entitled to be cast by the holders of the
total number of shares of Series D Preferred Stock then outstanding. Citigroup may not create any class of stock having preference as to dividends or distributions of the assets over the Series D
56
Preferred Stock, or alter or change the provisions of Citigroups certificate of incorporation (including any certificate of amendment or certificate of designations relating to the Series D
Preferred Stock) so as to adversely affect the powers, preferences or rights of the holders of shares of Series D Preferred Stock.
Distribution.
In the event of the voluntary or involuntary liquidation, dissolution or winding up of
Citigroup, holders of Series D Preferred Stock are entitled to receive out of assets available for distribution to stockholders, before any distribution of assets may be made to or set aside to holders of capital stock ranking junior to the Series D
Preferred Stock as to distributions, a liquidating distribution in an amount equal to $25,000 per share, plus any accrued and accumulated but unpaid dividends thereon to the date of final distribution.
Redemption.
Citigroup may redeem the Series D Preferred Stock, (i) in whole or in part, at its
option, at any time or from time to time on any dividend payment date on or after May 15, 2023, or (ii) in whole but not in part at any time within 90 days following a Regulatory Capital Event (as defined in the Series D Preferred Stock
certificate of designations), in each case at the redemption price equal to $25,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends, to, but excluding, the date fixed for redemption.
Series J Preferred Stock
Preferential Rights.
The Series J Preferred Stock ranks senior to Citigroup common stock and ranks equally
with each other series of Citigroup preferred stock outstanding on the date hereof as to dividends and distributions upon the liquidation, dissolution or winding up of Citigroup. The Series J Preferred Stock is not convertible into or exchangeable
for any shares of common stock or any other class of Citigroup capital stock. Holders of the Series J Preferred Stock do not have any preemptive rights. Citigroup may issue stock with preferences equal with or junior to the Series J Preferred Stock
without the consent of the holders of the Series J Preferred Stock.
Dividends.
Holders
of the Series J Preferred Stock are entitled to receive cash dividends when and as declared by the board of directors of Citigroup or a duly authorized committee of the board out of assets legally available for payment, (i) from the date of issuance
to, but excluding September 30, 2023, at an annual rate of 7.125% on the liquidation preference amount of $25,000 per share quarterly in arrears on March 30, June 30, September 30 and December 30 of each year, beginning on
December 30, 2013, and (ii) from, and including, September 30, 2023, at an annual rate equal to three-month LIBOR plus 4.040% on the liquidation preference amount of $25,000 per share of Series J Preferred Stock, quarterly in arrears, on
March 30, June 30, September 30 and December 30 of each year, beginning on December 30, 2013. Dividends on the Series J Preferred Stock are noncumulative and are payable quarterly in arrears.
As long as shares of Series J Preferred Stock remain outstanding, unless full noncumulative dividends for the dividend period then ending have
been paid or declared and set apart for payment on all outstanding shares of the Series J Preferred Stock, Citigroup cannot declare or pay any cash dividends on any shares of common stock or other capital stock ranking junior to the Series J
Preferred Stock during the next succeeding dividend period.
Voting Rights.
Holders of Series J
Preferred Stock do not have voting rights other than those described below and as specifically required by Delaware law.
If
any quarterly dividend payable on any Series J Preferred Stock is in arrears for six or more quarterly dividend periods, whether or not for consecutive dividend periods, the holders of the Series J Preferred Stock will be entitled to vote as a
class, together with the holders of all series of preferred stock ranking equally with the Series J Preferred Stock as to payment of dividends and upon which voting rights equivalent to those granted to the holders of Series J Preferred Stock have
been conferred and are exercisable, for the election of two Preferred Stock Directors. The voting rights of the holders of the Series J Preferred Stock to elect the Preferred Stock Directors will continue until all dividend arrearages on the Series
J Preferred Stock have been paid or declared and set apart for payment.
57
Also, without the consent of the holders of shares entitled to cast at least two-thirds of the
votes entitled to be cast by the holders of the total number of shares of Series J Preferred Stock then outstanding, Citigroup may not create any class of stock having preference as to dividends or distributions of the assets over the Series J
Preferred Stock, or alter or change the provisions of Citigroups certificate of incorporation (including any certificate of amendment or certificate of designations relating to the Series J Preferred Stock) so as to adversely affect the
powers, preferences or rights of the holders of shares of Series J Preferred Stock.
Distributions.
In the event of the voluntary or involuntary liquidation, dissolution or winding up of
Citigroup, holders of Series J Preferred Stock are entitled to receive out of assets available for distribution to stockholders, before any distribution of assets may be made to or set aside to holders of capital stock ranking junior to the Series J
Preferred Stock as to distributions, a liquidating distribution in an amount equal to $25,000 per share, plus any accrued and accumulated but unpaid dividends thereon to the date of final distribution.
Redemption.
Citigroup may redeem the Series J Preferred Stock, (i) in whole or in part, at its
option, at any time or from time to time, on any dividend payment date on or after September 30, 2023 or (ii) in whole but not in part at any time within 90 days following a Regulatory Capital Event (as defined in the Series J Preferred
Stock certificate of designations), in each case at the redemption price equal to $25,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends, to, but excluding, the date fixed for redemption.
Series K Preferred Stock
Preferential Rights.
The Series K Preferred Stock ranks senior to Citigroup common stock and ranks equally
with each other series of Citigroup preferred stock outstanding on the date hereof as to dividends and distributions upon the liquidation, dissolution or winding up of Citigroup. The Series K Preferred Stock is not convertible into or exchangeable
for any shares of common stock or any other class of Citigroup capital stock. Holders of the Series K Preferred Stock do not have any preemptive rights. Citigroup may issue stock with preferences equal with or junior to the Series K Preferred Stock
without the consent of the holders of the Series K Preferred Stock.
Dividends.
Holders
of the Series K Preferred Stock are entitled to receive cash dividends when and as declared by the board of directors of Citigroup or a duly authorized committee of the board out of assets legally available for payment, (i) from the date of issuance
to, but excluding November 15, 2023, at an annual rate of 6.875% on the liquidation preference amount of $25,000 per share quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, beginning on
February 15, 2014 and (ii) from, and including, November 15, 2023, at an annual rate equal to three-month LIBOR plus 4.130% on the liquidation preference amount of $25,000 per share of Series K Preferred Stock, quarterly in arrears, on
February 15, May 15, August 15 and November 15 of each year, beginning on February 15, 2024. Dividends on the Series K Preferred Stock are noncumulative and are payable quarterly in arrears.
As long as shares of Series K Preferred Stock remain outstanding, unless full noncumulative dividends for the dividend period then ending have
been paid or declared and set apart for payment on all outstanding shares of the Series K Preferred Stock, Citigroup cannot declare or pay any cash dividends on any shares of common stock or other capital stock ranking junior to the Series K
Preferred Stock during the next succeeding dividend period.
Voting Rights.
Holders of Series K
Preferred Stock do not have voting rights other than those described below and as specifically required by Delaware law.
If
any quarterly dividend payable on any Series K Preferred Stock is in arrears for six or more quarterly dividend periods, whether or not for consecutive dividend periods, the holders of the Series K Preferred Stock will be entitled to vote as a
class, together with the holders of all series of preferred stock ranking equally with the Series K Preferred Stock as to payment of dividends and upon which voting rights equivalent to those granted
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to the holders of Series K Preferred Stock have been conferred and are exercisable, for the election of two Preferred Stock Directors. The voting rights of the holders of the Series K Preferred
Stock to elect the Preferred Stock Directors will continue until all dividend arrearages on the Series K Preferred Stock have been paid or declared and set apart for payment.
Also, without the consent of the holders of shares entitled to cast at least two-thirds of the votes entitled to be cast by the holders of the
total number of shares of Series K Preferred Stock then outstanding, Citigroup may not create any class of stock having preference as to dividends or distributions of the assets over the Series K Preferred Stock, or alter or change the provisions of
Citigroups certificate of incorporation (including any certificate of amendment or certificate of designations relating to the Series K Preferred Stock) so as to adversely affect the powers, preferences or rights of the holders of shares of
Series K Preferred Stock.
Distributions.
In the event of the voluntary or involuntary liquidation,
dissolution or winding up of Citigroup, holders of Series K Preferred Stock are entitled to receive out of assets available for distribution to stockholders, before any distribution of assets may be made to or set aside to holders of capital stock
ranking junior to the Series K Preferred Stock as to distributions, a liquidating distribution in an amount equal to $25,000 per share, plus any accrued and accumulated but unpaid dividends thereon to the date of final distribution.
Redemption.
Citigroup may redeem the Series K Preferred Stock, (i) in whole or in part,
at its option, at any time or from time to time, on any dividend payment date on or after November 15, 2023 or (ii) in whole but not in part at any time within 90 days following a Regulatory Capital Event (as defined in the Series K
Preferred Stock certificate of designations), in each case at the redemption price equal to $25,000 per share, plus any declared and unpaid dividends, without accumulation of any undeclared dividends, to, but excluding, the date fixed for
redemption.
Important Provisions of Citigroups Certificate of Incorporation and By-Laws
Business Combinations.
The certificate of incorporation generally requires the affirmative vote of at least a
majority of the votes cast affirmatively or negatively by the holders of the then outstanding shares of voting stock, voting together as a single class, to approve any merger or other business combination between Citigroup and any interested
stockholder, unless (1) the transaction has been approved by a majority of the continuing directors of Citigroup or (2) minimum price, form of consideration and procedural requirements are satisfied. An interested stockholder
as defined in the certificate of incorporation generally means a person who owns at least 25% of the voting stock of Citigroup or who is an affiliate or associate of Citigroup and owned at least 25% of the voting stock of Citigroup at any time
during the prior two years. A continuing director, as defined in the certificate of incorporation, generally means a director who is not related to an interested stockholder and held that position before an interested stockholder became
an interested stockholder.
Amendments to Certificate of Incorporation and By-Laws.
The affirmative
vote of the holders of at least a majority of the voting power of the shares entitled to vote is required to amend the provisions of the certificate of incorporation relating to the issuance of common stock. Amendments of provisions of the
certificate of incorporation relating to business combinations generally require a vote of the holders of at least a majority of the then outstanding shares of voting stock. The board of directors, at any meeting, may alter or amend the by-laws upon
the affirmative vote of at least 66 2/3% of the entire board of directors.
Vacancies.
Vacancies on
the board of directors resulting from an increase in the number of directors may be filled by a majority of the board of directors then in office, so long as a quorum is present. Any other vacancies on the board of directors may be filled by a
majority of the directors then in office, even if less than a quorum. Any director elected to fill a vacancy that did not result from increasing the size of the board of directors shall hold office for a term coinciding with the predecessor
directors remaining term.
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