sv3za
As filed with the Securities and Exchange Commission on
May 11, 2011
Registration No.
333-172554
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
Pre-Effective Amendment
No. 1 to
FORM S-3
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
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Citigroup Funding Inc.
Citigroup Inc.
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Delaware
Delaware
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42-1658283
52-1568099
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(Exact name of registrant as
specified in its charter)
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Numbers)
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399 Park Avenue
New York, NY 10043
(212) 559-1000
(Address, including zip code,
and telephone number, including
area code, of registrant’s
principal executive offices)
Julie Bell Lindsay, Esq.
General Counsel-Capital Markets and Corporate Reporting
Citigroup Inc.
399 Park Avenue
New York, NY 10043
(212) 559-1000
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
Copy to:
Jeffrey D. Karpf, Esq.
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, New York 10006
(212) 225-2000
Approximate date of commencement of proposed sale of the
securities to the public: At such time (from time to time)
after the effective date of this Registration Statement as
agreed upon by Citigroup Funding Inc. and the Underwriters in
light of market conditions.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following
box. o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box. x
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following
box. o
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed to
register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following
box. o
(continued on the following
page)
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated
filer” and “smaller reporting company” in
Rule 12b-2
of the Exchange Act.
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Large accelerated
filer þ
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Accelerated filer o
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Non-accelerated
filer o
(Do not check if a smaller
reporting company)
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Smaller reporting
company o
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CALCULATION
OF REGISTRATION FEE
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Proposed maximum
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Proposed maximum
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Amount of
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Title of each class of securities
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offering price
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aggregate
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registration
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to be registered
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Amount to be registered(1)(2)
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per unit(1)
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offering price(1)
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fee(3)
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Debt Securities of Citigroup Funding Inc.(4)
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Index Warrants of Citigroup Funding Inc.(4)
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Debt Security and Index Warrant Units of Citigroup Funding
Inc.(4)
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Guarantees of Debt Securities and Index Warrants of Citigroup
Funding Inc.(5)
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Total
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$25,000,000,000(6)
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$2,902,500(3)
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(1)
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The amount to be registered, proposed maximum offering price per
unit and proposed maximum aggregate offering price for each
class of securities will be determined from time to time by
Citigroup Funding Inc. in connection with the issuance by it of
the securities registered hereby and is not specified as to each
class of securities pursuant to General Instruction II.D of
Form S-3
under the Securities Act of 1933, as amended, and
Rule 457(o) under the Securities Act.
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(2)
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Includes an indeterminate number of securities registered hereby
that may be offered or sold by affiliates of the Registrants in
market-making transactions.
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(3) |
Calculated pursuant to Rule 457(o) under the Securities
Act. In accordance with Rule 457(q), no filing fee is
required for the registration of an indeterminate number of
securities registered hereby that may be offered or sold by
affiliates of the Registrants in market-making transactions.
Pursuant to Rule 457(n) under the Securities Act, no
separate registration fee is payable for the guarantees of any
other securities being registered concurrently on this
Registration Statement. A filing fee of $41,396.03 was
previously paid in connection with the initial filing of this
Registration Statement on March 2, 2011 registering
$356,554,950 aggregate principal amount of securities, and
$2,790,792.07 was previously paid in connection with
$24,037,830,036 aggregate principal amount of securities
previously registered under Registration Statement
No. 333-157386,
as described below. The filing fee of $70,311.90 being paid in
connection with the filing of this Registration Statement
relates solely to the registration of $605,615,014 aggregate
principal amount of securities not previously registered.
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(4)
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Subject to Note 6, there is being registered hereby an
indeterminate principal amount of Debt Securities and amount of
Index Warrants and Debt Security and Index Warrant Units, as may
be sold from time to time.
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(5)
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No separate consideration will be received for the Guarantees.
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(6) |
This Registration Statement relates to the registration of
$605,615,014 aggregate principal amount of securities being
registered hereby and an additional $24,394,384,986 aggregate
principal amount of securities previously registered. In no
event will the aggregate public offering price of all securities
issued from time to time pursuant to this Registration Statement
exceed $25,000,000,000 or the equivalent thereof in one or more
foreign currencies, foreign currency units or composite
currencies.
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Pursuant to Rule 429 under the Securities Act of 1933, as
amended, the Prospectus included in this Registration Statement
also relates to the Debt Securities, Index Warrants and Debt
Securities and Index Warrant Units of Citigroup Funding Inc. and
the related Guarantees of Citigroup Inc. previously registered
under Post-Effective Amendment No. 1 to the Registration
Statement on
Form S-3
(No. 333-157386)
on February 11, 2011. This Registration Statement
constitutes Post-Effective Amendment No. 2 to Registration
Statement
No. 333-157386.
Accordingly, the Prospectus relates to a total of up to
$25,000,000,000 of securities which have been registered under
this Registration Statement and Registration Statement
No. 333-157386.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a)
OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS
THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
INTRODUCTORY
NOTE
This Registration Statement contains:
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a base prospectus relating to debt securities, index warrants
and debt security and index warrant units of Citigroup Funding
Inc.; and
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a form of prospectus supplement to the base prospectus relating
to the offering by Citigroup Funding Inc. of its Medium-Term
Senior Notes, Series D, and Medium-Term Subordinated Notes,
Series E, in registered form.
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This
prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
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SUBJECT TO COMPLETION, DATED
MAY 11, 2011
PROSPECTUS
$25,000,000,000
Citigroup Funding
Inc.
Debt Securities
Index Warrants
Debt Security and Index Warrant
Units
Payments Due from Citigroup
Funding Inc.
Fully and Unconditionally
Guaranteed by
Citigroup Inc.
Citigroup Funding Inc. will provide the specific terms of these
securities in supplements to this prospectus. You should read
this prospectus, the accompanying prospectus supplement and any
applicable pricing supplement carefully before you invest.
Citigroup Funding may offer and sell these securities to or
through one or more underwriters, dealers and agents, including
Citigroup Global Markets Inc, a broker-dealer affiliate of
Citigroup Funding, or directly to purchasers, on a continuous or
delayed basis.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus or any accompanying
prospectus supplement or pricing supplement is truthful or
complete. Any representation to the contrary is a criminal
offense.
These securities are not deposits or savings accounts but are
unsecured obligations of Citigroup Funding Inc. These securities
are not insured by the Federal Deposit Insurance Corporation or
any other governmental agency or instrumentality.
,
2011
PROSPECTUS
SUMMARY
This summary provides a brief overview of the key aspects of
Citigroup Funding, Citigroup and all material terms of the
offered securities that are known as of the date of this
prospectus. For a more complete understanding of the terms of
the offered securities, before making your investment decision,
you should carefully read:
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this prospectus, which explains the general terms of the
securities that Citigroup Funding may offer;
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the accompanying prospectus supplement and any applicable
pricing supplement, which (1) explains the specific terms
of the securities being offered and (2) updates and changes
information in this prospectus; and
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the documents referred to in “Where You Can Find More
Information” on page 6 for information on Citigroup,
including its financial statements.
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Citigroup
Inc.
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, institutions and jurisdictions. Citigroup has
approximately 200 million customer accounts and does business in
more than 160 countries and jurisdictions. Citigroup’s
activities are conducted through the Regional 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, the Middle East and Africa regions. Citigroup’s
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.
The principal executive offices of Citigroup are located at
399 Park Avenue, New York, New York 10043, and
its telephone number is
(212) 559-1000.
Citigroup
Funding Inc.
Citigroup Funding is a wholly-owned subsidiary of Citigroup
whose business activities consist primarily of providing funds
to Citigroup and its subsidiaries for general corporate
purposes. Citigroup Funding was incorporated on January 14,
2005 under the laws of the State of Delaware as a corporation
with perpetual duration.
The principal executive offices of Citigroup Funding are located
at 399 Park Avenue, New York, New York 10043, and
its telephone number is
(212) 559-1000.
The
Securities Citigroup Funding May Offer
Citigroup Funding may use this prospectus to offer up to
$25,000,000,000 of:
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debt securities;
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index warrants; and
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debt security and index warrant units.
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A prospectus supplement and/or pricing supplement will describe
the specific types, amounts, prices and detailed terms of any of
these offered securities.
Debt
Securities
Debt securities are guaranteed unsecured general obligations of
Citigroup Funding in the form of senior or subordinated debt.
Senior debt includes Citigroup Funding’s notes, debt and
any other debt for money
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borrowed that is not subordinated. Subordinated debt, so
designated at the time it is issued, would not be entitled to
interest and principal payments if interest and principal
payments on the senior debt were not made.
The senior and subordinated debt will be issued under separate
indentures among Citigroup Funding, Citigroup, as guarantor, and
a trustee. Below are summaries of the general features of the
debt securities from these indentures. For a more detailed
description of these features, see “Description of Debt
Securities” below. You are also encouraged to read the
indentures, which are incorporated by reference in Citigroup
Funding’s registration statement of which this prospectus
forms a part, Citigroup’s most recent annual report on
Form 10-K,
Citigroup’s proxy statement on Schedule 14A filed
after the period covered by the
Form 10-K,
Citigroup’s quarterly reports on
Form 10-Q
filed after the
Form 10-K
and Citigroup’s current reports on
Form 8-K
filed after the period covered by the
Form 10-K.
You can receive copies of these documents by following the
directions on pages 6 and 7.
General
Indenture Provisions that Apply to Senior and Subordinated
Debt
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None of the indentures limits the amount of debt that Citigroup
Funding may issue or provides holders any protection should
there be a highly leveraged transaction involving Citigroup
Funding, although the senior debt indentures do limit
Citigroup’s ability to pledge the stock of any subsidiary
that meets the financial thresholds in the indentures. These
thresholds are described below under “Description of Debt
Securities.”
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The indentures allow for different types of debt securities,
including indexed securities, to be issued in series and
provides for the issuance of securities in book-entry,
certificated and, in limited circumstances, bearer form.
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The indentures allow Citigroup and Citigroup Funding to merge or
to consolidate with another company, or sell all or
substantially all of their respective assets to another company.
The successor company, if other than Citigroup or Citigroup
Funding, as applicable, would be required to assume
Citigroup’s and Citigroup Funding’s respective
obligations under the indentures. Unless the transaction
resulted in an event of default, Citigroup and Citigroup Funding
would be released from all liabilities and obligations under the
debt securities when the other company assumed their respective
obligations under the indentures.
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The indentures provide that holders of a majority of the
principal amount of the senior debt securities outstanding in
any series and holders of a majority of the total principal
amount of the subordinated debt securities outstanding in any
series may vote to change Citigroup’s and Citigroup
Funding’s obligations or your rights concerning those
securities. However, changes to the financial terms of that
security, including changes in the payment of principal or
interest on that security or the currency of payment, cannot be
made unless every holder of that security consents to the change.
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The indentures provide that Citigroup and Citigroup Funding may
terminate and be fully discharged from their respective
obligations under the debt securities or be released from their
respective obligations to comply with the limitations discussed
above at any time by depositing sufficient amounts of cash or
U.S. government securities with the trustee to pay
Citigroup Funding’s obligations under the particular
securities when due.
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The indentures govern the actions of the trustee with regard to
the debt securities, including when the trustee is required to
give notices to holders of the securities and when lost or
stolen debt securities may be replaced.
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Citigroup provides a full and unconditional guarantee of the
debt securities for the benefit of the holders, from time to
time, of such debt securities.
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Events
of Default
The events of default specified in the senior debt indentures
include:
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failure to pay principal or premium, if any, when due;
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failure to pay required interest for 30 days;
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failure to make a required scheduled installment payment to a
sinking fund for 30 days;
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failure to perform covenants for 90 days after notice;
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certain events of insolvency or bankruptcy, whether voluntary or
not; and
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any additional events as may be set forth in the applicable
prospectus supplement.
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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 certain events
of insolvency or bankruptcy, whether voluntary or not. 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
Funding in the subordinated indenture or any other default which
is not also an event of default.
Remedies
Senior Indenture: If there were an event of default, the trustee
or holders of 25% of the principal amount of senior debt
securities outstanding in a series could demand that the
principal be paid immediately. However, holders of a majority in
principal amount of the securities in that series may rescind
that acceleration of the senior debt securities.
Subordinated Indenture: If there were an event of default
involving certain events of insolvency or bankruptcy, the
trustee or holders of 25% of the principal amount of
subordinated debt securities outstanding in a series could
demand that the principal be paid immediately. However, holders
of a majority in principal amount of the securities in that
series may rescind that acceleration of the debt securities. The
occurrence of a default for any reason other than these events
of insolvency or bankruptcy will not give the trustee or such
holders the right to demand that the principal of the
subordinated debt securities be paid immediately.
Index
Warrants
Citigroup Funding may issue index warrants independently or
together with debt securities (including debt security and index
warrant units). Citigroup Funding will issue any series of index
warrants under a separate index warrant agreement among
Citigroup Funding, Citigroup, as guarantor, and a bank or trust
company. Citigroup will provide a full and unconditional
guarantee of the index warrants for the benefit of the holders,
from time to time, of such index warrants. You are encouraged to
read the index warrant agreement, which has been filed as an
exhibit to one of Citigroup’s current reports and
incorporated by reference in its registration statement of which
this prospectus forms a part. You can receive copies of these
documents by following the directions on pages 6 and 7.
Index warrants are securities that, when properly exercised by
the purchaser, entitle the purchaser to receive an amount in
cash or a number of securities that will be indexed to prices,
yields, or other specified measures or changes in an index or
differences between two or more indices.
The prospectus supplement and/or pricing supplement for a series
of index warrants will describe the formula for determining the
amount in cash or number of securities, if any, that Citigroup
Funding will pay you when you exercise an index warrant and will
contain information about the relevant underlying assets and
other specific terms of the index warrant.
Citigroup Funding will generally issue index warrants in
book-entry form, which means that they will not be evidenced by
physical certificates. Also, Citigroup Funding will generally
list index warrants for trading on a national securities
exchange, such as the New York Stock Exchange
(“NYSE”), NYSE Arca, the NASDAQ Global Market or the
Chicago Board Options Exchange.
The index warrant agreement for any series of index warrants
will provide that holders of a majority of the total amount of
the index warrants outstanding in any series may vote to change
their rights concerning those index warrants. However, changes
to fundamental terms such as the amount or manner of payment on
an
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index warrant or changes to the exercise times cannot be made
unless every holder affected consents to the change.
Any prospective purchasers of index warrants should be aware of
special United States federal income tax considerations
applicable to instruments such as the index warrants. The
prospectus supplement and/or pricing supplement relating to each
series of index warrants will describe the important tax
considerations.
Debt
Security and Index Warrant Units
Citigroup Funding may issue debt security and index warrant
units consisting of debt securities and index warrants. The
applicable prospectus supplement and/or pricing supplement will
describe the terms of any debt security and index warrant units.
Use of
Proceeds
Citigroup Funding will use the net proceeds it receives from any
offering of these securities for general corporate purposes,
primarily to fund Citigroup and its subsidiaries. Citigroup
Funding may also use a portion of the proceeds to refinance or
extend the maturity of existing debt obligations. Citigroup
Funding may use a portion of the proceeds from the sale of index
warrants and indexed notes to hedge its exposure to payments
that it may have to make on such index warrants and indexed
notes as described below under “Use of Proceeds and
Hedging.”
Plan of
Distribution
Citigroup Funding may sell the offered securities in any of the
following ways:
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to or through underwriters or dealers;
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by itself directly;
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through agents; or
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through a combination of any of these methods of sale.
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The prospectus supplement and/or pricing supplement will explain
the ways Citigroup Funding sells specific securities, including
the names of any underwriters and details of the pricing of the
securities, as well as the commissions, concessions or discounts
Citigroup Funding is granting the underwriters, dealers or
agents.
If Citigroup Funding uses underwriters in any sale, the
underwriters will buy the securities for their own account and
may resell the securities from time to time in one or more
transactions, at a fixed public offering price or at varying
prices determined at the time of sale. In connection with an
offering, underwriters and selling group members and their
affiliates may engage in transactions to stabilize, maintain or
otherwise affect the market price of the securities, in
accordance with applicable law.
Citigroup Funding expects that the underwriters for any offering
will include one or more of its broker-dealer affiliates,
including Citigroup Global Markets Inc. These broker-dealer
affiliates also expect to offer and sell previously issued
offered securities as part of their business, and may act as a
principal or agent in such transactions. Citigroup Funding or
any of its affiliates may use this prospectus and the related
prospectus supplements and pricing supplements in connection
with these activities. Offerings in which Citigroup
Funding’s broker-dealer affiliates participate will conform
with the requirements set forth in Rule 5121 of the
Financial Industry Regulatory Authority, Inc. addressing
conflicts of interest when distributing the securities of an
affiliate.
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Ratio of
Income to Fixed Charges and
Ratio of Income to Combined Fixed Charges
Including Preferred Stock Dividends
The following table shows (1) the consolidated ratio of
income to fixed charges and (2) the consolidated ratio of
income to combined fixed charges including preferred stock
dividends of Citigroup for each of the five most recent fiscal
years and the three months ended March 31, 2011.
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Three Months
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Ended March 31,
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Year Ended December 31,
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2011
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2010
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2009
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2008
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2007
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2006
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Ratio of income to fixed charges (excluding interest on deposits)
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2.07
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1.78
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NM
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NM
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1.01
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1.81
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Ratio of income to fixed charges (including interest on deposits)
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1.70
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1.52
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NM
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NM
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1.01
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1.51
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Ratio of income to combined fixed charges including preferred
stock dividends (excluding interest on deposits)
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2.07
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1.78
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NM
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NM
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1.01
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1.80
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Ratio of income to combined fixed charges including preferred
stock dividends (including interest on deposits)
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1.70
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1.52
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NM
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NM
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1.01
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1.50
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NM: Not meaningful.
5
Where You
Can Find More Information
As required by the Securities Act, Citigroup Funding and
Citigroup filed a registration statement relating to the
securities offered by this prospectus with the Securities and
Exchange Commission. This prospectus is a part of that
registration statement, which includes additional information.
Citigroup has filed the exhibits discussed in this prospectus
with the registration statement, and you should read the
exhibits carefully for provisions that may be important to you.
Citigroup files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and
copy any document Citigroup files at the SEC’s public
reference room at 100 F Street, N.E.,
Washington, D.C. 20549. You can also request copies of
these documents, upon payment of a duplicating fee, by writing
to the Public Reference Section of the SEC. Please call the SEC
at
1-800-SEC-0330
for further information on the public reference room. These SEC
filings are also available to the public from the SEC’s web
site at
http://www.sec.gov.
Citigroup’s SEC filings are also available on its website
at
http://www.citigroup.com.
The SEC allows Citigroup to “incorporate by reference”
the information it files with the SEC, which means that it can
disclose important information to you by referring you to those
documents. The information incorporated by reference is
considered to be part of this prospectus. Information that
Citigroup files with the SEC will automatically update the
information in this prospectus. In all cases, you should rely on
the later information over different information included in
this prospectus. Citigroup incorporates by reference the
documents listed below and any future filings made with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act (File
No. 1-09924):
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Annual Report on
Form 10-K
for the fiscal year ending December 31, 2010, filed on
February 25, 2011;
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Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2011, filed on May 5,
2011;
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Current Reports on
Form 8-K
filed on January 10, 2011, January 12, 2011,
January 13, 2011, January 18, 2011 (to the extent
filed with the SEC), January 20, 2011, January 21,
2011, January 25, 2011, February 1, 2011, February 17,
2011, February 18, 2011, February 28, 2011, March 7,
2011; March 21, 2011, March 29, 2011, April 1,
2011, April 4, 2011, April 18, 2011 (to the extent
filed with the SEC), April 26, 2011 and May 9, 2011;
and
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Definitive Proxy Statement on Schedule 14A filed on
March 10, 2011, as amended.
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In no event, however, will any of the information that Citigroup
furnishes to, pursuant to Item 2.02 or Item 7.01 of
any Current Report on
Form 8-K
(including exhibits related thereto) or other applicable SEC
rules, rather than files with, the SEC be incorporated by
reference or otherwise be included herein, unless such
information is expressly incorporated herein by a reference in
such furnished Current Report on
Form 8-K
or other furnished document.
All documents Citigroup files pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and before the later of (1) the completion of
the offering of the securities described in this prospectus and
(2) the date the broker-dealer subsidiaries of Citigroup
stop offering securities pursuant to this prospectus shall be
incorporated by reference in this prospectus from the date of
filing of such documents.
You may request a copy of these filings, at no cost, by writing
or telephoning Citigroup at the following address:
Citigroup Document Services
540 Crosspoint Parkway
Getzville, NY 14068
(716) 730-8055
(tel.)
(877) 936-2737
(toll free)
6
Citigroup Funding and Citigroup are responsible for the
information contained and incorporated by reference in this
prospectus. Neither Citigroup Funding nor Citigroup have
authorized anyone to provide you with any other information, and
neither takes any responsibility for any other information that
others may provide you. You should not assume that the
information contained in this prospectus, the prospectus
supplement, any applicable pricing supplement, as well as
information Citigroup previously filed with the Securities and
Exchange Commission and incorporated by reference herein, is
accurate as of any date other than the date of the relevant
document. Neither Citigroup Funding nor Citigroup is making an
offer to sell these securities in any jurisdiction where the
offer or sale is not permitted.
7
FORWARD-LOOKING
STATEMENTS
Certain statements in this prospectus, any prospectus supplement
and in other information incorporated by reference herein and
therein are “forward-looking statements” within the
meaning of the rules and regulations of SEC. Generally,
forward-looking statements are not based on historical facts but
instead represent only management’s beliefs regarding
future events. Such statements may be identified by words such
as believe, expect, anticipate,
intend, estimate, may increase, may
fluctuate, and similar expressions, or future or conditional
verbs such as will, should, would and
could.
Such statements are based on Citigroup management’s 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 any accompanying prospectus
supplement or pricing supplement, the factors listed under
“Forward-Looking Statements” in Citigroup’s most
recent Annual Report on
Form 10-K
or Quarterly Report on
Form 10-Q
and described under “Risk Factors” in Citigroup’s
most recent Annual Report on
Form 10-K.
CITIGROUP
INC.
Citigroup 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. Citigroup’s activities are conducted
through the Regional 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.
Citigroup’s 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. However,
Citigroup may augment, and during the recent financial crisis
did augment, its capital through issuances of common stock,
convertible preferred stock, preferred stock, equity issued
through awards under employee benefits plans, and, in the case
of regulatory capital, through the issuance of subordinated debt
underlying trust preferred securities. Citigroup’s
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. Citigroup’s ability to pay dividends is
currently restricted due to its agreements with the
U.S. government, generally for so long as the
U.S. government continues to hold Citi’s trust
preferred securities. Citigroup’s 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 Citigroup’s
ability to service its own debt. Citigroup must also maintain
the required capital levels of a bank holding company 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.
Citigroup’s principal office is located at 399 Park Avenue,
New York, NY 10043, and its telephone number is
(212) 559-1000.
CITIGROUP
FUNDING INC.
Citigroup Funding is a wholly-owned subsidiary of Citigroup,
whose business activities consist primarily of providing funds
to Citigroup and its subsidiaries for general corporate
purposes. Citigroup Funding was incorporated on January 14,
2005 under the laws of the State of Delaware as a corporation
with perpetual duration. The principal executive offices of
Citigroup Funding are located at 399 Park Avenue, New York,
New York 10043, and its telephone number is
(212) 559-1000.
8
USE OF
PROCEEDS AND HEDGING
General. Citigroup Funding will use the
proceeds it receives from the sale of the offered securities for
general corporate purposes, which may include:
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funding the business of Citigroup subsidiaries;
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funding investments in, or extensions of credit or capital
contributions to, Citigroup subsidiaries; and
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lengthening the average maturity of liabilities, which means
that it could reduce its short-term liabilities or refund
maturing indebtedness.
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Citigroup Funding expects to incur additional indebtedness in
the future to fund Citigroup’s businesses. Citigroup
Funding or one or more of its affiliates may enter into a swap
agreement in connection with the sale of the offered securities
and may earn additional income from that transaction.
Use of Proceeds Relating to Index Warrants and Indexed
Notes. Citigroup Funding or one or more of its
affiliates may use all or some of the proceeds received from the
sale of index warrants or indexed notes to purchase or maintain
positions in the underlying assets. Citigroup Funding or one or
more of its affiliates may also purchase or maintain positions
in options, futures contracts, forward contracts or swaps, or
options on the foregoing, or other derivative or similar
instruments relating to the relevant index or underlying assets.
Citigroup Funding may also use the proceeds to pay the costs and
expenses of hedging any currency, interest rate or other
index-related risk relating to such index warrants and indexed
notes.
Citigroup Funding expects that it or one or more of its
affiliates will increase or decrease their initial hedging
position over time using techniques which help evaluate the size
of any hedge based upon a variety of factors affecting the value
of the underlying instrument. These factors may include the
history of price changes in that underlying instrument and the
time remaining to maturity. Citigroup Funding or one or more of
its affiliates may take long or short positions in the index,
the underlying assets, options, futures contracts, forward
contracts, swaps, or options on the foregoing, or other
derivative or similar instruments related to the index or the
underlying assets. These other hedging activities may occur from
time to time before the index warrants and indexed notes mature
and will depend on market conditions and the value of the index
and the underlying assets.
In addition, Citigroup Funding or one or more of its affiliates
may purchase or otherwise acquire a long or short position in
index warrants and indexed notes from time to time and may, in
their sole discretion, hold, resell, exercise, cancel or retire
such offered securities. Citigroup Funding or one or more of its
affiliates may also take hedging positions in other types of
appropriate financial instruments that may become available in
the future.
If Citigroup Funding or one or more of its affiliates has a long
hedge position in, or options, futures contracts or swaps or
options on the foregoing, or other derivative or similar
instruments related to, the index or underlying assets,
Citigroup Funding or one or more of its affiliates may liquidate
all or a portion of its holdings at or about the time of the
maturity or earlier redemption or repurchase of, or the payment
of any indexed interest on, the index warrants and indexed
notes. The aggregate amount and type of such positions are
likely to vary over time depending on future market conditions
and other factors. Since the hedging activities described in
this section involve risks and may be influenced by a number of
factors, it is possible that Citigroup Funding or one or more of
its affiliates may receive a profit from the hedging activities,
even if the market value of the index warrants or indexed notes
declines. Citigroup Funding is only able to determine profits or
losses from any such position when the position is closed out
and any offsetting position or positions are taken into account.
Citigroup Funding has no reason to believe that its hedging
activities, as well as those of its affiliates, will have a
material impact on the price of such options, futures contracts,
forward contracts, swaps, options on the foregoing, or other
derivative or similar instruments, or on the value of the index
or the underlying assets. However, Citigroup Funding cannot
guarantee you that its hedging activities, as well as those of
its affiliates, will not affect such prices or value. Citigroup
Funding or its affiliates will use the remainder of the proceeds
from the sale of index warrants and indexed notes for the
general corporate purposes described above.
9
EUROPEAN
MONETARY UNION
The foreign currencies in which debt securities may be
denominated or payments in respect of index warrants may be due
or by which amounts due on the offered securities may be
calculated could be issued by countries that are member states
of the European Union that have adopted or adopt the single Euro
currency in accordance with the Treaty establishing the European
Community (as that Treaty is amended from time to time) (the
“participating member states”).
The current seventeen participating member states are: Austria,
Belgium, Cyprus, Estonia, Finland, France, Germany, Greece,
Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal,
Slovakia, Slovenia and Spain. Other member states of the
European Union may also become participating member states of
the single Euro currency.
DESCRIPTION
OF DEBT SECURITIES
The debt securities offered by this prospectus will be
guaranteed unsecured obligations of Citigroup Funding and will
be either senior or subordinated debt. Senior debt securities
will be issued under a senior debt indenture. Subordinated debt
securities will be issued under a subordinated debt indenture.
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 have been incorporated by
reference to the registration statement on
Form S-3
under the Securities Act of 1933, as amended, of which this
prospectus forms a part.
As used in this prospectus, the term “supplement”
means either a prospectus supplement or a pricing supplement, as
applicable.
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 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 supplement. Copies of the indentures
may be obtained from Citigroup, Citigroup Funding 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.
Unless otherwise specified in connection with a particular
offering of debt securities, the trustee under the senior debt
indenture will be The Bank of New York Mellon, formerly known as
The Bank of New York, as successor trustee to JP Morgan
Chase Bank, N.A., and the trustee under the subordinated debt
indenture will be Deutsche Bank Trust Company Americas.
Citigroup Funding may, at its option, appoint others, including
Citibank, N.A., to act as paying agent, transfer agent and/or
registrar under each indenture.
General
Section numbers in The Bank of New York senior debt indenture
take the form “1.01”, “2.01” and so forth,
rather than “101”, “201” and so forth.
Section references below should be read accordingly.
The indentures provide that unsecured senior or subordinated
debt securities of Citigroup Funding, the payment on which are
fully and unconditionally guaranteed by Citigroup, may be issued
in one or more series, with different terms, in each case as
authorized from time to time by Citigroup Funding. The
indentures do not limit the amount of debt securities that may
be issued under them (Section 301). Citigroup
Funding also has the right to “reopen” a previous
issue of a series of debt securities by issuing additional debt
securities of such series.
United States federal income tax consequences and other special
considerations applicable to any variable rate debt securities
exchangeable for fixed rate debt securities or debt securities
issued by Citigroup Funding at a discount will be described in
the applicable supplement.
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Because Citigroup is a holding company, the claims of creditors
of Citigroup’s subsidiaries will have a priority over
Citigroup’s equity rights and the rights of
Citigroup’s creditors, including the holders of debt
securities issued by Citigroup, to participate in the assets of
the subsidiary upon the subsidiary’s liquidation.
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 amount 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 Funding
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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the location where payments on the debt securities will be made;
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the terms and conditions on which the debt securities may be
redeemed at the option of Citigroup Funding;
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any obligation of Citigroup Funding to redeem, purchase or repay
the debt securities at the option of a holder upon the happening
of any event and the terms and conditions of redemption,
purchase or repayment;
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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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any provisions for the discharge of Citigroup Funding’s
obligations relating to the debt securities by deposit of funds
or United States government securities;
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whether the debt securities are to trade in book-entry form and
the terms and any conditions for exchanging the global security
in whole or in part for paper certificates;
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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 (Section
301).
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The terms on which debt securities may be convertible into or
exchangeable for common stock or other securities of any kind
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 Funding. The terms may include provisions
pursuant to which the number of shares of common stock or other
securities to be received by the holders of such debt securities
may be adjusted.
The debt securities will be issued in registered form. 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, debt securities denominated in U.S.
dollars will be issued only in denominations of $1,000 and whole
multiples of $1,000. (Section 302). The supplement
relating to offered securities denominated in a foreign or
composite currency will specify the denomination of the offered
securities.
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 Funding may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection
with such registration of transfer. (Section 306).
Same-Day
Settlement and Payments
Unless otherwise specified in connection with a particular
offering of debt securities, settlement for the debt securities
will be made by Citigroup Global Markets Inc. in same-day funds.
All payments payable in cash, including maturity, interest and
call payments, will be paid by Citigroup Funding in same-day
funds so long as the debt securities are maintained in
book-entry form.
Payments on the debt securities other than those represented by
global notes will be made in the designated currency against
surrender of the debt securities, in the case of registered
notes, at the principal trust office of the relevant trustee in
New York City. Payment will be made to the registered holder
appearing in the register of note holders maintained by the
registrar at the close of business on the record date for such
payment. Interest payments may be made at the option of
Citigroup Funding, by a check mailed to the holder at his
registered address. (Section 308). Payments in any
other manner will be specified in the supplement.
Senior
Debt
The senior debt securities will be issued under the senior debt
indenture, will be guaranteed unsecured obligations of Citigroup
Funding and will rank on an equal basis with all other unsecured
debt of Citigroup Funding except subordinated debt
(Subordinated Debt Indenture, Section 1601).
Subordinated
Debt
The subordinated debt securities will be issued under the
subordinated debt indenture, will be guaranteed unsecured
obligations of Citigroup Funding and 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).
If Citigroup Funding 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 Funding 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 Funding 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 Funding, 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 1601).
“Senior Indebtedness” means:
(1) the principal, premium, if any, and interest in respect
of (A) indebtedness of Citigroup Funding or Citigroup for
money borrowed and (B) indebtedness evidenced by
securities, notes, debentures, bonds or other similar
instruments issued by Citigroup Funding and Citigroup, including
the senior debt securities;
(2) all capital lease obligations of Citigroup Funding and
Citigroup;
(3) all obligations of Citigroup Funding and Citigroup
issued or assumed as the deferred purchase price of property,
all conditional sale obligations of Citigroup Funding and
Citigroup and all obligations of Citigroup Funding and Citigroup
under any conditional sale or title retention agreement (but
excluding trade accounts payable in the ordinary course of
business);
(4) all obligations, contingent or otherwise, of Citigroup
Funding and Citigroup in respect of any letters of credit,
bankers acceptance, security purchase facilities and similar
credit transactions;
(5) all obligations of Citigroup Funding and 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;
(6) all obligations of the type referred to in clauses
(1) through (5) above of other persons for the payment
of which Citigroup Funding and/or Citigroup is responsible or
liable as obligor, guarantor or otherwise; and
(7) 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 Funding and/or
Citigroup whether or not such obligation is assumed by Citigroup
Funding or Citigroup;
but Senior Indebtedness does not include:
(A) any indebtedness issued prior to February 18, 2005
under a subordinated debt indenture with J.P. Morgan Trust
Company, as trustee, dated as of April 12, 2001, as
supplemented;
(B) any indebtedness issued by Citigroup under an indenture
with Bank One Trust Company, N.A., dated as of
July 17, 1998, as supplemented;
(C) any indebtedness issued to a Citigroup Trust before
May 31, 2004 under an indenture dated as of October 7,
1996, between Citigroup (formerly known as Travelers Group Inc.)
and JPMorgan Chase Bank, N.A. (as successor to The Chase
Manhattan Bank), as supplemented (the “1996 junior
subordinated debt indenture”);
(D) any guarantee entered into by Citigroup prior to
May 31, 2004 in respect of any preferred securities,
capital securities or preference stock of a Citigroup Trust to
which Citigroup issued any indebtedness under the 1996 junior
subordinated debt indenture;
(E) any indebtedness issued to a Citigroup Trust prior to
February 18, 2005 under that certain indenture, dated as of July
23, 2004, between Citigroup and JPMorgan Chase Bank, N.A. (the
“2004 junior subordinated debt indenture”);
(F) any guarantee entered into by Citigroup prior to
February 18, 2005 in respect of any preferred securities,
capital securities or preference stock of a Citigroup Trust to
which Citigroup issued any indebtedness under the 2004 junior
subordinated debt indenture; and
(G) any indebtedness or any guarantee that is by its terms
subordinated to, or ranks equally with the subordinated debt
securities and the issuance of which (x) has received the
concurrence or
13
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 debt securities from
qualifying for Tier 2 capital treatment (irrespective of
any limits on the amount of Citigroup’s Tier 2
capital) under the applicable capital adequacy guidelines,
regulations, policies or published interpretations of the Board
of Governors of the Federal Reserve System.
“Citigroup Trust” means each of Citigroup Capital III,
Citigroup Capital VII, Citigroup Capital VIII, Citigroup Capital
IX, Citigroup Capital X, Citigroup Capital XI, Citigroup Capital
XII, Citigroup Capital XIII, Citigroup Capital XIV, Citigroup
Capital XV, Citigroup Capital XVI, Citigroup Capital XVII,
Citigroup Capital XVIII, Citigroup Capital XIX, Citigroup
Capital XX, Citigroup Capital XXI, Citigroup Capital XXII,
Citigroup Capital XXIII, Citigroup Capital XXIV, Citigroup
Capital XXV, Citigroup Capital XXXII and Citigroup Capital
XXXIII, each a Delaware statutory trust.
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 (as defined below) of any Significant Subsidiary
(as defined below), whether such Voting Stock is owned or later
acquired, without effectively providing that the debt securities
and, at Citigroup’s option, any other senior indebtedness
ranking equally with such debt securities, be secured equally
and ratably with such indebtedness. This limitation does 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 15.04).
“Significant Subsidiary” means any Subsidiary (as
defined below), including its Subsidiaries:
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that has investments of and advances from Citigroup and its
other subsidiaries exceeding 10 percent of the total
consolidated assets of Citigroup and such other subsidiaries as
of the end of the most recently completed fiscal year;
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of which Citigroup’s and its other subsidiaries’
proportionate share of total assets (after inter-company
elimination) exceeds 10 percent of the total consolidated
assets of Citigroup and such other subsidiaries as of the end of
the most recently completed fiscal year; or
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of which Citigroup’s and its other subsidiaries’
equity in the income from continuing operations exceeds
10 percent of such consolidated income of Citigroup and
such other subsidiaries 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 corporation’s
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.
“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, Sections 1.01 and 15.04).
Limitations on Mergers and Sales of
Assets. The indentures provide that neither
Citigroup Funding nor Citigroup will merge or consolidate with
another corporation or sell other than for cash or lease all or
substantially all their assets to another corporation, or
purchase all or substantially all the assets of another
corporation unless:
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the successor corporation, if other than Citigroup Funding or
Citigroup, as applicable, expressly assumes by supplemental
indenture the obligations of Citigroup Funding or Citigroup, as
applicable, under the indentures; and
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in the case of the senior debt indentures 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
indentures (Sections 605 and 1505).
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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 or
(y) qualify at the time of issuance for Tier 2 capital
treatment (irrespective of any limits on the amount of
Citigroup’s Tier 2 capital) under the applicable
capital adequacy guidelines, regulations, policies or published
interpretations of the Federal Reserve.
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 Funding, 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 Funding, Citigroup and the relevant trustee may, with
the consent of the holders of 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, 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 or extend the time of payment 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;
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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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limit Citigroup Funding’s responsibility to maintain a
paying agent outside the U.S. for debt securities in bearer form;
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limit Citigroup Funding’s obligations to redeem certain
debt securities in bearer form if certain events involving U.S.
information reporting requirements occur;
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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, without the written consent of the trustee, the rights,
duties or immunities of the trustee (Senior Debt Indenture,
Section 14.02).
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In addition, the subordinated debt indenture may not be amended
without the consent of each holder of senior 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 senior debt securities (Subordinated
Debt Indenture, Section 1407).
Events of
Default and Defaults
Events of default under the senior debt indentures 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 (Section 701).
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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. 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
Funding or Citigroup in the subordinated indenture or any other
default that is not also an event of default (Subordinated
Debt Indenture, Sections 701 and 702).
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 that series may declare each
debt security of that series due and payable
(Section 702). Citigroup Funding and Citigroup are
required to file annually with the trustee a statement of an
officer as to the fulfillment by Citigroup Funding and Citigroup
of their respective obligations under the indenture during the
preceding year (Section 606 and 1002).
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 7.02).
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 events of default regarding that series
(Section 702). The trustee generally will not be
under an 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 reasonable
security or indemnity (Section 707).
If an event of default occurs and is continuing regarding a
series of debt securities, the trustee may use any sums that it
holds under the relevant indenture for its own reasonable
compensation and expenses incurred prior to paying the holders
of debt securities of that series (Section 705).
Before any holder of any series of debt securities may institute
action for any remedy, except payment on the holder’s 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 and
give the satisfactory security and indemnity against liabilities
incurred by the trustee for taking such action.
(Section 707).
Defeasance
If so specified when the debt securities of a particular series
are created, after Citigroup Funding has deposited with the
trustee cash or U.S. government securities or, in the case
of debt securities denominated in a currency other than U.S.
dollars, after Citigroup Funding has deposited with the trustee
funds in the currency specified in the applicable supplement or
securities of issuers 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 debt
securities of that series when due, then Citigroup Funding, at
its option:
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will be deemed to have paid and satisfied its obligations on all
outstanding debt securities of that series on the 91st day after
the applicable conditions described below are satisfied, which
is known as “defeasance and discharge;” or
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will cease to be under any of the obligations described above
under “Covenants — Limitation on Liens” and
“Covenants — Limitations on Mergers and Sales of
Assets” relating to the debt securities of the series,
other than to pay when due the principal of, premium, if any,
and interest on those debt securities, which is known as
“covenant defeasance.”
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Citigroup Funding must deliver to the trustee an opinion of
counsel accompanied by a ruling received or published by the
Internal Revenue Service to the effect that the holders of the
debt securities of the series will have no United States federal
income tax consequences as a result of Citigroup Funding’s
exercise of its defeasance option. In the case of a defeasance
and discharge, such opinion must be based upon a ruling or
administrative pronouncement of the Internal Revenue Service. If
the debt securities are listed on the NYSE, Citigroup Funding
must also deliver the trustee an opinion of counsel stating that
defeasance would not cause the debt securities to be delisted.
When there is a defeasance and discharge, (1) the
indentures will no longer govern the debt securities of that
series, (2) Citigroup Funding will no longer be liable for
payment and (3) the holders of those debt securities will
be entitled only to the deposited funds. When there is a
covenant defeasance, however, Citigroup Funding will continue to
be obligated to make payments when due if the deposited funds
are not sufficient.
The obligations and rights under the debt indentures regarding
compensation, reimbursement and indemnification of the trustee,
optional redemption, mandatory and optional scheduled
installment payments, if any, registration of transfer and
exchange of the debt securities of such series, replacement of
mutilated, destroyed, lost or stolen debt securities and certain
other administrative provisions will continue even if Citigroup
Funding exercises its defeasance and discharge or covenant
defeasance options (Article 12).
Under current United States federal income tax law, defeasance
and discharge should probably be treated as a taxable exchange
of the debt securities for an interest in the trust. As a
consequence, each holder of the debt securities would recognize
gain or loss equal to the difference between the value of the
holder’s interest in the trust and the holder’s
adjusted tax basis for the debt securities deemed exchanged.
Each holder would then be required to include in income its
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 debt
securities, except for any current interest payments.
Under current United States federal income tax law, a covenant
defeasance would not be treated as a taxable exchange of debt
securities. 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.
Citigroup
Guarantees
The payments due on debt securities issued by Citigroup Funding
will be fully and unconditionally guaranteed by Citigroup. If
for any reason Citigroup Funding does not make any required
payment in respect of its debt securities when due, Citigroup
will cause the payment to be made at the same address at which
Citigroup Funding is obligated to make such payment. The holder
of a guaranteed debt security will be entitled to payment under
the relevant guarantee of Citigroup without taking any action
whatsoever against Citigroup Funding. Citigroup’s
obligations under its guarantee contained in each indenture are
unconditional, irrespective of any (i) extension,
amendment, modification or renewal of any required payment;
(ii) any waiver of any event of default, extension of time
or failure to enforce any required payment; or (iii) any
extension, moratorium or other relief granted to Citigroup
Funding pursuant to any applicable law or statute.
Citigroup’s guarantee of the payments due on subordinated
debt securities will be an unsecured subordinated obligation. As
a result, Citigroup’s obligations to make payments under
its guarantee of the subordinated debt securities will be
subordinated and junior in right of payment, to the extent and
in the manner set forth in the subordinated debt indenture, to
all of Citigroup’s existing and future Senior
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Indebtedness, including any guarantee of senior debt securities
issued by Citigroup Funding (as described above under
“— Subordinated Debt”).
Concerning
the Trustees
Citigroup, Citigroup Funding and certain of their affiliates
have had and may continue to have banking relationships with the
trustees under the indentures in the ordinary course of business.
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.
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 DTC’s 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, Citigroup 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
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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.
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 DTC’s 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 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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the depositary is unwilling or unable to continue as depositary
for such global security and we are unable to find a qualified
replacement for DTC 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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we in our sole discretion decide to allow some or all book-entry
securities to be exchangeable for definitive securities in
registered form.
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If any of the events described in the preceding paragraph
occurs, we will issue definitive securities in certificated form
in an amount equal to a holder’s beneficial interest in the
securities. Definitive securities will be issued in minimum
denominations of $1,000 and whole multiples of $1,000 in excess
thereof, and will be registered in the name of the person the
depositary specifies in a written instruction to the registrar
of the debt securities.
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In the event definitive debt securities are issued:
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the holders of definitive debt securities will be able to
receive payments of principal and interest on their debt
securities at the office of our paying agent maintained in the
Borough of Manhattan;
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the holders of definitive debt securities will be able to
transfer their securities, in whole or in part, by surrendering
the securities for registration of transfer at the office of the
trustee or its designated agent. We will not charge any fee for
the registration of transfer or exchange, except that we may
require the payment of a sum sufficient to cover any applicable
tax or other governmental charge payable in connection with the
transfer; and
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any moneys we pay to our paying agents for the payment of
principal and interest on the debt securities that remains
unclaimed at the second anniversary of the date such payment was
due will be returned to us, and thereafter holders of definitive
securities may look only to us, as general unsecured creditors,
for payment.
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DESCRIPTION
OF INDEX WARRANTS
The following briefly summarizes the material terms and
provisions of the index warrants, other than pricing and related
terms disclosed in the accompanying supplement. You should read
the particular terms of the index warrants that are offered by
Citigroup Funding, which will be described in more detail in a
supplement. The supplement will also state whether any of the
general provisions summarized below do not apply to the index
warrants being offered.
Index warrants may be issued independently or together with debt
securities and may be attached to or separate from any such
offered securities. Each series of index warrants will be issued
under a separate index warrant agreement to be entered into
among Citigroup Funding, Citigroup and a bank or trust company,
as index warrant agent, and the payments due will be fully and
unconditionally guaranteed by Citigroup. A single bank or trust
company may act as index warrant agent for more than one series
of index warrants. The index warrant agent will act solely as
the agent of Citigroup Funding under the applicable index
warrant agreement and will not assume any obligation or
relationship of agency or trust for or with any owners of index
warrants. A copy of the index warrant agreement, including the
form of certificate or global certificate that will represent
the index warrant certificate, has been incorporated by
reference in the registration statement of which this prospectus
forms a part. You should read the more detailed provisions of
the index warrant agreement and the index warrant certificate or
index warrant global certificate for provisions that may be
important to you.
General
The index warrant agreement does not limit the number of index
warrants that may be issued. Citigroup Funding will have the
right to “reopen” a previous series of index warrants
by issuing additional index warrants of such series.
Each index warrant will entitle the warrant holder to receive,
upon exercise, cash or securities. The amount in cash or number
of securities will be determined by referring to an index
calculated on the basis of prices, yields, levels or other
specified objective measures in respect of:
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one or more specified securities or securities indices;
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one or more specified foreign currencies or currency indices;
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one or more specified commodities or commodity indices;
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intangibles;
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articles or goods;
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any other financial, economic or other measure or instrument,
including the occurrence or
non-occurrence
of any event or circumstance;
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a combination thereof; or
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changes in such measure or differences between two or more such
measures.
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The supplement for a series of index warrants will describe the
formula or methodology to be applied to the relevant index,
indices, intangibles, articles, goods or other measures or
instruments to determine the amount payable or distributable on
the index warrants.
If so specified in the supplement, the index warrants will
entitle the warrant holder to receive a minimum or maximum
amount upon automatic exercise at expiration or the happening of
any other event described in the supplement.
The index warrants will be deemed to be automatically exercised
upon expiration. Upon such automatic exercise, warrant holders
will be entitled to receive the cash amount or number of
securities due, if any, on such exercise of the index warrants.
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You should read the supplement applicable to a series of index
warrants for any circumstances in which the payment or
distribution or the determination of the payment or distribution
on the index warrants may be postponed or exercised early or
cancelled. The amount due after any such delay or postponement,
or early exercise or cancellation, will be described in the
applicable supplement.
Unless otherwise specified in connection with a particular
offering of index warrants, Citigroup Funding will not purchase
or take delivery of or sell or deliver any securities or
currencies, including the underlying assets, other than the
payment of any cash or distribution of any securities due on the
index warrants, from or to warrant holders pursuant to the index
warrants.
The applicable supplement relating to a series of index warrants
will describe the following:
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the aggregate number of such index warrants;
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the offering price of such index warrants;
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the measure or measures by which payment or distribution on such
index warrants will be determined;
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certain information regarding the underlying securities, foreign
currencies, indices, intangibles, articles or goods or other
measure or instrument;
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the amount of cash or number of securities due, or the means by
which the amount of cash or number of securities due may be
calculated, on exercise of the index warrants, including
automatic exercise, or upon cancellation;
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the date on which the index warrants may first be exercised and
the date on which they expire;
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any minimum number of index warrants exercisable at any one time;
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any maximum number of index warrants that may, at Citigroup
Funding’s election, be exercised by all warrant holders or
by any person or entity on any day;
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any provisions permitting a warrant holder to condition an
exercise of index warrants;
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the method by which the index warrants may be exercised;
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the currency in which the index warrants will be denominated and
in which payments on the index warrants will be made or the
securities that may be distributed in respect of the index
warrants;
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the method of making any foreign currency translation applicable
to payments or distributions on the index warrants;
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the method of providing for a substitute index or indices or
otherwise determining the amount payable in connection with the
exercise of index warrants if an index changes or is no longer
available;
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the time or times at which amounts will be payable or
distributable in respect of such index warrants following
exercise or automatic exercise;
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any national securities exchange on, or self-regulatory
organization with, which index warrants will be listed;
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any provisions for issuing such index warrants in certificated
form;
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if such index warrants are not issued in book-entry form, the
place or places at, and the procedures by which, payments or
distributions on the index warrants will be made; and
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any other terms of such index warrants.
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Prospective purchasers of index warrants should be aware of
special United States federal income tax considerations
applicable to instruments such as the index warrants. The
supplement relating to each series of index warrants will
describe these tax considerations. The summary of United States
federal income tax considerations contained in the supplement
will be presented for informational purposes only, however, and
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will not be intended as legal or tax advice to prospective
purchasers. You are urged to consult your tax advisors before
purchasing any index warrants.
Listing
Unless otherwise specified in connection with a particular
offering of index warrants, the index warrants will be listed on
a national securities exchange or with a self-regulatory
organization, in each case as specified in the supplement. It is
expected that such organization will stop trading a series of
index warrants as of the close of business on the related
expiration date of such index warrants.
Modification
The index warrant agreement and the terms of the related index
warrants may be amended by Citigroup, Citigroup Funding and the
index warrant agent, without the consent of the holders of any
index warrants, for any of the following purposes:
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curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision;
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maintaining the listing of such index warrants on any national
securities exchange or with any other self-regulatory
organization;
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registering such index warrants under the Exchange Act,
permitting the issuance of individual index warrant certificates
to warrant holders, reflecting the issuance by Citigroup Funding
of additional index warrants of the same series or reflecting
the appointment of a successor depositary; or
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for any other purpose that Citigroup Funding may deem necessary
or desirable and which will not materially and adversely affect
the interests of the warrant holders.
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Citigroup, Citigroup Funding and the index warrant agent also
may modify or amend the index warrant agreement and the terms of
the related index warrants, with the consent of the holders of
not less than a majority of the then outstanding warrants of
each series affected by such modification or amendment, for any
purpose. However, no such modification or amendment may be made
without the consent of each holder affected thereby if such
modification or amendment:
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changes the amount to be paid to the warrant holder or the
manner in which that amount is to be determined;
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shortens the period of time during which the index warrants may
be exercised;
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otherwise materially and adversely affects the exercise rights
of the holders of the index warrants; or
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reduces the percentage of the number of outstanding index
warrants the consent of whose holders is required for
modification or amendment of the index warrant agreement or the
terms of the related index warrants.
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Merger,
Consolidation, Sale or Other Disposition
If at any time there is a merger or consolidation involving
Citigroup Funding or Citigroup or a sale, transfer, conveyance,
other than lease, or other disposition of all or substantially
all of the assets of Citigroup Funding or Citigroup, then the
assuming corporation will succeed to the obligations of
Citigroup Funding or Citigroup, as applicable, under the index
warrant agreement and the related index warrants. Citigroup will
then be relieved of any further obligation under the index
warrant agreement and index warrants.
Enforceability
of Rights by Warrant Holders
Any warrant holder may, without the consent of the index warrant
agent or any other warrant holder, enforce by appropriate legal
action on its own behalf its right to exercise, and to receive
payment for, its index warrants.
23
Citigroup
Guarantee
The payments due on index warrants issued by Citigroup Funding
will be fully and unconditionally guaranteed by Citigroup. If
for any reason Citigroup Funding does not make any required
payment in respect of its index warrants when due, Citigroup
will cause the payment to be made at the same address at which
Citigroup Funding is obligated to make such payment. The holder
of a guaranteed index warrant will be entitled to payment under
the Citigroup guarantee without taking any action whatsoever
against Citigroup Funding. Citigroup’s obligations under
its guarantee are unconditional, irrespective of any
(i) extension, amendment, modification or renewal of any
required payment; (ii) any waiver of any event of default,
extension of time or failure to enforce any required payment; or
(iii) any extension, moratorium or other relief granted to
Citigroup Funding pursuant to any applicable law or statute.
DESCRIPTION
OF DEBT SECURITY AND INDEX WARRANT UNITS
Citigroup Funding may issue debt security and index warrant
units consisting of debt securities and index warrants. The
applicable supplement will describe the terms of any debt
security and index warrant units.
24
PLAN OF
DISTRIBUTION; CONFLICTS OF INTEREST
Citigroup Funding may offer the offered securities in one or
more of the following ways from time to time:
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to or through underwriters or dealers;
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by itself directly;
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through agents; or
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through a combination of any of these methods of sale.
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Any such underwriters, dealers or agents may include any
broker-dealer affiliate of Citigroup Funding.
The supplement relating to an offering of offered securities
will set forth the terms of such offering, including:
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the name or names of any underwriters, dealers or agents;
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the purchase price of the offered securities and the proceeds to
Citigroup Funding from such sale;
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any underwriting discounts and commissions or agency fees and
other items constituting underwriters’ or agents’
compensation;
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the initial public offering price;
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any discounts or concessions to be allowed or reallowed or paid
to dealers; and
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any securities exchanges on which such offered securities may be
listed.
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Any initial public offering prices, discounts or concessions
allowed or reallowed or paid to dealers may be changed from time
to time.
In compliance with the guidelines of the Financial Industry
Regulatory Authority, Inc. (“FINRA”), the maximum
discount or commission to be received by any FINRA member or
independent broker-dealer may not exceed 8% of the aggregate
amount of the securities offered pursuant to this prospectus and
any applicable supplement; however, it is anticipated that the
maximum commission or discount to be received in any particular
offering of securities will be significantly less than this
amount.
If underwriters are used in an offering of offered securities,
such offered securities will be acquired by the underwriters for
their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the
time of sale. The securities may be offered either to the public
through underwriting syndicates represented by one or more
managing underwriters or by one or more underwriters without a
syndicate. Unless otherwise specified in connection with a
particular offering of securities, the underwriters will not be
obligated to purchase offered securities unless specified
conditions are satisfied, and if the underwriters do purchase
any offered securities, they will purchase all offered
securities.
In connection with underwritten offerings of the offered
securities and in accordance with applicable law and industry
practice, the underwriters may purchase and sell the offered
securities in the open market. Purchases and sales in the open
market may include short sales, purchases to cover short
positions and stabilizing purchases.
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Short sales involve secondary market sales by the underwriters
of a greater number of securities than they are required to
purchase in an offering.
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Covering transactions involve purchases of securities in the
open market after the distribution has been completed in order
to cover short positions.
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Stabilizing transactions involve bids to purchase securities so
long as the stabilizing bids do not exceed a specified maximum.
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25
The underwriters also may impose a penalty bid. Penalty bids
permit the underwriters to reclaim a selling concession from a
syndicate member when the underwriters, in covering short
positions or making stabilizing purchases, repurchase securities
originally sold by that syndicate member.
Purchases to cover short positions and stabilizing purchases, as
well as other purchases by the underwriters for their own
accounts, may have the effect of preventing or retarding a
decline in the market price of the securities. They may also
cause the price of the securities to be higher than the price
that would otherwise exist in the open market in the absence of
these transactions. The underwriters may conduct these
transactions in the
over-the-counter
market or otherwise. If the underwriters commence any of these
transactions, they may discontinue them at any time.
If dealers are utilized in the sale of offered securities,
Citigroup Funding will sell such offered securities to the
dealers as principals. The dealers may then resell such offered
securities to the public at varying prices to be determined by
such dealers at the time of resale. The names of the dealers and
the terms of the transaction will be set forth in the supplement
relating to that transaction.
Offered securities may be sold directly by Citigroup Funding to
one or more institutional purchasers, or through agents
designated by Citigroup Funding from time to time, at a fixed
price or prices, which may be changed, or at varying prices
determined at the time of sale. Any agent involved in the offer
or sale of the offered securities in respect of which this
prospectus is delivered will be named, and any commissions
payable by Citigroup Funding to such agent will be set forth, in
the supplement relating to that offering. Unless otherwise
specified in connection with a particular offering of
securities, any such agent will be acting on a best efforts
basis for the period of its appointment.
As one of the means of direct issuance of offered securities,
Citigroup Funding may utilize the services of an entity through
which it may conduct an electronic “dutch auction” or
similar offering of the offered securities among potential
purchasers who are eligible to participate in the auction or
offering of such offered securities, if so described in the
applicable supplement.
If so indicated in the applicable supplement, Citigroup Funding
will authorize agents, underwriters or dealers to solicit offers
from certain types of institutions to purchase offered
securities from Citigroup Funding at the public offering price
set forth in such supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date
in the future. Such contracts will be subject only to those
conditions set forth in the supplement and the supplement will
set forth the commission payable for solicitation of such
contracts.
The broker-dealer affiliates of Citigroup Funding, including
Citigroup Global Markets Inc., are members of FINRA and may
participate in distributions of the offered securities.
Accordingly, offerings of offered securities in which Citigroup
Funding’s broker-dealer affiliates participate will conform
with the requirements set forth in FINRA Rule 5121
addressing conflicts of interest when distributing the
securities of an affiliate.
This prospectus, together with any applicable supplement, may
also be used by any broker-dealer affiliate of Citigroup Funding
in connection with offers and sales of the offered securities in
market-making transactions, including block positioning and
block trades, at negotiated prices related to prevailing market
prices at the time of sale. Any of Citigroup Funding’s
broker-dealer affiliates may act as principal or agent in such
transactions. None of Citigroup Funding’s broker-dealer
affiliates have any obligation to make a market in any of the
offered securities and may discontinue any market-making
activities at any time without notice, at its sole discretion.
One or more dealers, referred to as “remarketing
firms,” may also offer or sell the securities, if the
supplement so indicates, in connection with a remarketing
arrangement contemplated by the terms of the securities.
Remarketing firms will act as principals for their own accounts
or as agents. The supplement will identify any remarketing firm
and the terms of its agreement, if any, with Citigroup Funding
and Citigroup and will describe the remarketing firm’s
compensation. Remarketing firms may be deemed to be underwriters
in connection with the remarketing of the securities.
26
A prospectus in electronic format may be made available on the
websites maintained by one or more of the underwriters, dealers
or agents. The underwriters, dealers or agents may agree to
allocate a number of notes to underwriters, dealers or agents
for sale to their online brokerage account holders. The
underwriters, dealers or agents will allocate notes to
underwriters, dealers or agents that may make Internet
distributions on the same basis as other allocations. In
addition, notes may be sold by the underwriters, dealers or
agents to securities dealers who resell notes to online
brokerage account holders.
Underwriters, dealers and agents may be entitled, under
agreements with Citigroup Funding and Citigroup, to
indemnification by Citigroup Funding and Citigroup relating to
material misstatements and omissions. Underwriters, dealers and
agents may be customers of, engage in transactions with, or
perform services for, Citigroup Funding and affiliates of
Citigroup Funding in the ordinary course of business.
Except for securities issued upon a reopening of a previous
series, each series of offered securities will be a new issue of
securities and will have no established trading market. Any
underwriters to whom offered securities are sold for public
offering and sale may make a market in such offered securities,
but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The
offered securities may or may not be listed on a securities
exchange. No assurance can be given that there will be a market
for the offered securities.
In order to hedge its obligations under the offered securities,
Citigroup Funding or one or more of its affiliates may enter
into one or more swaps or other derivatives transactions with
one or more of its affiliates. You should refer to “Use of
Proceeds and Hedging” above for more information.
27
ERISA
MATTERS
The Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), imposes certain restrictions on employee
benefit plans that are subject to ERISA and on persons who are
fiduciaries with respect to those plans. In accordance with
ERISA’s general fiduciary requirements, a fiduciary with
respect to any such plan who is considering the purchase of the
debt securities or index warrants of Citigroup Funding on behalf
of the plan should determine whether the purchase is permitted
under the governing plan documents and is prudent and
appropriate for the plan in view of its overall investment
policy and the composition and diversification of its portfolio.
Citigroup Funding has affiliates, including broker-dealer
affiliates, that provide services to many employee benefit
plans. Citigroup Funding and any direct or indirect affiliate of
Citigroup Funding may each be considered a “party in
interest” within the meaning of ERISA and a
“disqualified person” under corresponding provisions
of the Internal Revenue Code of 1986, as amended (the
“Code”), to many employee benefit plans and retirement
accounts. “Prohibited transactions” within the meaning
of ERISA and the Code may result if any offered securities are
acquired by an employee benefit plan as to which Citigroup
Funding or any direct or indirect affiliate of Citigroup Funding
is a party in interest, unless the offered securities are
acquired pursuant to an applicable statutory or administrative
exemption. Any employee benefit plan or other entity to which
such provisions of ERISA or the Code apply proposing to acquire
the offered securities should consult with its legal counsel.
Please consult the applicable prospectus supplement for further
information with respect to a particular offering of securities.
LEGAL
MATTERS
Julie Bell Lindsay, General Counsel-Capital Markets and
Corporate Reporting of Citigroup, Douglas C. Turnbull, Associate
General Counsel-Capital Markets and Corporate Reporting of
Citigroup or counsel to be identified in the applicable
supplement, will act as legal counsel to Citigroup Funding and
Citigroup. Ms. Lindsay and Mr. Turnbull beneficially
owns, or has rights to acquire under Citigroup employee benefit
plans, an aggregate of less than 1% of Citigroup’s common
stock. Cleary Gottlieb Steen & Hamilton LLP, New York,
New York, or other counsel identified in the applicable
supplement, will act as legal counsel to the underwriters.
Cleary Gottlieb Steen & Hamilton LLP has from time to
time acted as counsel for Citigroup and certain of its
subsidiaries, including Citigroup Funding, and may do so in the
future.
EXPERTS
The consolidated financial statements of Citigroup Inc. as of
December 31, 2010 and 2009, and for each of the years in
the three-year period ended December 31, 2010, and
management’s assessment of effectiveness of internal
control over financial reporting as of December 31, 2010,
have been incorporated by reference herein in reliance upon the
reports of KPMG LLP, independent registered public accounting
firm, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing. To the
extent that KPMG audits and reports on consolidated financial
statements of Citigroup at future dates and consents to the use
of their reports thereon, such consolidated financial statements
also will be incorporated by reference in the registration
statement in reliance upon their reports and said authority. The
report of KPMG LLP on the consolidated financial statements
refers to changes in 2010 in Citigroup Inc.’s methods of
accounting for qualifying special purpose entities, variable
interest entities and embedded credit derivatives and changes in
2009 in Citigroup Inc.’s methods of accounting for
other-than-temporary
impairments on investment securities, business combinations,
noncontrolling interests in subsidiaries and earnings per share.
28
The
information in this prospectus supplement is not complete and
may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This prospectus supplement is not an
offer to sell these securities and it is not soliciting an offer
to buy these securities in any state where the offer or sale is
not permitted.
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SUBJECT TO COMPLETION, DATED
MAY 11, 2011
PROSPECTUS SUPPLEMENT
(To prospectus
dated ,
2011)
Citigroup Funding
Inc.
Medium-Term
Senior Notes, Series D
Medium-Term Subordinated Notes,
Series E
Payments Due from Citigroup
Funding Inc.
Fully and Unconditionally
Guaranteed by Citigroup Inc.
General
Terms of Sale
The following terms will generally apply to the medium-term
senior and subordinated notes that we will sell from time to
time using this prospectus supplement, the accompanying
prospectus and any applicable pricing supplement. Citigroup
Funding will include information on the specific terms for each
note in a pricing supplement to this prospectus supplement that
Citigroup Funding will deliver to prospective buyers of any note.
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The notes will have maturities of nine months or more from the
date of issue, unless otherwise specified in the pricing
supplement.
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The notes may be issued as indexed notes. Payment of interest or
principal on indexed notes may be linked to the price of one or
more securities, currencies, commodities or other goods.
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The terms of specific notes may permit or require redemption or
repurchase at our option or the option of the holder.
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Index and currency risks may be associated with the notes.
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The notes will be denominated in U.S. dollars unless
otherwise specified by us and described in a pricing supplement.
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The notes may bear interest at a fixed or floating interest
rate. Zero coupon notes issued at a discount may not bear
interest.
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Senior notes are part of our senior indebtedness; and
subordinated notes are part of our subordinated indebtedness.
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You should review “Description of the Notes” and the
pricing supplement for specific terms that apply to your notes.
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Investing in the notes involves risks. See “Risk
Factors” beginning on page S-3 of this prospectus
supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or any
accompanying prospectus or pricing supplement is truthful or
complete. Any representation to the contrary is a criminal
offense.
These notes are not deposits or savings accounts but are
unsecured debt obligations of Citigroup Funding Inc. The notes
are not insured by the Federal Deposit Insurance Corporation or
any other governmental agency or instrumentality.
,
2011
We are responsible for the information contained and
incorporated by reference in this prospectus supplement, the
accompanying prospectus and any applicable pricing supplement.
We have not authorized anyone to give you any other information,
and we take no responsibility for any other information that
others may give you. You should not assume that the information
contained or incorporated by reference in this prospectus
supplement or the accompanying prospectus is accurate as of any
date other than the date on the front of this prospectus
supplement or the accompanying prospectus. We are not making an
offer of the securities in any state where the offer is not
permitted.
TABLE OF
CONTENTS
Prospectus Supplement
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Page
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S-3
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S-7
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S-8
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S-34
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S-41
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S-42
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S-42
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Prospectus
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1
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8
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EX-5.A |
EX-23.A |
EX-24.B |
S-2
RISK
FACTORS
Changes
in Exchange Rates and Exchange Controls Could Result in a
Substantial Loss to You.
An investment in foreign currency notes, which are notes
denominated in a specified currency other than U.S. dollars,
entails significant risks that are not associated with a similar
investment in a security denominated in U.S. dollars. Similarly,
an investment in an indexed note, on which all or a part of any
payment due is based on one or more currencies other than U.S.
dollars, has significant risks that are not associated with a
similar investment in non-indexed notes. Such risks include, but
are not limited to:
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the possibility of significant market changes in exchange rates
between U.S. dollars and the relevant currencies;
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the possibility of significant changes in exchange rates between
U.S. dollars and the relevant currencies resulting from official
redenomination or revaluation of such specified currency; and
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the possibility of the imposition or modification of foreign
exchange controls by either the United States or foreign
governments.
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Such risks generally depend on factors over which Citigroup
Funding has no control and which cannot be readily foreseen,
such as:
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economic events;
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political events; and
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the supply of, and demand for, the relevant currencies.
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In recent years, exchange rates between the U.S. dollar and some
foreign currencies in which Citigroup Funding’s notes may
be denominated, and between these foreign currencies and other
foreign currencies, have been volatile. This volatility may be
expected in the future. Fluctuations that have occurred in any
particular exchange rate in the past are not necessarily
indicative, however, of fluctuations that may occur in the
exchange rate during the term of any foreign currency note.
Depreciation of the specified currency of a foreign currency
note against U.S. dollars would result in a decrease in the
effective yield of such foreign currency note below its interest
rate and could result in a substantial loss to the investor on a
U.S. dollar basis.
Governments have imposed from time to time, and may in the
future impose, exchange controls that could affect exchange
rates as well as the availability of a specified currency other
than U.S. dollars at the time of payment of principal of, or
premium (if any) or interest on, a foreign currency note. There
can be no assurance that exchange controls will not restrict or
prohibit payments of principal, premium (if any) or interest or
other amounts payable (if any) denominated in any such specified
currency. Similarly, in the case of indexed notes and depending
on the specific terms of the notes, fluctuations of the relevant
underlying currencies could result in no return or in a
substantial loss to the investor.
Even if there are no actual exchange controls, it is possible
that such specified currency would not be available to Citigroup
Funding when payments on a note are due because of circumstances
beyond the control of Citigroup Funding. In this event,
Citigroup Funding will make required payments in U.S. dollars on
the basis described in this prospectus supplement. You should
consult your own financial and legal advisors as to the risks of
an investment in notes denominated in a currency other than U.S.
dollars. See “— The Unavailability of Currencies
Could Result in a Substantial Loss to You” and
“Description of the Notes — Payment of Principal
and Interest” below.
The information set forth in this prospectus supplement is
directed to prospective purchasers of notes who are United
States residents, except where otherwise expressly noted.
Citigroup Funding and Citigroup disclaim any responsibility to
advise prospective purchasers who are residents of countries
other than the United States regarding any matters that may
affect the purchase or holding of, or receipt of payments of
principal, premium or interest on, notes. Such persons should
consult their advisors with regard to these matters. Any
applicable supplement relating to notes having a specified
currency other than U.S. dollars will contain a description of
any material exchange controls affecting such currency and any
other required information concerning such currency.
S-3
The
Unavailability of Currencies Could Result in a Substantial Loss
to You.
Except as set forth below, if payment on a note is required to
be made in a specified currency other than U.S. dollars and such
currency is:
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unavailable due to the imposition of exchange controls or other
circumstances beyond Citigroup Funding’s control;
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no longer used by the government of the country issuing such
currency; or
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no longer used for the settlement of transactions by public
institutions of the international banking community,
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then all payments on such note will be made in U.S. dollars
until such currency is again available or so used. The amounts
so payable on any date in such currency shall be converted into
U.S. dollars on the basis of the most recently available market
exchange rate for such currency or as otherwise indicated in the
applicable pricing supplement. Any payment on such note made
under such circumstances in U.S. dollars will not constitute a
default or an event of default under the indenture under which
such note was issued.
If the specified currency of a note is officially redenominated,
other than as a result of European Monetary Union, such as by an
official redenomination of any such specified currency that is a
composite currency, then the payment obligations of Citigroup
Funding on such note will be the amount of redenominated
currency that represents the amount of Citigroup Funding’s
obligations immediately before the redenomination. The notes
will not provide for any adjustment to any amount payable under
such notes as a result of:
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any change in the value of the specified currency of such notes
relative to any other currency due solely to fluctuations in
exchange rates; or
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any redenomination of any component currency of any composite
currency, unless such composite currency is itself officially
redenominated.
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Currently, there are limited facilities in the United States for
conversion of U.S. dollars into foreign currencies, and vice
versa. In addition, banks do not generally offer non-U.S.
dollar-denominated checking or savings account facilities in the
United States. Accordingly, payments on notes made in a currency
other than U.S. dollars will be made from an account at a bank
located outside the United States, unless otherwise specified in
the applicable pricing supplement.
Judgments
in a Foreign Currency Could Result in a Substantial Loss to
You.
The notes will be governed by, and construed in accordance with,
the laws of the State of New York. 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 New York Judiciary Law 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 exchange rate
prevailing on the date of the entry of the judgment or decree.
Changes
in the Value of Underlying Assets of Indexed Notes Could Result
in a Substantial Loss to You.
An investment in indexed notes may have significant risks that
are not associated with a similar investment in a debt
instrument that:
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has a fixed principal amount; and
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bears interest at either a fixed rate or a floating rate based
on nationally published interest rate references.
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S-4
The risks of a particular indexed note will depend on the
specific terms of such indexed note. Such risks may include, but
are not limited to, the possibility of significant changes in
the prices, values, or levels of:
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the underlying assets;
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any financial, economic, or other measure or instrument making
up the relevant underlying assets; and
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any financial, economic, or other measure or instrument related
to the underlying assets.
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Underlying assets could include:
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one or more specified securities or securities indices;
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one or more specified foreign currencies or currency indices;
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one or more specified commodities or commodity indices;
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intangibles;
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articles or goods;
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any other financial, economic or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance;
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a combination thereof; or
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changes in such measures or differences between two or more such
measures.
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The risks associated with a particular indexed note generally
depend on factors over which Citigroup Funding has no control
and which cannot readily be foreseen. These risks include:
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economic events;
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political events; and
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the supply of, and demand for, the underlying assets.
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In recent years, currency exchange rates and prices for various
underlying assets have been highly volatile. Such volatility may
be expected in the future. Fluctuations in any such rates or
prices that have occurred in the past are not necessarily
indicative, however, of fluctuations that may occur during the
term of any indexed note.
In considering whether to purchase indexed notes, you should be
aware that the calculation of amounts payable on indexed notes
may involve reference to:
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an index determined by an affiliate of Citigroup Funding; or
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prices that are published solely by third parties or entities
that are not regulated by the laws of the United States or any
State thereof.
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Depending on the terms of an indexed note, the risk of loss of
principal or no return as a result of linking principal or
interest payments on indexed notes to the underlying assets can
be substantial. You should consult your own financial and legal
advisors as to the risks of an investment in indexed notes.
The
Return on Indexed Notes May Be Below the Return on Similar
Standard Debt Securities
Depending on the terms of an indexed note, as specified in the
applicable pricing supplement, you may not receive any interest
payments or receive only very low interest payments on such
indexed note. Similarly, depending on the terms of an indexed
note, you may receive at maturity a principal payment that is
equal to, less than, or only marginally greater than your
initial investment in the notes. As a result, the overall return
on such indexed note may be less than the amount you would have
earned by investing in a standard debt security that bears
interest at a prevailing market fixed or floating rate.
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An
Indexed Note May Be Linked to Volatile Underlying Assets, Which
May Adversely Affect Your Investment
Some underlying assets are highly volatile, which means that
their value may increase or decrease significantly over a short
period of time. It is impossible to predict the future
performance of underlying assets based on historical
performance. The amount of principal or interest that can be
expected to become payable on an indexed note may vary
substantially from time to time. Because the amounts payable
with respect to an indexed note are generally calculated based
on the price, value or level of the relevant underlying assets
on a specified date or over a limited period of time, volatility
in the underlying assets increases the risk that the return on
the indexed note may be adversely affected by a fluctuation in
the level of the relevant underlying assets.
The volatility of underlying assets may be affected by
financial, political, military or economic events, including
governmental actions, or by the activities of participants in
the relevant markets. Any of these events or activities could
adversely affect the value of an indexed note.
If You
Purchase an Indexed Note, You Will Have No Rights with Respect
to any Underlying Assets to which Such Indexed Note is
Linked
Investing in an indexed note will not make you a holder of any
of the underlying assets or any of their components. As a
result, you will not have any voting rights, any right to
receive dividends or other distributions or any other rights
with respect to any of the underlying assets or any of their
components.
Citigroup
Funding’s Hedging Activity Could Result in a Conflict of
Interest
We expect to hedge our obligations under any particular indexed
note through us or one or more of our affiliates. This hedging
activity will likely involve trading in the underlying assets or
in other instruments, such as options or swaps, based upon the
underlying assets. This hedging activity may present a conflict
between your interest in the indexed notes and the interests we
and our affiliates have in executing, maintaining and adjusting
our hedge transactions because it could affect the market price
of the underlying assets and therefore the market value of the
indexed notes. It could also be adverse to your interest if it
affects the price at which the agents may be willing to purchase
your indexed notes in the secondary market. Since hedging the
obligation under the indexed notes involves risk and may be
influenced by a number of factors, it is possible that we or our
affiliates may profit from our hedging activity, even if the
value of the indexed notes declines.
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IMPORTANT
CURRENCY INFORMATION
Purchasers are required to pay for each note in a currency
specified by Citigroup Funding for such note. If requested by a
prospective purchaser of a note having a specified currency
other than U.S. dollars, an agent may at its discretion arrange
for the exchange of U.S. dollars into the specified currency to
enable the purchaser to pay for such note. Each such exchange
will be made by such agent. The terms, conditions, limitations
and charges that such agent may from time to time establish in
accordance with its regular foreign exchange practice shall
control the exchange. The purchaser must pay all costs of
exchange.
References in this prospectus supplement to “U.S.
dollars,” “U.S.$,” “dollar” or
“$” are to the lawful currency of the United States.
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DESCRIPTION
OF THE NOTES
The following description of the particular terms of the
Medium-Term Senior Notes, Series D and Medium-Term
Subordinated Notes, Series E supplements the description of
the general terms and provisions of the debt securities set
forth in the prospectus. If any specific information regarding
the notes in this prospectus supplement is inconsistent with the
more general terms of the debt securities described in the
prospectus, you should rely on the information in this
prospectus supplement.
The pricing supplement for each offering of notes will contain
the specific information and terms for that offering. If any
information in the pricing supplement, including any changes in
the method of calculating interest on any note, is inconsistent
with this prospectus supplement, you should rely on the
information in the pricing supplement. The pricing supplement
may also add, update or change information contained in the
prospectus and this prospectus supplement. It is important for
you to consider the information contained in the prospectus,
this prospectus supplement and the pricing supplement in making
your investment decision.
General
Introduction. The senior notes are a series of
senior debt securities issued under Citigroup Funding’s
senior debt indenture among Citigroup Funding, Citigroup, as
guarantor, and The Bank of New York Mellon, formerly known as
The Bank of New York, as successor trustee, the payments on
which are fully and unconditionally guaranteed by Citigroup. The
subordinated notes are a series of subordinated debt securities
issued under Citigroup Funding’s subordinated debt
indenture among Citigroup Funding, Citigroup, as guarantor, and
Deutsche Bank Trust Company Americas, as trustee, the payments
on which are fully and unconditionally guaranteed by Citigroup.
Citigroup Funding reserves the right to withdraw, cancel or
modify the offer made by this prospectus supplement without
notice.
The U.S. dollar equivalent of the public offering price or
purchase price of a note having a specified currency other than
U.S. dollars will be determined on the basis of the market
exchange rate. Unless otherwise specified in connection with a
particular offering of notes, this market exchange rate will be
the noon buying rate in New York City for cable transfers in
foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New York for such specified currency on
the applicable issue date. Such determination will be made by
Citigroup Funding or its agent, as the exchange rate agent for
the applicable offering of notes.
Ranking. The senior notes will constitute part
of the senior indebtedness of Citigroup Funding and will rank on
an equal basis with all other unsecured debt of Citigroup
Funding other than subordinated debt. The guarantee of payments
due on the senior notes will constitute part of the senior
indebtedness of Citigroup and will rank on an equal basis with
all other unsecured debt of Citigroup other than subordinated
debt. The subordinated notes will be subordinate and junior in
the right of payment, to the extent and in the manner set forth
in the subordinated debt indenture, to all senior indebtedness
of Citigroup Funding. See “Description of Debt
Securities — Subordinated Debt” in the
prospectus. The guarantee of payments due on the subordinated
notes will be subordinate and junior in right of payment, to the
extent and in the manner set forth in the subordinated debt
indenture, to all senior indebtedness of Citigroup. See
“Description of Debt Securities — Citigroup
Guarantees” in the prospectus.
If there were an event of default with respect to any senior
indebtedness, the trustee or holders of 25% of the principal
amount of senior debt securities outstanding in a series could
demand that the principal be repaid immediately. If there were
an event of default with respect to any subordinated
indebtedness involving certain events of insolvency or
bankruptcy, the trustee or holders of 25% of the principal
amount of subordinated debt securities outstanding in a series
could demand that the principal be paid immediately. In the
absence of certain events of insolvency or bankruptcy, failure
to pay amounts due with respect to subordinated indebtedness
would not permit the trustee or such holders to demand that the
principal of such subordinated debt securities be paid
immediately. See “Description of Debt
Securities — Events of Default and Defaults” in
the prospectus.
Citigroup Funding had $63.5 billion aggregate principal
amount of senior indebtedness outstanding (excluding
intercompany debt) as of March 31, 2011. On a consolidated
basis, Citigroup had approximately
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$404.0 billion aggregate principal amount of senior
indebtedness outstanding (excluding intercompany debt) as of
March 31, 2011. This senior indebtedness consisted of
approximately $325.4 billion of term debt, approximately
$24.6 billion of commercial paper and approximately
$54.0 billion of other short-term borrowings.
Forms of Notes. The notes will be issued in
fully registered form only, without coupons. Each note will be
issued initially as a book-entry note, which will be a global
security registered in the name of a nominee of the Depositary
Trust Company, or DTC, as depositary, or such other depositary
named in the applicable pricing supplement. Alternatively, if
specified in the applicable pricing supplement, each note will
be issued initially as a certificated note, which will be a
certificate issued in temporary or definitive form. Except as
set forth in the prospectus under “Description of Debt
Securities — Book-Entry Procedures and
Settlement,” book-entry notes will not be issuable as
certificated notes. See “— Book-Entry
System” below.
Denominations. Unless otherwise specified in
connection with a particular offering of notes, the authorized
denominations of notes denominated in U.S. dollars will be
$1,000 and any larger amount that is a whole multiple of $1,000.
The authorized denominations of notes that have a specified
currency other than U.S. dollars will be the approximate
equivalents in the specified currency.
Maturity. Unless otherwise specified in
connection with a particular offering of notes, each note will
mature on a stated maturity date. Such stated maturity date will
be a business day nine months or more from its date of issue,
except in the case of indexed notes, for which the maturity may
be shorter, as selected by the purchaser and agreed to by
Citigroup Funding. If so specified in the applicable pricing
supplement, the stated maturity date may be extended at the
option of Citigroup Funding, and each note may also be redeemed
at the option of Citigroup Funding, or repaid at the option of
the holder, prior to its stated maturity. Each note that has a
specified currency of pounds sterling will mature in compliance
with the regulations the Bank of England may promulgate from
time to time.
Additional Information. The pricing supplement
relating to a note will describe the following terms:
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the specified currency for such note;
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whether such note
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(1)
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is a fixed rate note;
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(2)
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is a floating rate note;
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(3)
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is an amortizing note, meaning that a portion or all the
principal amount is payable prior to stated maturity in
accordance with a schedule, by application of a formula, or
based on an index; and/or
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(4)
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is an indexed note on which payments of interest or principal,
or both, may be linked to the price of one or more securities,
currencies, intangibles, articles, commodities or goods or any
other financial, economic or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance;
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the price at which such note will be issued, which will be
expressed as a percentage of the aggregate principal amount or
face amount;
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the original issue date on which such note will be issued;
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the date of the stated maturity;
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if such note is a fixed rate note, the rate per annum at which
such note will bear any interest, and whether and the manner in
which such rate may be changed prior to its stated maturity;
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if such note is a floating rate note, relevant terms such as:
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the base rate;
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(2)
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the initial interest rate;
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(3)
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the interest reset period or the interest reset dates;
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(4)
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the interest payment dates;
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(5)
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any index maturity;
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(6)
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any maximum interest rate;
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any minimum interest rate;
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(8)
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any spread or spread multiplier; and
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any other terms relating to the particular method of calculating
the interest rate for such note and whether and how any spread
or spread multiplier may be changed prior to stated maturity;
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whether such note is a note issued originally at a discount;
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if such note is an amortizing note, the terms for repayment
prior to stated maturity;
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if such note is an indexed note, in the case of an indexed rate
note, the manner in which the amount of any interest payment
will be determined or, in the case of an indexed principal note,
its face amount and the manner in which the principal amount
payable at stated maturity will be determined;
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whether such note may be redeemed at the option of Citigroup
Funding, or repaid at the option of the holder, prior to stated
maturity as described under “Optional Redemption, Repayment
and Repurchase” below and the terms of its redemption or
repayment;
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whether such note may have an optional extension beyond its
stated maturity as described under “Extension of
Maturity” below;
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whether such note will be represented by a global security or a
certificate issued in definitive form;
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any special United States federal income tax consequences of the
purchase, ownership and disposition of a particular issuance of
notes;
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whether such note is a renewable note, and, if so, its specific
terms;
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the use of proceeds, if materially different than that disclosed
in the accompanying prospectus;
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whether the holder of the note has a survivor’s option, as
described below under “Repayment Upon Death;” and
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any other terms of such note provided in the accompanying
prospectus to be set forth in a pricing supplement or that are
otherwise consistent with the provisions of the indenture under
which such note will be issued.
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As used in this prospectus supplement, business day means:
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for any note, any day that is not a Saturday or Sunday and that,
in New York City, is not a day on which banking institutions
generally are authorized or obligated by law or executive order
to close;
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for LIBOR 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 any determination by the exchange rate agent of an exchange
rate pursuant to notes having a specified currency other than
U.S. dollars, an exchange rate business day, which shall be any
day on which banking institutions and foreign exchange markets
settle payments in New York City and London;
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for notes having a specified currency other than U.S. dollars
only, other than notes denominated in euros, 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 notes and notes denominated in euros, 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 pricing supplement as Sydney, Toronto, Auckland and Zurich,
respectively.
Payment
of Principal and Interest
Citigroup Funding will pay the principal of, and any premium and
interest on, each note in the specified currency for the note.
If the specified currency for a note is other than U.S. dollars,
Citigroup Funding will, unless otherwise specified in the
applicable pricing supplement, arrange to convert all payments
in respect of the note into U.S. dollars in the manner described
in the following paragraph. The holder of a note having a
specified currency other than U.S. dollars may, if stated in the
applicable pricing supplement and such note, elect to receive
all payments on the note in the specified currency by delivering
a written notice to the trustee for such note not later than
fifteen calendar days prior to the applicable payment date,
except under the circumstances described under “Risk
Factors — The Unavailability of Currencies Could
Result in a Substantial Loss to You” above. Such election
will remain in effect until revoked by a written notice to the
trustee that is received not later than fifteen calendar days
prior to the applicable payment date. If an event of default has
occurred or Citigroup Funding has given notice of redemption of
a note, no such change of election may be made.
Unless otherwise specified in connection with a particular
offering of notes, the amount of any U.S. dollar payment on a
note having a specified currency other than U.S. dollars will be
determined by the exchange rate agent:
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based on the specified currency/U.S. dollar exchange rate
prevailing at 11:00 a.m., London, England time, on the
second exchange rate business day prior to the applicable
payment date, or
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if an exchange rate bid quotation is not so available, the
exchange rate agent will obtain a bid quotation from a leading
foreign exchange bank in London, England selected by the
exchange rate agent after consultation with Citigroup Funding.
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The exchange rate agent will also determine prior to settlement
the aggregate amount of the specified currency payable on a
payment date for all notes denominated in the specified
currency. All currency exchange costs will be deducted from
payments to the holders of the notes. If no such bid quotations
are available, the payments will be made in the specified
currency, unless the specified currency is unavailable due to
the imposition of exchange controls or due to other
circumstances beyond Citigroup Funding’s control. In that
case, payments will be made as described under “Risk
Factors — The Unavailability of Currencies Could
Result in a Substantial Loss to You” above.
Unless otherwise specified in connection with a particular
offering of notes, U.S. dollar payments of interest on notes,
other than interest payable at stated maturity, will be made,
except as provided below, by check mailed to the registered
holders of the notes. In the case of global securities
representing book-entry notes, payments of interest on notes
will be made to a nominee of the depositary.
A holder of $10,000,000, or its equivalent in a specified
currency other than U.S. dollars, or more in aggregate principal
amount of notes of like tenor and term, will be entitled to
receive U.S. dollar payments by wire transfer of immediately
available funds. However, such a holder is entitled to receive
the payments only if the trustee receives written appropriate
wire transfer instructions for the notes not later than fifteen
calendar days prior to the applicable interest payment date.
Unless otherwise specified in connection with a particular
offering of notes, principal and any premium and interest
payable at the stated maturity of a note will be paid in
immediately available funds upon surrender of the note at the
corporate trust office or agency of the trustee for the note in
New York City.
Unless otherwise specified in connection with a particular
offering of notes, any payment required to be made on a note on
a date, including the stated maturity date, that is not a
business day for the note need not
S-11
be made on that date. A payment may be made on the next
succeeding business day with the same force and effect as if
made on the specified date. No additional interest will accrue
as a result of delayed payment.
Unless otherwise specified in connection with a particular
offering of notes, if the principal of any original issue
discount note, or OID note, other than an indexed note, is
declared to be due and payable immediately as a result of the
acceleration of stated maturity, the amount of principal due and
payable relating to the note will be limited to the aggregate
principal amount of the note multiplied by the sum of
(1) its issue price, expressed as a percentage of the
aggregate principal amount, plus (2) the original issue
discount amortized from the date of issue to the date of
declaration. Amortization will be calculated using the interest
method, computed in accordance with U.S. generally accepted
accounting principles in effect on the date of declaration.
Unless otherwise set forth in the applicable pricing supplement,
the regular record date for any interest payment date for a
floating rate note, fixed rate note or an indexed rate note will
be the date, whether or not a business day, fifteen calendar
days immediately preceding an interest payment date.
Repayment
Upon Death
The pricing supplement relating to any senior note will indicate
if the holder of such note will have the survivor’s option,
which is an option to elect repayment of such note prior to its
stated maturity in the event of the death of the beneficial
owner of such note. Citigroup Funding will not issue any
subordinated notes with a survivor’s option.
Pursuant to exercise of the survivor’s option, Citigroup
Funding will repay any note (or applicable portion of any note)
properly tendered for repayment by the person, or on behalf of
the person by a representative of such person, who has authority
to act on behalf of the deceased beneficial owner of the note
under the laws of the appropriate jurisdiction (including,
without limitation, the personal representative, executor,
surviving joint tenant or surviving tenant by the entirety of
such deceased beneficial owner) at a price equal to the
amortized face amount thereof, subject to the following
limitations.
Citigroup Funding may, in its sole discretion, limit to
$2,500,000 (or the approximate equivalent in other currencies)
the aggregate principal amount of all notes for which exercises
of the survivor’s option will be accepted in any calendar
year. In the event that such limitation is applied, Citigroup
Funding may limit to $250,000 (or the approximate equivalent in
other currencies) the aggregate principal amount of notes (or
portions of notes) for which exercise of the survivor’s
option will be accepted during a calendar year for any
individual deceased beneficial owner of notes. Moreover,
Citigroup Funding will not make principal repayments due to
exercise of the survivor’s option in amounts that are less
than $5,000 (or the approximate equivalent in other currencies).
In the event that the limitations described in the preceding
sentences would result in the partial repayment of any note, the
principal amount of such note remaining outstanding after
repayment must be at least $5,000. Any note tendered due to
exercise of the survivor’s option may be withdrawn by a
written request of its holder received by the paying agent prior
to its repayment.
The amortized face amount of a note on any date shall be the
amount equal to
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the issue price set forth on the face of the applicable pricing
supplement plus
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that portion of the difference between the issue price and the
stated principal amount of such note that has accrued by such
date at:
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the bond yield to maturity set forth on the face of the
applicable pricing supplement, or
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if so specified in the applicable pricing supplement, the bond
yield to call printed on its face. Such yield will be computed
in each case in accordance with generally accepted United States
bond yield computation principles. However, the amortized face
amount of a note shall never exceed its stated principal amount.
The bond yield to call listed on the face of a pricing
supplement shall be computed on the basis of the first occurring
optional redemption date for such note and the amount payable on
the optional redemption date. If any note is not redeemed on its
first optional redemption date, the bond yield to call for such
note will be recomputed on the optional redemption date on the
basis of
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the next occurring optional redemption date and the amount
payable on such optional redemption date, and will continue to
be so recomputed on each succeeding optional redemption date
until such note is redeemed.
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Each note that is tendered pursuant to valid exercise of the
survivor’s option will be accepted promptly in the order
all such notes are tendered, except for any note (or portion
thereof) the acceptance of which, in the event Citigroup Funding
imposed either of the limits described in the preceding
paragraph, would:
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contravene the annual limitation, or
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result in the acceptance during the then current calendar year
of an aggregate principal amount of notes (or portions thereof)
exceeding $250,000 (or the approximate equivalent in other
currencies) for the relevant individual deceased beneficial
owner.
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If at the end of any calendar year Citigroup Funding has not
imposed the annual limit, or if the aggregate principal amount
of notes that have been accepted during that year due to
exercise of the survivor’s option has not exceeded the
annual limitation, Citigroup Funding may accept notes from
individual deceased owners in amounts that exceed the normal
$250,000 per-person limit. In this case, Citigroup Funding will
accept notes or portions of notes exceeding the $250,000 limit
in the order they were received, up to the annual limitation for
such calendar year. Any note or portion of a note accepted for
repayment due to the exercise of the survivor’s option will
be repaid on the first interest payment due date that occurs
20 or more calendar days after the date of such acceptance.
Each note (or any portion thereof) tendered for repayment that
is not accepted in any calendar year due to the application of
such annual limitation will be deemed to be tendered in the
following calendar year in the order in which all such notes
were originally tendered, unless any such note is withdrawn by
its holder. If a note (or any portion thereof) that is tendered
for repayment due to the valid exercise of the survivor’s
option is not accepted, the paying agent will deliver to any
affected representative a notice that states the reasons the
note (or portion thereof) has not been accepted for repayment.
The notice will be sent by first-class mail to the broker or
other entity that represents the deceased beneficial owner of
such note or, in the case of a certificated note, to the
registered holder thereof at its last known address as indicated
on the records of the security registrar.
Subject to the foregoing, in order for a survivor’s option
to be validly exercised, the paying agent must receive:
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a written request for repayment signed by the representative.
Such signature must be guaranteed by a member firm of a
registered national securities exchange or of the Financial
Industry Regulatory Authority, Inc. or a commercial bank or
trust company having an office or correspondent in the United
States;
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tender of such note to be repaid;
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appropriate evidence satisfactory to Citigroup Funding and the
paying agent that (1) the representative has authority to
act on behalf of the deceased beneficial owner; (2) the
death of such beneficial owner has occurred; and (3) the
deceased was the beneficial owner of such note at the time of
death;
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if applicable, a properly executed assignment or endorsement; and
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if such note is held by a nominee of the deceased beneficial
owner, a certificate satisfactory to the trustee from such
nominee attesting to the beneficial ownership of such note. All
questions as to the eligibility or validity of any exercise of
the survivor’s option will be determined by Citigroup
Funding, in its sole discretion, and such determinations will be
final and binding on all parties.
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If such note is represented by a global certificate, the
depositary’s nominee will be the holder of such note and
therefore will be the only entity that can exercise the
survivor’s option for such note. To obtain repayment upon
exercise of the survivor’s option for such a note, the
representative must provide to the broker or other entity
through which the deceased beneficial owner holds an interest in
such note:
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the documents described in the first and third bullet points of
the preceding paragraph; and
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instructions to the broker or other entity to notify the
depositary of the representative’s desire to obtain
repayment pursuant to exercise of the survivor’s option.
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The broker or other entity will provide to the paying agent:
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the documents received from the representative referred to in
the first bullet point of the preceding paragraph;
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its tender of such note pursuant to exercise of the
survivor’s option; and
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a certificate satisfactory to the paying agent from the broker
or other entity stating that it represents the deceased
beneficial owner.
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The broker or other entity will be responsible for disbursing to
the appropriate representative any payments it receives due to
exercise of the survivor’s option.
A representative may obtain more information regarding the
survivor’s option from Citibank, N.A., the paying agent, at
388 Greenwich Street, 14th Floor, New York, New York 10013
(telephone
1-800-422-2066),
during normal business hours.
Fixed
Rate Notes
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 pricing supplement until its principal amount
is paid or made available for payment. However, as described
below under “— Subsequent Interest Periods” and
“— Extension of Maturity,” or as otherwise may be
described in the applicable pricing supplement, the rate of
interest payable on fixed rate notes may be adjusted from time
to time.
Unless otherwise specified in connection with a particular
offering of notes, interest on each fixed rate note will be
payable semiannually in arrears on such dates as set forth in
the applicable pricing supplement, with each such day being an
interest payment date, and at stated maturity. Unless
“accrue to pay” is specified in the applicable pricing
supplement or unless otherwise specified in connection with a
particular offering of notes, if an interest payment date for
any fixed rate note would otherwise be a day that is not a
business day, any payment required to be made on such note on
such date, including the stated maturity date, may be made on
the next succeeding business day with the same force and effect
as if made on such date. No additional interest will accrue as a
result of such delayed payment.
If in connection with any fixed rate note, “accrue to
pay” is specified in the applicable pricing supplement, and
any interest payment date for such fixed rate note would
otherwise be a day that is not a business day, such interest
payment date will be postponed to the next succeeding business
day. Any payment of interest on such interest payment date will
include interest accrued through the day before such interest
payment date. Unless otherwise specified in connection with a
particular offering of notes, interest on fixed rate notes will
be computed on the basis of a 360-day year of twelve 30-day
months or, in the case of an incomplete month, the number of
days elapsed.
Floating
Rate Notes
The initial interest period is the period from the original
issue date to, but not including, the first interest reset date.
Each floating rate note will bear interest at the initial
interest rate set forth, or otherwise described, in the
applicable pricing supplement. An interest period is the period
from each interest reset date to, but not including, the
following interest reset date.
S-14
The interest rate for each floating rate note will be determined
based on an interest rate basis, the 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 that may be specified in
the applicable pricing supplement as applicable to such note.
The spread multiplier is the percentage that may be specified in
the applicable note or pricing supplement. As described below
under “Subsequent Interest Periods” and
“Extension of Maturity,” or as may otherwise be
specified in the applicable note or pricing supplement, the
spread or spread multiplier on floating rate notes may be
adjusted from time to time.
As specified in the applicable note or pricing supplement, a
floating rate note may also have either or both of the
following, which will be expressed as a rate per annum on a
simple interest rate basis:
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maximum interest rate, which will be a maximum limitation, or
ceiling, on the rate at which interest may accrue during any
interest period; and/or
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minimum interest rate, which will be a minimum limitation, or
floor, on the rate at which interest may accrue during any
interest period.
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In addition to any maximum interest rate that may be applicable
to any floating rate note, the interest rate on a floating rate
note will in no event be higher than the maximum rate permitted
by applicable law. The notes will be governed by the law of the
State of New York. As of the date of this prospectus supplement,
the maximum rate of interest under provisions of the New York
penal law, with a few exceptions, is 25% per annum on a simple
interest basis. Such maximum rate of interest only applies to
obligations that are less than U.S.$2,500,000.
Citigroup Funding will appoint and enter into agreements with
calculation agents to calculate interest rates on floating rate
notes. Unless otherwise specified in the applicable note or
pricing supplement, Citibank, N.A. will be the calculation
agent for each floating rate note. All determinations of
interest by a calculation agent will, in the absence of manifest
error, be conclusive for all purposes and binding on the holders
of the floating rate notes.
The interest rate on each floating rate note will be reset on an
interest reset date, which means that the interest rate is reset
daily, weekly, monthly, quarterly, semiannually or annually, as
specified in the applicable note or pricing supplement.
Unless otherwise specified in the applicable note or pricing
supplement, the interest reset dates will be as follows:
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in the case of floating rate notes that reset daily, each
business day;
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in the case of floating rate notes that reset weekly, other than
Treasury Rate notes, the Wednesday of each week;
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in the case of Treasury Rate notes that reset weekly and except
as provided below under “— Treasury Rate
Notes,” the Tuesday of each week;
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in the case of floating rate notes that reset monthly, other
than Eleventh District Cost of Funds Rate notes, the third
Wednesday of each month;
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in the case of floating rate notes that are Eleventh District
Cost of Funds Rate notes, the first calendar day of each month;
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in the case of floating rate notes that reset quarterly, the
third Wednesday of March, June, September and December of each
year;
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in the case of floating rate notes that reset semiannually, the
third Wednesday of each of two months of each year specified in
the applicable note or pricing supplement; and
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in the case of floating rate notes that reset annually, the
third Wednesday of one month of each year specified in the
applicable note or pricing supplement.
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S-15
Unless otherwise specified in the applicable pricing supplement:
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if an interest reset date for any floating rate note would fall
on a day that is not a business day, such interest reset date
will be postponed to the next succeeding business day.
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in the case of a LIBOR note or a EURIBOR note, if postponement
to the next business day would cause the interest reset date to
be in the next succeeding calendar month, the interest reset
date will instead be the immediately preceding business day.
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if an auction of direct obligations of United States Treasury
bills falls on a day that is an interest reset date for Treasury
Rate notes, the interest reset date will be the succeeding
business day.
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Unless otherwise specified in the applicable note or pricing
supplement and except as set forth below, the rate of interest
that goes into effect on any interest reset date will be
determined on an interest determination date preceding such
interest reset date, as further described below.
Unless otherwise specified in the applicable note or pricing
supplement, interest payable on floating rate notes will be the
interest accrued from and including the original issue date or
the last date to which interest has been paid, as the case may
be, to but excluding the applicable interest payment date.
Accrued interest on a floating rate note with more than one
interest reset date will be calculated by multiplying the
principal amount of the note by an accrued interest factor. If
the floating rate note is an indexed note, the face amount of
the note will be multiplied by the accrued interest factor. The
accrued interest factor will be computed by adding the interest
factors calculated for each day in the period for which accrued
interest is being calculated. Unless otherwise specified in the
applicable note or pricing supplement, the interest factor for
each such day will be computed by dividing the interest rate in
effect on such day by 360, in the case of CD Rate notes,
Commercial Paper Rate notes, Federal Funds Rate notes, LIBOR
notes, Prime Rate notes, Eleventh District Cost of Funds Rate
notes and EURIBOR notes. In the case of Treasury Rate notes, the
interest factor for each such day will be computed by dividing
such interest rate by the actual number of days in the year. The
interest factor will be expressed as a decimal calculated to
seven decimal places without rounding. For purposes of making
the foregoing calculation, the interest rate in effect on any
interest reset date will be the applicable rate as reset on such
date.
For all other floating rate notes, accrued interest will be
calculated by multiplying the principal amount of the note by
the interest rate in effect during the period for which accrued
interest is being calculated. That product is then multiplied by
the quotient obtained by dividing the number of days in the
period for which accrued interest is being calculated by 360, in
the case of CD Rate notes, Commercial Paper Rate notes, Federal
Funds Rate notes, LIBOR notes, Prime Rate notes, Eleventh
District Cost of Funds Rate notes and EURIBOR notes. In the case
of Treasury Rate notes, such product is multiplied by the
quotient obtained by dividing the number of days in the period
for which accrued interest is being calculated by the actual
number of days in the year.
Unless otherwise specified in the applicable note or pricing
supplement, 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% (0.0000001), with five
one-millionths of a percentage point rounded upward. All
currency amounts used in, or resulting from, such calculation on
floating rate notes will be rounded to the nearest one-hundredth
of a unit. For purposes of such rounding, 0.005 of a unit shall
be rounded upward.
Except as provided below and unless otherwise provided in the
applicable pricing supplement, interest on floating rate notes
having maturities of one year or more will be payable, in the
case of floating rate notes with an interest reset date that
resets:
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daily, weekly, or monthly — on a business day that
occurs, or business days that occur, in each month, as specified
in the applicable pricing supplement;
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quarterly — on a business day that occurs in each
third month, as specified in the applicable pricing supplement;
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S-16
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semi-annually — on a business day that occurs in each
of two months of each year, as specified in the applicable
pricing supplement; and
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annually — on a business day that occurs in one month
of each year, as specified in the applicable pricing supplement.
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Unless otherwise provided in the applicable pricing supplement,
if an interest payment date for any floating rate note would
fall on a day that is not a business day, such interest payment
date will be postponed to the next succeeding business day and,
in the case of a LIBOR note or a EURIBOR note, if postponement
to the next business day would cause the interest payment date
to be in the next succeeding calendar month, the interest
payment date will instead be the immediately preceding business
day.
If for any floating rate note, the applicable note or pricing
supplement provides that the note does not accrue to pay, and if
an interest payment date for such floating rate note would
otherwise be a day that is not a business day, such interest
payment date will not be postponed. Any payment required to be
made on such floating rate note, however, may be made on the
next succeeding business day with the same force and effect as
if made on the due date. No additional interest will accrue as a
result of such delayed payment.
Upon the request of the holder of any floating rate note, the
calculation agent for such note will provide the interest rate
then in effect and, if determined, the interest rate that will
become effective on the next interest reset date for such
floating rate note.
The applicable pricing supplement will designate one of the
following base rates as applicable to a floating rate note:
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the CD Rate;
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the Commercial Paper Rate;
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the Federal Funds Rate;
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LIBOR;
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the Treasury Rate;
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the Prime Rate;
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the Eleventh District Cost of Funds Rate;
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EURIBOR;
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CDOR; or
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such other rate or interest rate formula as is set forth in the
applicable pricing supplement and in the 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.
“Calculation date” means the date on which the
calculation agent is to calculate the interest rate as of the
related rate determination date and will be the earlier of
(1) the tenth calendar day after the related rate
determination date, or if any such day is not a business day,
the next succeeding business day or (2) the business day
preceding the applicable interest payment date or the stated
maturity.
S-17
CD Rate Notes. Each CD Rate note will bear
interest for each interest reset period at an interest rate
equal to the CD Rate and any spread or spread multiplier
specified in such note and in the applicable pricing supplement.
The calculation agent will determine the CD Rate on each CD Rate
determination date. The CD Rate determination date is the second
business day prior to the interest reset date for each interest
reset period for negotiable U.S. dollar certificates of deposit
having the index maturity designated in the applicable pricing
supplement as published in H.15(519) opposite the caption
“CDs (Secondary Market).”
The following procedures will be followed if the CD Rate cannot
be determined as described above.
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If the above rate is not published prior to 3:00 p.m., New York
City time, on the calculation date pertaining to the CD Rate
determination date then the CD Rate for such interest period
will be the rate on that CD Rate determination date for
negotiable U.S. dollar certificates of deposit of the index
maturity designated in the applicable note or pricing supplement
as published in the H.15 Daily Update or other recognized
electronic source used for the purpose of displaying the
applicable rate, opposite the caption “CDs (Secondary
Market).”
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If by 3:00 p.m., New York City time, on the related CD Rate
determination date, the above rate is not yet published, then
the CD Rate will be the arithmetic average of the secondary
market offered rates as of 10:00 a.m., New York City time,
on that CD Rate determination date of three leading non-bank
dealers in negotiable U.S. certificates of deposit in New York
City selected by the calculation agent for negotiable U.S.
certificates of deposit of major United States money center
banks of the highest credit standing, in the market for
negotiable U.S. dollar certificates of deposit, with a remaining
maturity closest to the index maturity designated in the
applicable note or pricing supplement in an amount that is
representative for a single transaction in that market at that
time.
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If the dealers selected by the calculation agent, however, are
not quoting offered rates as mentioned in the preceding bullet
point, the CD Rate for such interest period will be the same as
the CD Rate for the immediately preceding interest period. If
there was no such interest period, the CD Rate will be the
initial interest rate.
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CD Rate notes, like other notes, are not deposit obligations of
a bank and are not insured by the Federal Deposit Insurance
Corporation.
Commercial Paper Rate Notes. Each Commercial
Paper Rate note will bear interest for each interest period at
an interest rate equal to the Commercial Paper Rate and any
spread or spread multiplier, specified in such note and the
applicable pricing supplement.
The calculation agent will determine the Commercial Paper Rate
on each Commercial Paper Rate determination date. The Commercial
Paper Rate determination date is the second business day
immediately preceding the interest reset date for each interest
period. The Commercial Paper Rate will be the money market yield
on that date of the rate for commercial paper having the index
maturity specified in the applicable note or pricing supplement,
as such rate published in H.15(519) opposite the caption
“Commercial Paper — Nonfinancial.”
The following procedures will be followed if the Commercial
Paper Rate cannot be determined as described above.
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If such rate is not published prior to 3:00 p.m., New York City
time, on the calculation date pertaining to the Commercial Paper
Rate determination date, then the Commercial Paper Rate for such
interest period will be the money market yield on that
Commercial Paper Rate determination date of the rate for
commercial paper of the specified index maturity as published in
H.15 Daily Update, or such other recognized electronic source
used for the purpose of displaying the applicable rate, opposite
the caption “Commercial Paper —
Nonfinancial.”
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If by 3:00 p.m., New York City time, on such calculation date,
the above rate is not yet published, then the Commercial Paper
Rate for such interest period will be the money market yield of
the arithmetic
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S-18
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average of the offered rates, as of 11:00 a.m., New York
City time, on that Commercial Paper Rate determination date, of
three leading dealers of U.S. dollar commercial paper in
New York City selected by the calculation agent for such
Commercial Paper Rate note for commercial paper of the specified
index maturity placed for an industrial issuer whose bonds are
rated “Aa” or the equivalent by a nationally
recognized rating agency.
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If the dealers selected by such calculation agent, however, are
not quoting offered rates as mentioned in the preceding bullet
point, the Commercial Paper Rate for such interest period will
be the same as the Commercial Paper Rate for the immediately
preceding interest period. If there was no such interest period,
the Commercial Paper Rate will be the initial interest rate.
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Money market yield will be expressed as a percentage and
calculated as follows:
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money market yield
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=
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D × 360
360 – (D × M)
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× 100
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where “D” refers to the applicable per annum rate for
commercial paper quoted on a bank discount basis and expressed
as a decimal, and “M” refers to the actual number of
days in the applicable interest period.
Federal Funds Rate Notes. Each Federal Funds
Rate note will bear interest for each interest period at an
interest rate equal to the Federal Funds Rate and any spread or
spread multiplier specified in such note and the applicable
pricing supplement.
The calculation agent will determine the Federal Funds Rate on
each Federal Funds Rate determination date. The Federal Funds
Rate determination date is the second business day immediately
preceding the interest reset date for such interest period. The
Federal Funds Rate will be the rate for U.S. dollar federal
funds as published in H.15(519) opposite the caption
“Federal Funds (Effective),” as displayed on Reuters
3000 Xtra Service (“Reuters”) (or any successor
service) on Page FEDFUNDS1 (or any other page as may
replace such page on such service, which is commonly referred to
as “Reuters page FEDFUNDS1” opposite the caption
“EFFECT.”).
The following procedures will be followed if the Federal Funds
Rate cannot be determined as described above.
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If the above rate does not appear on Reuters page FEDFUNDS1
or otherwise set forth above or is not published prior to 3:00
p.m., New York City time, on the calculation date pertaining to
the Federal Funds Rate determination date, the Federal Funds
Rate for such interest period will be the rate on that Federal
Funds Rate determination date as published in the
H.15 Daily Update opposite the caption “Federal Funds
(Effective),” or such other recognized electronic source
used for the purpose of displaying the applicable rate.
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If by 3:00 p.m., New York City time, on such calculation date
the above rate is not yet published, then the Federal Funds Rate
for such interest period will be the arithmetic average of the
rates for the last transaction in overnight U.S. dollar
federal funds arranged by three leading brokers of
U.S. dollar federal funds transactions in New York City,
selected by the calculation agent prior to 9:00 a.m., New
York City time, on the business day following such Federal Funds
Rate determination date.
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If the brokers so selected by the calculation agent are not
quoting as mentioned above, the Federal Funds Rate for such
interest period will be the Federal Funds Rate in effect for the
particular Federal Funds Rate determination date. If there was
no such Federal Funds Rate in effect for the interest period,
the Federal Funds Rate will be the initial interest rate.
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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 such note
and the applicable pricing supplement.
The calculation agent will determine LIBOR on each LIBOR
determination date. The LIBOR determination date is the second
London business day prior to the interest reset date for each
interest period.
S-19
On a LIBOR 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 the specified currency for the period of the index
maturity specified in the applicable note or pricing supplement
commencing on such interest reset date, which appears on the
“designated LIBOR page” at approximately
11:00 a.m., London, England time, on that LIBOR
determination date.
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If “Reuters LIBOR01” is designated in the applicable
note or pricing supplement, or if no LIBOR page is specified in
the applicable note or pricing supplement as the method for
calculating LIBOR, “designated LIBOR page” means the
display on Reuters (or any successor service) 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 a LIBOR 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
Funding) will select four major banks in the London, England
interbank market.
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The calculation agent will request that the principal London,
England 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 LIBOR
determination date. These quotations shall be for deposits in
the specified currency for the period of the specified index
maturity, commencing on the related interest reset date. Offered
quotations must be based on a principal amount equal to at least
U.S.$1,000,000 or the approximate equivalent in the specified
currency that is representative of a single transaction in such
market at such time.
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(1)
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If two or more quotations are provided, LIBOR on such LIBOR
determination date will be the arithmetic average of such
quotations.
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(2)
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If fewer than two quotations are provided, the calculation agent
(after consultation with Citigroup Funding) will select three
major banks in New York City and follow the steps in the two
bullet points immediately below.
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The calculation agent will then determine LIBOR for such
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
such LIBOR determination date. The rates quoted will be for
loans in the specified currency, for the period of the specified
index maturity commencing on the related interest reset date.
Rates quoted must be based on a principal amount of at least
U.S.$1,000,000 or the approximate equivalent in the specified
currency that is representative of a single transaction in such
market at such time.
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If fewer than three New York City banks selected by the
calculation agent are quoting rates, LIBOR for such interest
period will be the same as for the immediately preceding
interest period. If there was no such interest period, the LIBOR
Rate will be the initial interest rate.
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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 such note and the applicable pricing supplement.
Treasury
Rate Notes Other than Constant Maturity Treasury Rate
Notes
Unless “Constant Maturity” is specified in the
applicable note or pricing 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
S-20
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 government that have the index maturity specified
in the applicable note or pricing 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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(1)
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If the Treasury Rate referred to above is not published prior to
3:00 p.m., New York City time, on the calculation date
pertaining to the Treasury Rate determination date, then the
Treasury Rate will be the Money Market 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.”
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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 related Treasury
Rate determination 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.
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(3)
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If the rate referred to in clause (2) is not so announced by the
United States Department of the Treasury, or if the auction is
not held, then the Treasury Rate on such Treasury Rate
determination date will be the bond equivalent yield of the rate
on the Treasury Rate determination date of the applicable
treasury securities as 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 related
calculation date, then the Treasury Rate will be the rate on the
Treasury Rate determination date of 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/Secondary
Market.”
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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 related
calculation date, then the Treasury Rate will be the rate on the
Treasury Rate determination date calculated by the calculation
agent as the bond equivalent yield of the arithmetic average of
the secondary market bid rates, as of approximately
3:30 p.m., New York City time, on the Treasury Rate
determination date, of three primary United States government
securities dealers selected by the calculation agent (after
consultation with Citigroup Funding), for the issue of treasury
securities with a remaining maturity closest to the index
maturity specified in the applicable note or pricing 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 clause (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 such interest period, the Treasury Rate will be the
initial interest rate.
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The Treasury Rate determination date for each interest period
will be the day of the week in which the interest reset date for
such interest period falls on which treasury securities would
normally be 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
such auction may be held on the preceding Friday. If, as the
result of a legal holiday, an auction is held on the preceding
Friday, such Friday will be the Treasury Rate 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 reset date for a Treasury Rate note,
then that interest reset date will instead be the business day
immediately following the auction date.
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
360 – (D × M)
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× 100
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S-21
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.
Constant
Maturity Treasury Rate Notes
If “Constant Maturity” is specified in the applicable
note or pricing supplement, the Treasury Rate for each interest
period will be the percentage equal to the yield for United
States Treasury securities at “constant maturity”
having the CMT maturity index specified in the applicable
pricing supplement as the yield is displayed on Reuters (or any
successor service) page “FRBCMT” (or any other page as
may replace such page on such service) opposite the caption
“Treasury Constant Maturities” (“Reuters
Page FRBCMT”) on the Constant Maturity Treasury Rate
determination date.
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If the rate referred to above does not appear on Reuters
Page “FRBCMT”, then the Treasury Rate on such
Constant Maturity Treasury Rate determination date will be the
percentage equal to the yield for United States Treasury
securities at “constant maturity” having the
designated CMT maturity index for the particular Constant
Maturity Treasury Rate determination date as published in
H.15(519) opposite the caption “Treasury Constant
Maturities.”
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If the rate referred to above does not so appear in H.15(519),
then the Treasury Rate on such Constant Maturity Treasury Rate
determination date will be the rate on the particular Constant
Maturity Treasury Rate determination date for the period of the
designated CMT maturity index as may then be published by either
the Federal Reserve or the United States Department of the
Treasury that the calculation agent determines to be comparable
to the rate which would otherwise have been published in
H.15(519).
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If the Treasury Rate cannot be determined as indicated above,
the following procedures will be followed in the order set forth
below:
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(1)
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If the above information, as applicable, is not so published,
then the calculation agent will calculate the Treasury Rate on
the Constant Maturity Treasury Rate determination date as
follows:
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The Treasury Rate will be a yield to maturity based on the
arithmetic average of the secondary market bid prices as of
approximately 3:30 p.m., New York City time, on the Constant
Maturity Treasury Rate determination date of three leading U.S.
government securities dealers in New York City, for Treasury
notes. The Treasury notes will be United States treasury
securities, with an original maturity of approximately the
designated CMT maturity index and a remaining term to maturity
of not less than such designated CMT maturity index minus one
year and in a principal amount that is representative for a
single transaction in the securities in that market at that time.
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The three government securities dealers referenced above will be
identified from five such dealers who are selected by the
calculation agent (after consultation with Citigroup Funding),
one of which may be the agent, by eliminating the dealers with
the highest and lowest quotations, or in the event of equality,
one of the highest and/or lowest quotation, as the case may
require.
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(2)
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If three or four, but not five, of such dealers provide
quotations as described above, then the Treasury Rate will be
based on the arithmetic average of the bid prices obtained and
neither the highest nor the lowest of such quotes will be
eliminated.
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(3)
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If the calculation agent is unable to obtain three such Treasury
note quotations as described in clause (1) above, the
Treasury Rate on such Constant Maturity Treasury Rate
determination date will be calculated by the calculation agent
as follows:
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The rate will be a yield to maturity based on the arithmetic
average of the secondary market bid prices as of approximately
3:30 p.m., New York City time, on the Constant Maturity
Treasury Rate determination date reported, according to their
written records, by three leading U.S. government securities
dealers in New York City, for Treasury notes with an original
maturity of the number of years that is the next highest to the
designated CMT maturity index and a remaining maturity
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closest to the index maturity specified in the applicable note
or pricing supplement, and in an amount that is representative
for a single transaction in that market at that time.
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If two Treasury notes with an original maturity, as described
above, have remaining terms to maturity equally close to the
designated CMT maturity index, the calculation agent will obtain
quotations for the Treasury note with the shorter remaining term
to maturity and will use such quotations to calculate the
Treasury Rate as set forth above.
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The three government securities dealers referenced above will be
identified from five such dealers who are selected by the
calculation agent (after consultation with Citigroup Funding),
one of which may be the agent, by eliminating the dealers with
the highest and lowest quotations, or in the event of equality,
one of the highest and/or lowest quotation, as the case may
require.
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(4)
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If three or four, but not five, of such dealers provide
quotations as described above, then the Treasury Rate will be
based on the arithmetic average of the offer prices obtained and
neither the highest nor the lowest of such quotes will be
eliminated.
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(5)
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If fewer than three dealers selected by the calculation agent
provide quotations as described in clause (3) above, the
Treasury Rate determined as of the Constant Maturity Treasury
Rate determination date will be the Treasury Rate in effect on
such Constant Maturity Treasury Rate determination date.
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“Designated CMT maturity index” means the original
period to maturity of the U.S. treasury securities, either one,
two, three, five, seven, ten, twenty or thirty years, specified
in the applicable note or pricing supplement for which the
Treasury Rate will be calculated. If no such maturity is
specified in the applicable note or pricing supplement, the
designated CMT maturity index will be two years.
The “Constant Maturity Treasury Rate determination
date” will be the second business day prior to the interest
reset date for the applicable interest period.
The CMT Rate for a treasury security maturity as published as of
any business day is intended to be indicative of the yield of a
U.S. Treasury security having as of such business day a
remaining term to maturity equivalent to such maturity. The CMT
Rate as of any business day is based upon an interpolation by
the U.S. Treasury of the daily yield curve of outstanding
treasury securities. This yield curve, which relates the yield
on a security to its time to maturity, is based on the
over-the-counter market bid yields on actively traded Treasury
securities. Such yields are calculated from composites of
quotations reported by leading U.S. government securities
dealers, which may include one or more of the calculation agents
or other affiliates of Citigroup Funding. Certain constant
maturity yield values are read from the yield curve. Such
interpolation from the yield curve provides a theoretical yield
for a Treasury security having ten years to maturity, for
example, even if no outstanding Treasury security has as of such
date exactly ten years remaining to maturity.
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 pricing supplement.
The calculation agent will determine the Prime Rate for each
interest period on each Prime Rate determination date. The Prime
Rate determination date is the second business day prior to the
interest reset date for 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 pertaining to the Prime Rate
determination date, then the Prime Rate will be the rate on the
Prime Rate determination date that is published in the H.15
Daily Update, or such other recognized electronic source used
for the purpose of displaying the applicable 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 related calculation
date, then the Prime Rate will be the arithmetic average of the
rates of interest that appear on Reuters
page “USPRIME1” (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)
(“Reuters page
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S-23
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USPRIME1”) as such bank’s prime rate or base lending
rate, as of 11:00 a.m. New York City time, on the Prime Rate
determination date.
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If fewer than four such rates appear on the Reuters
page “USPRIME1” for such Prime Rate determination
date by 3:00 p.m., New York City time on the related
calculation date, then the calculation agent (after consultation
with Citigroup Funding) will select three major banks in New
York City. The Prime Rate will be the arithmetic average of the
prime rates or base lending 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 Prime Rate
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 in effect on the Prime Rate
determination date.
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Eleventh District Cost of Funds Rate Notes. Eleventh
District Cost of Funds Rate notes will bear interest at the
interest rates, calculated based on the Eleventh District Cost
of Funds Rate and any spread and/or spread multiplier, specified
in the Eleventh District Cost of Funds Rate notes and the
applicable pricing supplement.
The calculation agent will determine the Eleventh District Cost
of Funds Rate on each Eleventh District Cost of Funds Rate
determination date. The Eleventh District Cost of Funds Rate
determination date is the last working day of the month
immediately prior to each interest reset date for each interest
period on which the Federal Home Loan Bank of San Francisco
publishes the Eleventh District Cost of Funds Index.
The Eleventh District Cost of Funds Rate will be the rate equal
to the monthly weighted average cost of funds for the calendar
month immediately preceding the month in which such Eleventh
District Cost of Funds Rate determination date falls as set
forth under the caption
“11th District”
on the display on Reuters (or any successor service) Page
“COFI/ARMS” (or any other page as may replace such
page on such service) (Reuters Page “COFI/ARMS”).
Such page will be deemed to include any successor page,
determined by the calculation agent, as of 11:00 A.M., San
Francisco, California time, on the Eleventh District Cost of
Funds Rate determination date.
The following procedures will be followed if the Eleventh
District Cost of Funds Rate cannot be determined as described
above.
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If the rate does not appear on Reuters
Page “COFI/ARMS” on any related Eleventh District
Cost of Funds Rate determination date, the Eleventh District
Cost of Funds Rate for the Eleventh District Cost of Funds Rate
determination date will be the Eleventh District Cost of Funds
Rate Index.
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If the Federal Home Loan Bank of San Francisco fails to announce
the Eleventh District Cost of Funds Rate Index on or prior to
the Eleventh District Cost of Funds Rate determination date for
the calendar month immediately preceding that date, then the
Eleventh District Cost of Funds Rate for such date will be the
Eleventh District Cost of Funds Rate in effect on such Eleventh
District Cost of Funds Rate determination date.
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The “Eleventh District Cost of Funds Rate Index” will
be the monthly weighted average cost of funds paid by member
institutions of the Eleventh Federal Home Loan Bank District
that the Federal Home Loan Bank of San Francisco most recently
announced as the cost of funds for the calendar month preceding
the date of such announcement.
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 such
note and the applicable pricing supplement.
The calculation agent will determine EURIBOR on each EURIBOR
determination date. The EURIBOR determination date is the second
TARGET business day prior to the interest reset date for each
interest period.
The calculation agent will determine the offered rates for
deposits in euros for the period of the index maturity specified
in the applicable note or pricing supplement, in amounts of at
least €1,000,000, commencing on such interest reset date,
as that rate appears on the display on Reuters (or any successor
service) on page “EURIBOR01”
S-24
(or any other page as may replace such page on such service) as
of 11:00 a.m., Brussels, Belgium time, on such EURIBOR
determination date.
If EURIBOR cannot be determined on a EURIBOR 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
Funding) will select four major banks in the Eurozone interbank
market.
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The calculation agent will request that the principal Eurozone
offices of those four selected banks provide their offered
quotations to prime banks in the Eurozone interbank market at
approximately 11:00 a.m., Brussels, Belgium time, on the
EURIBOR determination date. These quotations shall be for
deposits in euros for the period of the specified index
maturity, commencing on such interest reset date. Offered
quotations must be based on a principal amount equal to at least
€1,000,000 or the approximate equivalent in
U.S. dollars that is representative of a single transaction
in such market at such time.
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(1)
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If two or more quotations are provided, EURIBOR for such
interest period will be the arithmetic average of such
quotations.
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(2)
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If fewer than two quotations are provided, the calculation agent
(after consultation with Citigroup Funding) will select three
major banks in the Eurozone and follow the steps in the two
bullet points immediately below.
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The calculation agent will then determine EURIBOR for such
interest period as the arithmetic average of rates quoted by
those three major banks in the Eurozone to leading European
banks at approximately 11:00 a.m., Brussels, Belgium time,
on such EURIBOR determination date. The rates quoted will be for
loans in euros, for the period of the specified index maturity,
commencing on the interest reset date. Rates quoted must be
based on a principal amount of at least US$1,000,000 or the
approximate equivalent in U.S. dollars that is
representative of a single transaction in such market at such
time.
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If the banks so selected by the calculation agent are not
quoting rates as described above, EURIBOR for such interest
period will be the same as for the immediately preceding
interest period. If there was no such interest period, EURIBOR
will be the initial interest rate.
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“Eurozone” means the region comprised of member states
of the European Union that adopted the single currency in
accordance with the Treaty establishing the European Community,
as amended.
CDOR Rate Notes. Each CDOR note will bear
interest for each interest period at an interest rate equal to
the Canadian dollar three-month Banker’s Acceptance Rate
(“CDOR”) and any spread or spread multiplier specified
in the note and the applicable pricing supplement.
The calculation agent will determine CDOR on each CDOR
determination date. The CDOR 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 Reuters (or any successor
service) Page “CDOR” (or any other page as may replace
such page on such service), or any 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, Canada time,
on such CDOR 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,
Canada time, on the CDOR 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, Canada time, on such CDOR
determination date.
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S-25
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If no offered rate appears on Reuters Page CDOR on a CDOR
determination date at approximately 10:00 a.m., Toronto,
Canada 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, Canada time, on such CDOR 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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Inverse Floating Rate Notes. Any floating rate
note may be designated in the applicable note or pricing
supplement as an inverse floating rate note. In such an event,
unless otherwise specified in the applicable note or pricing
supplement, the interest rate on such floating rate note will be
equal to:
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in the case of the period, if any, commencing on the issue date,
or the date on which such note otherwise begins to accrue
interest if different from the issue date, up to the first
interest reset date, a fixed rate of interest established by
Citigroup Funding as described in the applicable note or pricing
supplement; and
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in the case of each period commencing on an interest reset date,
a fixed rate of interest specified in the applicable note or
pricing supplement minus the interest rate determined based on
the base rate as adjusted by any spread and/or spread multiplier.
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However, on any inverse floating rate note, the interest rate
will not be less than zero.
Floating/Fixed Rate Notes. The applicable note
or pricing supplement may provide that a note 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 such note will be determined as if it were a
floating rate note and a fixed rate note for each such
respective period, all as specified in such applicable note or
pricing supplement.
Subsequent
Interest Periods
The applicable note or pricing supplement will indicate whether
Citigroup Funding has the option to reset the interest rate, or
the spread, spread multiplier or method of calculation, as the
case may be, for such note. If Citigroup Funding has the option
to reset, the note or pricing supplement will also indicate the
optional reset date or dates on which such interest rate, or
such spread, spread multiplier or method of calculation, as the
case may be, may be reset.
Citigroup Funding shall notify the trustee whether or not it
intends to exercise such option relating to such notes at least
45 but not more than 60 days prior to an optional reset
date for the note. Not later than 40 days prior to the
optional reset date, the trustee will mail to the holder of such
notes a reset notice first class, postage prepaid, indicating
whether Citigroup Funding has elected to reset the interest rate
or the spread, spread multiplier or method of calculation, as
the case may be.
If Citigroup Funding elects to reset the interest rate, or the
spread, spread multiplier or method of calculation, as the case
may be, the trustee will mail to the holder, in a manner
described above, a notice indicating such new interest rate or
such new spread, spread multiplier or method of calculation, as
the case may be. The notice will also indicate any provisions
for redemption during the subsequent interest period. The
subsequent interest period is the period from such optional
reset date to the next optional reset date or, if there is no
such next optional reset date, to the stated maturity of such
note, including the date or dates on which or the period or
periods during which and the price or prices at which such
redemption may occur during such subsequent interest period.
Upon the transmittal by the trustee of a reset notice to the
holder of a note, such new interest rate or such new spread,
spread multiplier and/or method of calculation, as the case may
be, will take effect automatically. Except as modified by the
reset notice and as described below, such note will have the
same terms as prior to the transmittal of such reset notice.
S-26
Despite the foregoing, not later than 20 days prior to an
optional reset date for a note, Citigroup Funding may, at its
option, revoke the interest rate, or the spread or spread
multiplier, provided for in the reset notice relating to such
optional reset date, and establish a higher interest rate, or a
higher spread or spread multiplier, as applicable, for the
subsequent interest period commencing on such optional reset
date.
Citigroup Funding can make such revocations by causing the
trustee for the note to mail notice of such higher interest rate
or higher spread or spread multiplier, as the case may be, first
class, postage prepaid, to the holder of such note. Such notice
shall be irrevocable. All notes for which the interest rate or
spread or spread multiplier is reset on an optional reset date
will bear such higher interest rate, or higher spread or spread
multiplier, as the case may be, whether or not tendered for
repayment.
The holder of a note will have the option to elect repayment of
such note by Citigroup Funding on each optional reset date at a
price equal to the principal amount of such note plus interest
accrued to such optional reset date. In order for a note to be
repaid on an optional reset date, the holder of such note must
follow the procedures set forth below under
“— Optional Redemption, Repayment and
Repurchase” for optional repayment or in the applicable
note or pricing supplement. However, the period for delivery of
such note or notification to the trustee for such note will be
at least 25 but not more than 35 days prior to such
optional reset date. Further, a holder who has tendered a note
for repayment pursuant to a reset notice may, by written notice
to the trustee for such note, revoke any tender for repayment
until the close of business on the tenth day prior to such
optional reset date.
Amortizing
Notes
Citigroup Funding may from time to time offer amortizing notes
on which a portion or all of the principal amount is payable
prior to stated maturity:
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in accordance with a schedule;
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by application of a formula; or
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based on an index.
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In the case of amortizing subordinated notes, once any scheduled
payments of principal begin, all scheduled payments will be made
at least annually and the amount repaid in each year will be no
less than in the previous year. Further information concerning
additional terms and conditions of any amortizing notes,
including terms for repayment of such notes, will be set forth
in the applicable note or pricing supplement.
Indexed
Notes
Citigroup Funding may from time to time offer indexed notes on
which some or all interest payments, in the case of an indexed
rate note, and/or the principal amount payable at stated
maturity or earlier redemption or retirement, in the case of an
indexed principal note, is determined based on:
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the principal amount of such notes or, in the case of an indexed
principal note, the amount designated in the applicable pricing
supplement as the “face amount” of such indexed note;
and
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an index, which may be based on:
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(1)
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prices, changes in prices, or differences between prices, of one
or more securities, currencies, intangibles, goods, articles or
commodities;
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(2)
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the application of a formula; or
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(3)
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an index which shall be such other objective price, economic or
other measures as are described in the applicable pricing
supplement.
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A description of the index used in any determination of an
interest or principal payment, and the method or formula by
which interest or principal payments will be determined based on
such index, will be set forth in the applicable pricing
supplement.
S-27
If a fixed rate note, floating rate note or indexed rate note is
also an indexed principal note, the amount of any interest
payment will be determined based on the face amount of such
indexed note unless specified otherwise in connection with a
particular offering of notes. If an indexed note is also an
indexed principal note, the principal amount payable at stated
maturity or any earlier redemption or repayment of the indexed
note may be different from the face amount.
If a third party is appointed to calculate or announce the index
for a particular indexed note, and the third party either
(1) suspends the calculation or announcement of such index
or (2) changes the basis upon which such index is
calculated in a manner that is inconsistent with the applicable
pricing supplement, then Citigroup Funding will select another
third party to calculate or announce the index. Citigroup Global
Markets Inc. or another affiliate of Citigroup Funding may be
either the original or successor third party selected by
Citigroup Funding.
If for any reason such index cannot be calculated on the same
basis and subject to the same conditions and controls as applied
to the original third party, then any indexed interest payments
or any indexed principal amount of such indexed note will be
calculated in the manner set forth in the applicable pricing
supplement. Any determination by the selected third party will
be binding on all parties, except in the case of an obvious
error.
Unless otherwise specified in connection with a particular
offering of notes, for the purpose of determining whether
holders of the requisite principal amount of notes outstanding
under the applicable indenture have made a demand or given a
notice or waiver or taken any other action, the outstanding
principal amount of indexed notes will be deemed to be the face
amount stated on such notes. Unless otherwise specified in
connection with a particular offering of notes, in the event of
an acceleration of the stated maturity of an indexed note, the
principal amount payable to the holder of such note upon
acceleration will be the principal amount determined based on
the formula used to determine the principal amount of such note
on the stated maturity of such note, as if the date of
acceleration were the stated maturity.
An investment in indexed notes has significant risks, including
wide fluctuations in market value as well as in the amounts of
payments due, that are not associated with a similar investment
in a conventional debt security. Such risks depend on a number
of factors including supply and demand for the particular
security, currency, commodity or other good or article to which
the note is indexed and economic and political events over which
Citigroup Funding has no control. See “Risk
Factors — Changes in the Value of Underlying Assets of
Indexed Notes Could Result in a Substantial Loss to You”
and “— Citigroup Funding’s Hedging Activity
Could Result in a Conflict of Interest” above for a
discussion of these considerations.
Fluctuations in the price of any particular security or
commodity, in the exchange rates between particular currencies
or in particular indices that have occurred in the past are not
necessarily indicative, however, of fluctuations in the price or
exchange rates that may occur during the term of any indexed
notes. Accordingly, prospective investors should consult their
own financial and legal advisors as to the risks of investment
in indexed notes.
Dual
Currency Notes
Citigroup Funding may from time to time offer dual currency
notes on which Citigroup Funding has the option of making all
payments of principal, any premium and interest on such notes,
the payments on which would otherwise be made in the specified
currency of those notes, in the optional payment currency
specified in the applicable pricing 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
pricing supplement. Information as to the relative value of the
specified currency compared to the optional payment currency
will be set forth in the applicable pricing supplement.
The pricing supplement for each issuance of dual currency notes
will specify, among other things:
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the specified currency;
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the optional payment currency; and
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S-28
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the designated exchange rate.
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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
applicable pricing supplement will also specify the option
election dates and interest payment dates for the related
issuance of dual currency notes. Each option election date will
be a particular number of days before an interest payment date
or stated maturity, as set forth in the applicable pricing
supplement. Each option election date will be the date on which
Citigroup Funding may select whether to make all scheduled
payments due thereafter in the optional payment currency rather
than in the specified currency.
If Citigroup Funding makes such an election, the amount payable
in the optional payment currency will be determined using the
designated exchange rate specified in the applicable pricing
supplement. If such election is made, notice of the election
will be mailed in accordance with the terms of the applicable
tranche of dual currency notes within two business days of the
option election date. The notice will state (1) the first
date, whether an interest payment date and/or stated maturity,
on which scheduled payments in the optional payment currency
will be made and (2) the designated exchange rate. Any such
notice by Citigroup Funding, 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 Funding had made the payment in the
specified currency.
For United States federal income tax purposes, holders of dual
currency notes may need to comply with rules which differ from
the general rules applicable to holders of other types of notes
offered by this prospectus supplement. The United States federal
income tax consequences of the purchase, ownership and
disposition of dual currency notes will be set forth in the
applicable pricing supplement.
Renewable
Notes
Citigroup Funding may from time to time offer renewable notes,
which will mature on an initial maturity date. Such initial
maturity date will be an interest payment date specified in the
applicable pricing supplement occurring in, or prior to, the
twelfth month following the original issue date of such notes,
unless the term of all or any portion of any such notes is
renewed in accordance with the procedures described below.
The term of a renewable note may be extended to the interest
payment date occurring in the twelfth month, or, if a special
election interval is specified in the applicable pricing
supplement, the last month in a period equal to twice the
special election interval elected by the holder after such
renewal date. Such an extension may be made on the initial
renewal date. That date will be the interest payment date
occurring in the sixth month, unless a special election interval
is specified in the applicable pricing supplement, prior to the
initial maturity date of a renewable note and on the interest
payment date occurring in each sixth month, or in the last month
of each special election interval, after such initial renewal
date which, together with the initial renewal date, constitutes
a renewal date.
If a holder does not elect to extend the term of any portion of
the principal amount of a renewable note during the specified
period prior to any renewal date, such portion will become due
and payable on the new maturity date. Such new maturity date
will be the interest payment date occurring in the sixth month,
or the last month in the special election interval, after such
renewal date.
A holder of a renewable note may elect to renew the term of such
renewable note, or if so specified in the applicable pricing
supplement, any portion of such renewable note, by delivering a
notice to such effect to the trustee or any duly appointed
paying agent at the corporate trust office of the trustee or
agency of the trustee in New York City. Such notice will be
delivered not less than 15 nor more than 30 days prior to
such renewal date, unless another period is specified in
connection with a particular offering of notes as the special
election period. Such election will be irrevocable and will be
binding upon each subsequent holder of such renewable note.
An election to renew the term of a renewable note may be
exercised for less than the entire principal amount of such
renewable note only if so specified in the applicable pricing
supplement and only in such principal amount, or any integral
multiple in excess of such amount, that is specified in the
applicable pricing supplement. However, the term of the
renewable notes may not be extended beyond the stated maturity
specified for such renewable notes in the applicable pricing
supplement.
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If the holder does not elect to renew the term, such renewable
note must be presented to the trustee, or any duly appointed
paying agent. If such renewable note is a certificate issued in
definitive form, it must be presented to the trustee as soon as
practicable following receipt of such renewable note. The
trustee, or any duly appointed paying agent, will issue in
exchange for such note, in the name of such holder, a note. The
note will be in a principal amount equal to the principal amount
of such exchanged renewable note for which no election to renew
such term was exercised, with terms identical to those specified
on such renewable note. However, such note will have a fixed,
nonrenewable stated maturity on the new maturity date.
If an election to renew is made for less than the full principal
amount of a holder’s renewable note, the trustee, or any
duly appointed paying agent, will issue a replacement renewable
note in exchange for such note in the name of such holder. Such
replacement renewable note will be in a principal amount equal
to the principal amount elected to be renewed of such exchanged
renewable note, with terms otherwise identical to such exchanged
renewable note.
Extension
of Maturity
If so stated in the applicable pricing supplement relating to a
particular offering of notes, Citigroup Funding may, extend the
stated maturity of such note for an extension period. Unless
otherwise specified in connection with a particular offering of
notes, 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 applicable pricing supplement.
Unless otherwise specified in connection with a particular
offering of notes, Citigroup Funding may exercise such option
for a note by notifying the trustee for such note at least 45
but not more than 60 days prior to the original stated
maturity of such note. Not later than 40 days prior to the
original stated maturity of the note, the trustee for the note
will mail to the holder of the note an extension notice, first
class, postage prepaid. The extension notice will set forth
among other items:
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the election of Citigroup Funding to extend the stated maturity
of such note;
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the new stated maturity;
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in the case of a fixed rate note, the interest rate applicable
to the extension period;
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in the case of a floating rate note, the spread, spread
multiplier or method of calculation applicable to the extension
period; and
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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.
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Unless otherwise specified in connection with a particular
offering of notes, upon the provision by such trustee of an
extension notice to the holder of a note, the stated maturity of
the note will be extended automatically, and, except as modified
by the extension notice and as described in the next paragraph,
the note will have the same terms as prior to the mailing of the
extension notice. Despite the foregoing and unless otherwise
specified in connection with a particular offering of notes, not
later than 20 days prior to the original stated maturity of
the note, Citigroup Funding 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 note 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 Funding may so act by causing the trustee for the note
to mail notice of the higher interest rate or higher spread or
spread multiplier, as the case may be, first class, postage
prepaid, to the holder of the note. Unless otherwise specified
in connection with a particular offering of notes, the notice
will be irrevocable. Unless otherwise specified in connection
with a particular offering of notes, all notes 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 pricing supplement relating to a particular
offering of notes, the holder of a note of which Citigroup
Funding elects to extend maturity may have the option of early
redemption, repayment or
S-30
repurchase of such note by Citigroup Funding on the original
stated maturity at a price equal to the principal amount of such
note, plus interest accrued to that date. In order for a note to
be repaid on the old stated maturity once Citigroup Funding has
extended its stated maturity, the holder of the note must follow
the procedures set forth below under “— Optional
Redemption, Repayment and Repurchase” for optional
repayment. The period for delivery of the note or notification
to the trustee for the note will be at least 25 but not
more than 35 days prior to the old stated maturity. A
holder who has tendered a note for repayment after an extension
notice may give written notice to the trustee for the note to
revoke any tender for repayment until the close of business on
the tenth day before the original stated maturity.
Combination
of Provisions
If so specified in the applicable pricing supplement, any note
may be required to comply with all of the provisions, or any
combination of the provisions, described above under
“— Subsequent Interest Periods,”
“— Extension of Maturity” and
“— Renewable Notes.”
Book-Entry
System
Upon issuance, and unless the rules of DTC state otherwise, all
book-entry notes having the same original issue date and
otherwise identical terms will be represented by a single global
security. Each global security representing book-entry notes
will be deposited with, or on behalf of, DTC and registered in
the name of a nominee of DTC. Book-entry notes will not be
exchangeable for certificated notes and, except under the
circumstances described in the prospectus under
“Description of Debt Securities — Book-Entry
Procedures and Settlement — Definitive Notes and
Paying Agents,” will not otherwise be issuable as
certificated notes.
A further description of DTC’s procedures regarding global
securities representing book-entry notes is set forth in the
prospectus under “Description of Debt
Securities — Book-Entry Procedures and
Settlement.”
Optional
Redemption, Repayment and Repurchase
The pricing supplement relating to each note will indicate
whether such note can be redeemed at the option of Citigroup
Funding, in whole or in part prior to its stated maturity. The
applicable pricing supplement will also indicate (1) the
optional redemption date or dates on which such note may be
redeemed and (2) the redemption price at which, together
with accrued interest to such optional redemption date, such
note may be redeemed on each such optional redemption date.
Unless otherwise specified in connection with a particular
offering of notes, at least 30 days prior to the date of
redemption, the trustee will mail notice of such redemption,
first class, postage prepaid, to the holder of such note. Unless
otherwise specified in connection with a particular offering of
notes, Citigroup Funding may exercise such option relating to a
redemption of a note in part only by notifying the trustee for
such note at least 45 days prior to any optional redemption
date. In the event of redemption of a note in part only, a new
note or notes for the unredeemed portion of such note or notes
will be issued to the holder of such note or notes upon the
cancellation of such note or notes. The notes, other than
amortizing notes, may not be redeemed. The redemption of any
subordinated note that is included in Citigroup’s capital
may be subject to consultation with the Federal Reserve, which
may not acquiesce in the redemption of such note unless it is
satisfied that the capital position of Citigroup will be
adequate after the proposed redemption.
The pricing supplement relating to each note will also indicate
whether the holder of such note will have the option to elect
repayment of such note by Citigroup Funding prior to its stated
maturity. If so, such pricing supplement will specify
(1) the optional repayment date or dates on which such note
may be repaid and (2) the optional repayment price. Such
optional repayment price is the price at which, together with
accrued interest to such optional repayment date, such note may
be repaid on each optional repayment date.
In order for a note to be repaid, the trustee for such note must
receive, at least 30 but not more than 45 days prior
to an optional repayment date:
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such note with the form entitled “Option to Elect
Repayment” on the reverse of such note duly completed; or
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(2)
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a telegram, telex, facsimile transmission or letter from a
member of a national securities exchange or the Financial
Industry Regulatory Authority, Inc. or a commercial bank or
trust company in the United States setting forth:
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the name of the holder of such note;
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the principal amount of such note to be repaid;
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the certificate number or a description of the tenor and terms
of such note;
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a statement that the option to elect repayment is being
exercised; and
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a guarantee that the note to be repaid with the form entitled
“Option to Elect Repayment” on the reverse of such
note duly completed will be received by the trustee not later
than five business days after the date of such telegram, telex,
facsimile transmission or letter.
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If the guarantee procedure described in clause (2) above is
followed, then such note and form duly completed must be
received by the trustee by such fifth business day. Any tender
of a note by the holder for repayment, except pursuant to a
reset notice or an extension notice, will be irrevocable. The
repayment option may be exercised by the holder of a note for
less than the entire principal amount of such note, provided,
that the principal amount of such note remaining outstanding
after repayment is an authorized denomination. Upon such partial
repayment, the such will be canceled and a new note or notes for
the remaining principal amount will be issued in the name of the
holder of such repaid note.
If a note is represented by a global security, DTC’s
nominee will be the holder of such note and, therefore, will be
the only entity that can exercise a right to repayment. In order
to ensure that DTC’s nominee will timely exercise a right
to repayment relating to a particular note, the beneficial owner
of such note must instruct the broker or other direct or
indirect participant through which it holds an interest in such
note to notify DTC of its desire to exercise a right to
repayment. Different firms have different cut-off times for
accepting instructions from their customers. Accordingly, each
beneficial owner should consult the broker or other direct or
indirect participant through which it holds an interest in a
note in order to ascertain the cut-off time by which such an
instruction must be given in order for timely notice to be
delivered to DTC.
Except in the case of an optional redemption by Citigroup
Funding at a stated redemption price provided for in the
applicable pricing supplement, if Citigroup Funding redeems or
repays a note that is an OID note other than an indexed note
prior to its stated maturity, then Citigroup Funding will pay
the amortized face amount of the note as of the date of
redemption or repayment regardless of anything else stated in
this prospectus supplement or the accompanying prospectus.
The amortized face amount of a note on any date means the amount
equal to:
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the issue price set forth on the face of the applicable pricing
supplement plus
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that portion of the difference between the issue price and the
stated principal amount of the note that has accrued by that
date at
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the bond yield to maturity set forth in the applicable pricing
supplement, or
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if so specified in the applicable pricing supplement, the bond
yield to call set forth on the face of the note.
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These computations will be made in accordance with generally
accepted United States bond yield computation principles.
However, the amortized face amount of a note will never exceed
its stated principal amount. The bond yield to call listed in a
pricing supplement will be computed on the basis of:
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the first occurring optional redemption date with respect to
such note; and
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the amount payable on such optional redemption date.
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In the event that any such note is not redeemed on such first
occurring optional redemption date, the bond yield to call that
applies to such note will be recomputed on such optional
redemption date on the basis of (1) the next occurring
optional redemption date and (2) the amount payable on such
optional redemption date.
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The bond yield to call will continue to be so recomputed on each
succeeding optional redemption date until the note is so
redeemed.
Citigroup Funding may at any time purchase notes at any price in
the open market or otherwise. Notes so purchased by Citigroup
Funding may, at the discretion of Citigroup Funding, be held,
resold or surrendered to the trustee for such notes for
cancellation.
Other
Provisions
The terms in the applicable pricing supplement may modify any
provisions relating to:
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the determination of an interest rate basis;
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the specification of an interest rate basis;
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calculation of the interest rate applicable to, or the principal
payable at maturity on, any note;
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interest payment dates; or
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any other related matters.
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Defeasance
The defeasance provisions described in the prospectus will not
be applicable to the notes except as set forth in the applicable
pricing supplement.
S-33
CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Introduction
The following is a summary of the material United States federal
income tax considerations that may be relevant to a holder of a
note. The summary is based on:
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laws;
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regulations;
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rulings; and
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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 holders that will hold notes 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 notes. For example, this summary does not
address tax considerations applicable to investors to whom
special tax rules may apply, including, without limitation:
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banks or other financial institutions;
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tax-exempt entities;
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insurance companies;
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regulated investment companies;
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common trust funds;
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entities that are treated for United States federal income tax
purposes as partnerships or other pass-through entities;
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controlled foreign corporations;
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dealers in securities or currencies;
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traders in securities that elect mark to market;
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persons that will hold notes as a part of an integrated
investment, including a straddle, a synthetic security or hedge
or a conversion transaction, comprised of a note 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 notes, including any indexed
notes, dual currency notes or notes providing for contingent
payments, will be provided in the applicable pricing supplement.
Purchasers of such notes should carefully examine the applicable
pricing supplement and should consult with their tax advisors
with respect to those notes.
Prospective investors should consult their tax advisors in
determining the tax consequences to them of purchasing, holding
and disposing of the notes, 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 prospectus supplement, the term United States
holder means:
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a citizen or resident of the United States;
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a corporation or other entity treated as a corporation created
or organized in or under the laws of the United States or any
political subdivision thereof;
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an estate, if United States federal income taxation is
applicable to the income of such estate regardless of its
source; or
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a trust, if a United States court is able to exercise primary
supervision over the trust’s administration and one or more
United States persons have the authority to control all of the
trust’s substantial decisions.
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As used in this summary, the term “non-United States
holder” means a holder who is not a United States holder
and the term “United States” means the United States
of America, including the fifty states and the District of
Columbia, but excluding its territories and possessions.
United
States Holders
Payments
of Interest
Payments of qualified stated interest, as defined below under
“Original Issue Discount,” on a note 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 holder’s method of tax
accounting.
If such payments of interest are made relating to a note that is
denominated in a 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 in fact is
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). A United States holder that uses
the accrual method of tax accounting will accrue interest income
on the foreign currency note 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 the holder’s taxable
year; or
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at the holder’s election, at the spot rate of exchange on
(1) the last day of the accrual period, or the last day of
the taxable year within the accrual period if the accrual period
spans more than one taxable year, or (2) the date of
receipt, if that date is within five business days of the last
day of the accrual period.
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Such an 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, which will be treated
as ordinary income or loss, on the receipt of an interest
payment made relating to a foreign currency note 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 notes.
Purchase,
Sale and Retirement of Notes
A United States holder’s tax basis in a note generally will
equal the cost of that note to such holder
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(1)
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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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(2)
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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 the note.
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In the case of a foreign currency note, the cost of the note to
a United States holder will generally be the U.S. dollar value
of the foreign currency purchase price on the date of purchase.
In the case of a foreign currency note that is traded on an
established securities market, a United States holder generally
should determine the U.S. dollar value of the cost of the
note by translating the amount paid in foreign currency into its
U.S. dollar value at the spot rate of exchange (1) on
the settlement date of the purchase in the case of a United
States holder using the cash method of tax accounting and
(2) on the trade date, in the case of a United States
holder using the accrual method of tax accounting, unless the
holder elects to use the spot rate
S-35
applicable to cash method United States holders. The amount of
any subsequent adjustments to a United States holder’s tax
basis in a foreign currency note in respect of OID, market
discount and premium will be determined in the manner described
under “Original Issue Discount,” “Market
Discount” and “Notes Purchased at a Premium”
below. The conversion of U.S. dollars to another specified
currency and the immediate use of the specified currency to
purchase a foreign currency note generally will not result in
taxable gain or loss for a United States holder.
Upon the sale, exchange, retirement or other taxable disposition
(collectively, a “disposition”) of a note, a United
States holder generally will recognize gain or loss equal to the
difference between (1) 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 (2) the United
States holder’s adjusted tax basis in the note. If a United
States holder receives a specified currency other than the U.S.
dollar in respect of the disposition of a note, 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 note.
In the case of a foreign currency note 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 that 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 (1) on the settlement date of the
disposition in the case of a United States holder using the cash
method of tax accounting and (2) on the trade date, in the
case of a United States holder using the accrual method of tax
accounting, unless the 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 notes 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 notes, gain or loss
recognized by a United States holder on the sale, exchange,
retirement or other taxable disposition of a note will generally
be long term capital gain or loss if the United States
holder’s holding period for the note exceeded one year at
the time of such disposition.
Gain or loss recognized by a United States holder on the sale,
exchange, retirement or other taxable disposition of a foreign
currency note 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 the note.
Original
Issue Discount
In General. Notes with a term greater than one
year may be issued with OID for United States federal income tax
purposes. Such notes are called OID notes in this prospectus
supplement. United States holders generally must accrue OID in
gross income over the term of the OID notes 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 note in advance of the receipt of
cash attributable to such income.
OID generally will arise if the stated redemption price at
maturity of the note exceeds its issue price by more than a de
minimis amount equal to 0.25% of the note’s stated
redemption price at maturity multiplied by the number of
complete years to maturity. OID may also arise if a note 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 note is the
first price at which a substantial amount of notes 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 note is the sum of all payments due under the note, 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 note at a single fixed rate of interest or,
under particular conditions, based on one or more interest
indices.
S-36
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
note will be the sum of the daily portions of OID for each day
during that taxable year or any portion of the taxable year in
which such a United States holder held the OID note. 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 note. 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 (1) the product of the OID note’s adjusted issue
price at the beginning of the accrual period multiplied by its
yield to maturity (as adjusted to take into account the length
of the accrual period), less (2) the amount, if any, of
qualified stated interest allocable to that accrual period. The
adjusted issue price of an OID note at the beginning of any
accrual period will equal the issue price of the OID note, as
defined above, (1) increased by previously accrued OID from
prior accrual periods, and (2) reduced by any payment made
on the note, other than payments of qualified stated interest,
on or before the first day of the accrual period.
Foreign Currency Notes. In the case of an OID
note that is also a foreign currency note, 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 the accrual period within a United States
holder’s taxable year, or, at the United States
holder’s election (as described above under “Payments
of Interest”), at the spot rate of exchange on (1) the
last day of the accrual period, or the last day of the taxable
year within the accrual period if the accrual period spans more
than one taxable year, or (2) on the date of receipt, if
that date is within five business days of the last day of the
accrual period.
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All payments on an OID note, 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 note, a United States holder will recognize ordinary
income or loss measured by the difference between (1) the
amount received and (2) 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 note. The amount accrued will be determined by using
the rate of exchange applicable to such previous accrual.
Acquisition Premium. A United States holder
that purchases an OID note for an amount less than or equal to
the remaining redemption amount, but in excess of the OID
note’s adjusted issue price, generally is permitted to
reduce the daily portions of OID by a fraction. The numerator of
this fraction is the excess of the United States holder’s
adjusted tax basis in the OID note immediately after its
purchase over the OID note’s adjusted issue price. The
denominator of the fraction is the excess of the remaining
redemption amount over the OID note’s adjusted issue price.
For purposes of this prospectus supplement,
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“acquisition premium” means the excess of the purchase
price paid by a United States holder for an OID note over the
OID note’s adjusted issue price; and
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“remaining redemption amount” means the sum of all
amounts payable on an OID note after the purchase date other
than payments of qualified stated interest.
|
The notes may have special redemption, repayment or interest
rate reset features, as indicated in the applicable pricing
supplement. Notes containing such features, in particular OID
notes, may be subject to special rules that differ from the
general rules discussed above. Accordingly, purchasers of notes
with such features should carefully examine the applicable
pricing supplement and should consult their tax advisors
relating to such notes.
S-37
Market
Discount
If a United States holder purchases a note, other than a
short-term note, for an amount that is less than the note’s
stated redemption price at maturity or, in the case of an OID
note, for an amount that is less than the note’s revised
issue price, i.e., the note’s issue price increased by the
amount of accrued OID, the note 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 paragraph under “Original
Issue Discount”). Any gain recognized by the United States
holder on the sale, exchange, retirement or other taxable
disposition of notes having market discount generally will be
treated as ordinary income to the extent of the market discount
that accrued on the note 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 note.
Such an election will apply to market discount notes acquired by
the United States holder on or after the first day of the first
taxable year to which such election applies and may be revoked
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. 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 note.
Market discount on a foreign currency note will be accrued by a
United States holder in the foreign 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 note is disposed of by the
United States holder. Any accrued market discount on a foreign
currency note 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 holder’s taxable year.
Short-Term
Notes
The rules set forth above also will generally apply to notes
having maturities of not more than one year from the date of
issuance. Those notes are called short-term notes in this
prospectus supplement. Certain modifications apply to these
general rules.
First, none of the interest on a short-term note is treated as
qualified stated interest. Instead, interest on a short-term
note is treated as part of the short-term note’s stated
redemption price at maturity, thereby giving rise to OID. Thus,
all short-term notes will be OID notes. OID will be treated as
accruing on a short-term note ratably, or at the election of a
United States holder, under a constant yield method.
Second, a United States holder of a short-term note that uses
the cash method of tax accounting will generally not be required
to include OID in respect of the short-term note 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 note until the
maturity of the note 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 note
as ordinary income to the extent of the holder’s accrued
OID on the note, and as
short-term
capital gain to the extent the gain exceeds accrued OID. A
United States holder of a short-term note 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
generally will be required to include OID on a short-term note
in income on a current basis.
Third, any United States holder of a short-term note, whether
using the cash or accrual method of tax accounting, can elect to
accrue the acquisition discount, if any, on the note on a
current basis. If such an election is made, the OID rules will
not apply to the note. Acquisition discount is the excess of the
note’s stated redemption price at maturity over the
holder’s purchase price for the note. Acquisition discount
will be
S-38
treated as accruing ratably or, at the election of the United
States holder, under a constant-yield method based on daily
compounding.
As described above, the notes may have special redemption
features. These features may affect the determination of whether
a note has a maturity of not more than one year and thus is a
short-term note. Purchasers of notes with such features should
carefully examine the applicable pricing supplement and should
consult their tax advisors in relation to such features.
Notes
Purchased at a Premium
A United States holder that purchases a note for an amount in
excess of the remaining redemption amount will be considered to
have purchased the note 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 note. Such election, once
made, generally applies to all debt instruments held or
subsequently acquired by the United States holder on or after
the beginning of the first taxable year to which the election
applies. 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 note 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
holder’s tax basis when the note 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 note to
maturity will generally be required to treat the premium as
capital loss when the note matures.
Amortizable bond premium in respect of a foreign currency note
will be computed in the specified currency and will reduce
interest income in the foreign 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 note based on the
difference between (1) the spot rate of exchange on the
date or dates such premium is recovered through interest
payments on the note and (2) the spot rate of exchange on
the date on which the United States holder acquired the note.
See “Original Issue Discount — Acquisition
Premium” above for a discussion of the treatment of a note
purchased for an amount less than or equal to the remaining
redemption amount but in excess of the note’s 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
notes. 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 to the trustee 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 sale,
exchange, retirement or other taxable disposition of the notes.
Any amounts withheld under the backup withholding rules will be
allowed as a credit against the United States holder’s
United States federal income tax liability provided the required
information is timely furnished to the IRS.
Non-United
States Holders
Under current United States federal income tax law:
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•
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withholding of United States federal income tax will not apply
to a payment on a note to a non-United States holder, provided
that,
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(1)
|
the holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of stock of
Citigroup Funding entitled to vote and is not a controlled
foreign corporation related to Citigroup Funding through stock
ownership;
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S-39
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(2)
|
the beneficial owner provides a statement signed under penalties
of perjury that includes its name and address and certifies that
it is a non-United States holder in compliance with applicable
requirements; and
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(3)
|
neither Citigroup Funding nor its paying agent has actual
knowledge or reason to know that the beneficial owner of the
note is a United States holder.
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(4)
|
in the case of payments made after December 31, 2012 on
notes issued after March 18, 2012, the holder has provided
any required information with respect to its direct and indirect
U.S. owners and, if the notes are held through a foreign
financial institution, the institution has entered into an
agreement with the U.S. government to collect and provide to the
U.S. tax authorities information about its direct and indirect
U.S. account holders and investors, and the holder has provided
any required information to the foreign financial institution.
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•
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withholding of United States federal income tax will generally
not apply to any gain realized on the disposition of a note,
subject to the conditions set forth in clause (4), above.
|
If a non-United States holder is subject to withholding at a
rate in excess of a reduced rate for which the non-United States
holder is eligible under a tax treaty or otherwise, such
non-United States holder may be able to obtain a refund of or
credit for any amounts withheld in excess of the applicable
rate. Investors are encouraged to consult with their own tax
advisors regarding the possible implications of these
withholding requirements on their investment in the notes.
Despite the above, if a non-United States holder is engaged in a
trade or business in the United States (or, if certain tax
treaties apply, if the non-United States holder maintains a
permanent establishment within the United States) and the
interest on the notes is effectively connected with the conduct
of that trade or business (or, 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, if certain tax treaties apply, such
lower rates as provided) branch profits tax.
Any gain realized on the disposition of a note generally will
not be subject to United States federal income tax unless:
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•
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that gain is effectively connected with the non-United States
holder’s conduct of a trade or business in the United
States (or, 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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•
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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.
|
In general, backup withholding and information reporting will
not apply to a payment of interest on a note to a non-United
States holder, or to proceeds from the disposition of a note 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 Funding 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 holder’s
United States federal income tax liability provided the required
information is timely furnished to the IRS. In certain
circumstances, the amounts of payments made on a note, the name
and address of the beneficial owner and the amount, if any, of
tax withheld may be reported to the IRS.
S-40
PLAN OF
DISTRIBUTION; CONFLICTS OF INTEREST
The notes are being offered on a continuous basis by Citigroup
Funding through Citigroup Global Markets Inc., or other
broker-dealer affiliates of Citigroup Funding, as agents. The
agents have agreed to use their reasonable efforts to solicit
orders to purchase notes. The agents, Citigroup Funding and
Citigroup have signed a global selling agency agreement. The
global selling agency agreement, as amended, has been
incorporated by reference in the registration statement of which
this prospectus supplement forms a part. Citigroup Funding will
have the sole right to accept orders to purchase notes and may
reject proposed purchases in whole or in part. An agent will
have the right to reject any proposed purchase in whole or in
part. Citigroup Funding reserves the right to withdraw, cancel
or modify the offer made by this prospectus supplement, the
accompanying prospectus or any pricing supplement without notice.
The following table summarizes the aggregate commissions or
discounts payable in connection with offerings of the notes.
Commissions and discounts will vary depending upon the stated
maturity of the notes.
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Proceeds,
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before expenses,
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Public Offering
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Agents’ Discounts
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to Citigroup
|
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Price
|
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and Commissions
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Funding
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100%
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0.02%-5%
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99.98%-95%
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Citigroup Funding may also sell notes at a discount to the
agents for their own account or for resale to one or more
purchasers at varying prices related to prevailing market prices
or at a fixed public offering price. After any initial public
offering of notes to be resold to purchasers at a fixed public
offering price, the public offering price and any concession or
discount may be changed.
In addition, the agents may offer and sell notes purchased by it
as principal to other dealers. These notes may be sold at a
discount which, unless otherwise specified in the applicable
pricing supplement, will not exceed the discount to be received
by the agents from Citigroup Funding.
Unless otherwise specified in connection with a particular
offering of notes, any note purchased by an agent as principal
will be purchased at 100% of the principal amount or face amount
less a percentage equal to the commission applicable to an
agency sale of a note of identical maturity.
Citigroup Funding reserves the right to sell notes directly to
investors on its own behalf and to enter into agreements similar
to the agency agreement with other parties. No commission will
be payable nor will a discount be allowed on any sales made
directly by Citigroup Funding.
Unless notes are issued upon the reopening of a prior offering,
no note will have an established trading market when issued.
Unless otherwise specified in connection with a particular
offering of notes, the notes will not be listed on any
securities exchange. An agent may make a market in the notes,
but no agent is obligated to do so. An agent may discontinue any
market-making at any time without notice, at its sole
discretion. There can be no assurance of the existence or
liquidity of a secondary market for any notes, or that the
maximum amount of notes will be sold.
Citigroup Funding estimates that its total expenses for the
offering, excluding underwriting commissions or discounts, will
be approximately $4,425,500.
An agent, whether acting as agent or principal, may be deemed to
be an underwriter within the meaning of the Securities Act of
1933. Citigroup Funding and Citigroup have agreed to indemnify
the agents against liabilities relating to material
misstatements and omissions, or to contribute to payments that
the agents may be required to make relating to these
liabilities. Citigroup Funding and Citigroup will reimburse the
agents for customary legal and other expenses incurred by them
in connection with the offer and sale of the notes.
Unless otherwise specified in connection with a particular
offering of notes, payment of the purchase price of the notes
will be required to be made in immediately available funds in
New York City on the date of settlement.
Concurrently with the offering of notes through the agent as
described in this prospectus supplement, Citigroup Funding may
issue other securities under the indentures referred to in the
prospectus.
S-41
The broker-dealer affiliates of Citigroup Funding, including
Citigroup Global Markets Inc., are members of FINRA and may
participate in offerings of the notes. Accordingly, offerings of
the notes in which Citigroup Funding’s broker-dealer
affiliates participate will conform with the requirements
addressing conflicts of interest when distributing the
securities of an affiliate set forth in FINRA Rule 5121.
This prospectus supplement, the accompanying prospectus and the
related pricing supplement may be used by an agent or other
affiliates of Citigroup Funding in connection with offers and
sales of the notes offered by this prospectus supplement in
market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. An agent or these
other affiliates may act as principal or agent in such
transactions.
VALIDITY
OF THE NOTES
The validity of the notes that may be issued after the date of
this prospectus supplement, and the related Citigroup guarantee,
has been passed upon for Citigroup Funding and Citigroup by
Douglas C. Turnbull, Associate General Counsel-Capital Markets
and Corporate Reporting of Citigroup and counsel to Citigroup
Funding. Mr. Turnbull’s opinion was based on
assumptions about future actions required to be taken by
Citigroup Funding and the relevant trustee in connection with
the issuance and sale of the notes, about the specific terms of
each series of notes and about other matters that may affect the
validity of the notes but could not be determined at the time of
the opinion. If counsel other than Mr. Turnbull will pass
upon the validity of the notes and the related Citigroup
guarantee, such counsel will be identified in the applicable
pricing supplement, and the opinion of such counsel will be
filed with the Securities and Exchange Commission and
incorporated by reference in the registration statement of which
this prospectus supplement forms a part.
ERISA
MATTERS
A fiduciary of a pension, profit-sharing or other employee
benefit plan governed by the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), should consider the
fiduciary standards of ERISA in the context of the ERISA
plan’s particular circumstances before authorizing an
investment in the offered securities of Citigroup Funding. Among
other factors, the fiduciary should consider whether such an
investment is in accordance with the documents governing the
ERISA plan and whether the investment is appropriate for the
ERISA plan in view of its overall investment policy and
diversification of its portfolio.
Certain provisions of ERISA and the Internal Revenue Code of
1986, as amended (the “Code”), prohibit employee
benefit plans (as defined in Section 3(3) of ERISA) that
are subject to Title I of ERISA, plans described in
Section 4975(e)(1) of the Code (including, without
limitation, retirement accounts and Keogh Plans), and entities
whose underlying assets include plan assets by reason of a
plan’s investment in such entities (including, without
limitation, as applicable, insurance company general accounts)
(collectively, “plans”), from engaging in certain
transactions involving “plan assets” with parties that
are “parties in interest” under ERISA or
“disqualified persons” under the Code with respect to
the plan or entity. Governmental and other plans that are not
subject to ERISA or to the Code may be subject to similar
restrictions under state, federal or local law. Any employee
benefit plan or other entity, to which such provisions of ERISA,
the Code or similar law apply, proposing to acquire the offered
securities should consult with its legal counsel.
Citigroup Funding has affiliates, including insurance company
affiliates and broker-dealer affiliates, that provide services
to many employee benefit plans. Citigroup Funding and any such
affiliate of Citigroup Funding may each be considered a
“party in interest” and a “disqualified
person” to a large number of plans. A purchase of offered
securities of Citigroup Funding by any such plan would be likely
to result in a prohibited transaction between the plan and
Citigroup Funding.
Accordingly, unless otherwise provided in connection with a
particular offering of securities, offered securities may not be
purchased, held or disposed of by any plan or any other person
investing “plan assets” of any plan that is subject to
the prohibited transaction rules of ERISA or Section 4975
of the Code or other
S-42
similar law, unless one of the following exemptions (or a
similar exemption or exception) applies to such purchase,
holding and disposition:
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•
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Section 408(b)(17) of ERISA and Section 4975(d)(20) of
the Code for transactions with certain service providers (the
“Service Provider Exemption”),
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•
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Prohibited Transaction Class Exemption (“PTCE”)
96-23 for
transactions determined by in-house asset managers,
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•
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PTCE 95-60
for transactions involving insurance company general accounts,
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•
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PTCE 91-38
for transactions involving bank collective investment funds,
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•
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PTCE 90-1
for transactions involving insurance company separate
accounts, or
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•
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PTCE 84-14
for transactions determined by independent qualified
professional asset managers.
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Unless otherwise provided in connection with a particular
offering of securities, any purchaser of the offered securities
or any interest therein will be deemed to have represented and
warranted to Citigroup Funding on each day from the date of its
purchase of the offered securities through and including the
date of disposition of such offered securities that either:
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(a)
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it is not a plan subject to Title I of ERISA or
Section 4975 of the Code and is not purchasing such
securities or interest therein on behalf of, or with “plan
assets” of, any such plan;
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(b)
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its purchase, holding and disposition of such securities are not
and will not be prohibited because they are exempted by a
statutory exemption or one or more of the following prohibited
transaction exemptions:
PTCE 96-23,
95-60,
91-38,
90-1 or
84-14; or
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(c)
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it is a governmental plan (as defined in section 3 of
ERISA) or other plan that is not subject to the provisions of
Title I of ERISA or Section 4975 of the Code and its
purchase, holding and disposition of such securities are not
otherwise prohibited.
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Due to the complexity of these rules and the penalties imposed
upon persons involved in prohibited transactions, it is
important that any person considering the purchase of the
offered securities with plan assets consult with its counsel
regarding the consequences under ERISA and the Code, or other
similar law, of the acquisition and ownership of offered
securities and the availability of exemptive relief under the
class exemptions listed above.
S-43
Citigroup Funding
Inc.
Medium-Term Senior Notes,
Series D
Medium-Term Subordinated Notes,
Series E
Payments Due from Citigroup
Funding Inc.
Fully and Unconditionally
Guaranteed by Citigroup Inc.
PROSPECTUS SUPPLEMENT
,
2011
(Including prospectus
dated ,
2011)
PART
II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and
Distribution.
The following table sets forth the various expenses payable by
the Registrants in connection with the Securities being
registered hereby. All of the fees set forth below, except for
the commission registration fee, are estimates.
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Commission Registration Fee
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$
|
111,707.93
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Accounting Fees
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350,000.00
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Trustees’ Fees and Expenses
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300,000.00
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Printing and Engraving Fees
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1,000,000.00
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Rating Agency Fees
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1,500,000.00
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FINRA Fee
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75,500.00
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Legal Fees and Expenses
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600,000.00
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Stock Exchange Listing Fees
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100,000.00
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Total
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$
|
4,037,207.93
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Item
15. Indemnification of Directors and
Officers.
Citigroup
Subsection (a) of Section 145 of the General
Corporation Law of the State of Delaware, or DGCL, empowers a
corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that the
person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such
action, suit or proceeding if the person acted in good faith and
in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe the person’s conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which
the person reasonably believed to be in or not opposed to the
best interest of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe
that the person’s conduct was unlawful.
Subsection (b) of Section 145 of the DGCL
empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in right of the
corporation to procure a judgment in its favor by reason of the
fact that such person acted in any of the capacities set forth
above, against expenses (including attorneys’ fees)
actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit if the
person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation and except that no indemnification may be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court
in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
Subsection (d) of Section 145 of the DGCL
provides that any indemnification under subsections (a) and
(b) of Section 145 (unless ordered by a court) shall
be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the present or
former director, officer, employee or
II-1
agent is proper in the circumstances because the person has met
the applicable standard of conduct set forth in subsections
(a) and (b) of Section 145. Such determination
shall be made, with respect to a person who is a director or
officer at the time of such determination, (1) by a
majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or
(2) by a committee of such directors designated by the
majority vote of such directors, even though less than a quorum,
or (3) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or
(4) by the stockholders.
Section 145 of the DGCL further provides that to the extent
a present or former director or officer of a corporation has
been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections
(a) and (b) of Section 145, or in defense of any
claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys’ fees) actually and
reasonably incurred by such person in connection therewith and
that such expenses may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by
the corporation as authorized in Section 145 of the DGCL;
that any indemnification and advancement of expenses provided
by, or granted pursuant to, Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may
be entitled; that indemnification provided by, or granted
pursuant to, Section 145 shall, unless otherwise provided
when authorized and ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall
inure to the benefit of such person’s heirs, executors and
administrators; and empowers the corporation to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any
such capacity, or arising out of such person’s status as
such, whether or not the corporation would have the power to
indemnify such person against such liabilities under
Section 145. Section Four of Article IV of
Citigroup’s By-Laws provides that Citigroup shall indemnify
its directors and officers to the fullest extent permitted by
the DGCL.
Citigroup also provides liability insurance for its directors
and officers which provides for coverage against loss from
claims made against directors and officers in their capacity as
such, including, subject to certain exceptions, liabilities
under the federal securities laws.
Section 102(b)(7) of the DGCL provides that a
certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director
(i) for any breach of the director’s duty of loyalty
to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, or (iv) for any transaction
from which the director derived an improper personal benefit.
Article Tenth of Citigroup’s Restated Certificate of
Incorporation limits the liability of directors to the fullest
extent permitted by Section 102(b)(7).
The directors and officers of Citigroup are covered by insurance
policies indemnifying them against certain liabilities,
including certain liabilities arising under the Securities Act,
which might be incurred by them in such capacities and against
which they cannot be indemnified by Citigroup. Any agents,
dealers or underwriters who execute any underwriting or
distribution agreement relating to securities offered pursuant
to this Registration Statement will agree to indemnify
Citigroup’s directors and their officers who signed the
Registration Statement against certain liabilities that may
arise under the Securities Act with respect to information
furnished to Citigroup by or on behalf of such indemnifying
party.
Citigroup
Funding
Subsection (a) of Section 145 of the General
Corporation Law of the State of Delaware, or DGCL, empowers a
corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or
II-2
investigative (other than an action by or in the right of the
corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys’ fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by the
person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person’s
conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith
and in a manner which the person reasonably believed to be in or
not opposed to the best interest of the corporation, and, with
respect to any criminal action or proceeding, had reasonable
cause to believe that the person’s conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a
corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or suit by or in right of the corporation to
procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against
expenses (including attorneys’ fees) actually and
reasonably incurred by the person in connection with the defense
or settlement of such action or suit if the person acted in good
faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the corporation and except
that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
Subsection (d) of Section 145 of the DGCL provides
that any indemnification under subsections (a) and (b) of
Section 145 (unless ordered by a court) shall be made by
the corporation only as authorized in the specific case upon a
determination that indemnification of the present or former
director, officer, employee or agent is proper in the
circumstances because the person has met the applicable standard
of conduct set forth in subsections (a) and (b) of
Section 145. Such determination shall be made, with respect
to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who
are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) by a committee of such directors
designated by the majority vote of such directors, even though
less than a quorum, or (3) if there are no such directors,
or if such directors so direct, by independent legal counsel in
a written opinion, or (4) by the stockholders.
Section 145 of the DGCL further provides that to the extent
a present or former director or officer of a corporation has
been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections (a)
and (b) of Section 145, or in defense of any claim, issue
or matter therein, such person shall be indemnified against
expenses (including attorneys’ fees) actually and
reasonably incurred by such person in connection therewith and
that such expenses may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by
the corporation as authorized in Section 145 of the DGCL;
that any indemnification and advancement of expenses provided
by, or granted pursuant to, Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may
be entitled; that indemnification provided by, or granted
pursuant to, Section 145 shall, unless otherwise provided
when authorized and ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall
inure to the benefit of such person’s heirs, executors and
administrators; and empowers the corporation to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any
such capacity, or arising out of such person’s status as
such, whether or not the
II-3
corporation would have the power to indemnify such person
against such liabilities under Section 145.
Section One of Article VII of Citigroup Funding’s
By-Laws provides that Citigroup Funding shall indemnify its
directors and officers to the fullest extent permitted by the
DGCL.
Citigroup Funding also provides liability insurance for its
directors and officers which provides for coverage against loss
from claims made against directors and officers in their
capacity as such, including, subject to certain exceptions,
liabilities under the federal securities laws.
Section 102(b)(7) of the DGCL provides that a certificate
of incorporation may contain a provision eliminating or limiting
the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty
as a director, provided that such provision shall not eliminate
or limit the liability of a director (i) for any breach of
the director’s duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, or
(iv) for any transaction from which the director derived an
improper personal benefit. Article Seventh of Citigroup
Funding’s Certificate of Incorporation limits the liability
of directors to the fullest extent permitted by
Section 102(b)(7).
The directors and officers of Citigroup Funding are covered by
insurance policies indemnifying them against certain
liabilities, including certain liabilities arising under the
Securities Act, which might be incurred by them in such
capacities and against which they cannot be indemnified by
Citigroup Funding. Any agents, dealers or underwriters who
execute any underwriting or distribution agreement relating to
securities offered pursuant to this Registration Statement will
agree to indemnify Citigroup Funding’s directors and their
officers who signed the Registration Statement against certain
liabilities that may arise under the Securities Act with respect
to information furnished to Citigroup Funding by or on behalf of
such indemnifying party.
For the undertaking with respect to indemnification, see
Item 17 herein.
See the Global Selling Agency Agreement and the Selling Agency
Agreement for Index Warrants incorporated by reference as
Exhibits 1(a) and 1(c) for certain indemnification
provisions.
Item 16. Exhibits.
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Exhibit
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Number
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Description
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1
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(a)
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—
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|
Global Selling Agency Agreement, dated April 20, 2006,
relating to the Medium-Term Notes, Series D and
Series E, incorporated by reference to Exhibit 1.01 to
Citigroup’s Current Report on
Form 8-K
filed on April 25, 2006
(No. 1-09924).
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1
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(b)
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—
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Amendment No. 1 to Global Selling Agency Agreement, dated
March 10, 2009, relating to the Medium-Term Senior Notes,
Series D and Series E, incorporated by reference to
Exhibit 1.01 to Citigroup’s Current Report on
Form 8-K filed on March 11, 2009 (No. 1-09924).
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1
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(c)
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—
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Selling Agency Agreement, dated November 22, 2006, relating
to the Index Warrants, incorporated by reference to
Exhibit 1.01 to Citigroup’s Current Report on
Form 8-K
filed on November 22, 2006
(No. 1-09924).
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1
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(d)
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—
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Amendment No. 1 to Selling Agency Agreement, dated
March 10, 2009, relating to the Index Warrants,
incorporated by reference to Exhibit 1.02 to
Citigroup’s Current Report on Form 8-K filed on
March 11, 2009 (No. 1-09924).
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4
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(a)
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—
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Senior Debt Indenture, dated as of June 1, 2005, among
Citigroup Funding Inc., Citigroup Inc. and The Bank of New York
Mellon, as successor trustee to JPMorgan Chase Bank, N.A.,
incorporated by reference to Exhibit 4(b) to the
Registrants’ registration statement on
Form S-3
filed on March 13, 2006
(Nos. 333-132370,
333-132370-01).
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4
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(b)
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—
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Subordinated Debt Indenture, dated as of June 1, 2005,
among Citigroup Funding Inc., Citigroup Inc. and Deutsche Bank
Trust Company Americas, as Trustee, incorporated by reference to
Exhibit 4(c) to the Registrants’ registration
statement on
Form S-3
filed on March 13, 2006
(Nos. 333-132370,
333-132370-01).
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4
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(c)
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—
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|
Forms of Medium-Term Registered Notes, Series D and
Series E, incorporated by reference to Exhibit 4(d) to
the Registrants’ registration statement on
Form S-3
filed on March 13, 2006
(Nos. 333-132370,
333-132370-01).
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4
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(d)
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—
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Forms of Medium-Term Temporary Global Notes, Series D and
Series E, incorporated by reference to Exhibit 4(f) to
the Registrants’ registration statement on
Form S-3
filed on March 13, 2006
(Nos. 333-132370,
333-132370-01).
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II-4
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Exhibit
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Number
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Description
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4
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(e)
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—
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|
Forms of Medium-Term Permanent Global Notes, Series D and
Series E, incorporated by reference to Exhibit 4(g) to
the Registrants’ registration statement on
Form S-3
filed on March 13, 2006
(Nos. 333-132370,
333-132370-01).
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4
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(f)
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—
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Index Warrant Agreement for Index Warrants, and form of Index
Warrant Certificate for Index Warrants in registered form,
incorporated by reference to Exhibits 4.01 and 4.02 to
Citigroup’s Current Report on
Form 8-K
filed on November 22, 2006
(No. 1-09924).
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5
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(a)
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—
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Opinion of Douglas C. Turnbull, Esq.*
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12
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(a)
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—
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Calculation of Ratio of Income to Fixed Charges, incorporated by
reference to Exhibit 12.01 to Citigroup’s Quarterly
Report on
Form 10-Q
for the period ended March 31, 2011
(No. 1-09924).
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12
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(b)
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—
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Calculation of Ratio of Income to Combined Fixed Charges
Including Preferred Stock Dividends, incorporated by reference
to Exhibit 12.02 to Citigroup’s Quarterly Report on
Form 10-Q
for the year ended March 31, 2011
(No. 1-09924).
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23
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(a)
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—
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Consent of KPMG LLP, Independent Registered Public Accounting
Firm.*
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23
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(b)
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—
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Consent of Douglas C. Turnbull, Esq. (included in
Exhibit 5(a)).*
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24
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(a)
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—
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Powers of Attorney of Citigroup Inc. Directors.*
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25
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(a)
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—
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Form T-1
Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of The Bank of New York
Mellon, as successor trustee to JPMorgan Chase Bank, N.A. under
the Senior Debt Indenture.**
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25
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(b)
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—
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Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended, of Deutsche Bank
Trust Company Americas under the Subordinated Debt Indenture.**
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Item 17. Undertakings.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
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(i)
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To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended;
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(ii)
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To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in this registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the “Calculation of Registration
Fee” table in the effective registration statement; and
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(iii)
|
To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
|
provided, however, that paragraphs (i), (ii) and (iii)
above do not apply if the information required to be included in
a post-effective amendment by those clauses is contained in
reports filed with or furnished to the Securities and Exchange
Commission by Citigroup Inc. pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as
amended, that are incorporated by reference in this registration
statement, or is contained in a form of prospectus filed
pursuant to Rule 424(b) that is part of the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, as amended, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the
II-5
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under
the Securities Act of 1933, as amended, to any purchaser:
(i) Each prospectus filed by the Registrants pursuant to
Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was
deemed part of and included in the registration
statement; and
(ii) Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii) or
(x) for the purpose of providing the information required
by Section 10(a) of the Securities Act of 1933, as amended,
shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus
is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an
underwriter, such date shall be deemed to be a new effective
date of the registration statement relating to the securities in
the registration statement to which that prospectus relates, and
the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made
in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of
the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or
modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or
made in any such document immediately prior to such effective
date.
(5) That, for the purpose of determining liability of the
Registrants under the Securities Act of 1933, as amended, to any
purchaser in the initial distribution of the securities, the
undersigned Registrants undertake that in a primary offering of
securities of the undersigned Registrants pursuant to this
registration statement, regardless of the underwriting method
used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the
following communications, the undersigned Registrants will be a
seller to the purchaser and will be considered to offer or sell
such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the
undersigned Registrants relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned Registrants or used
or referred to by the undersigned Registrants;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned Registrants or its securities provided by or on
behalf of the undersigned Registrants; and
(iv) Any other communication that is an offer in the
offering made by the undersigned Registrants to the purchaser.
(6) That, for purposes of determining any liability under
the Securities Act of 1933, as amended, each filing of Citigroup
Inc.’s annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934, as
amended, (and, where applicable, each filing of an employee
benefit plan’s annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934, as amended) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
II-6
(7) To file an application for the purpose of determining
the eligibility of the trustee to act under subsection (a)
of Section 310 of the Trust Indenture Act in accordance
with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Trust Indenture Act.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to
directors, officers and controlling persons of the registrants
pursuant to the provisions described under Item 15 above,
or otherwise, the registrants have been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrants of expenses incurred
or paid by a director, officer or controlling person of the
registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, Citigroup Inc. certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3
and has duly caused this Registration Statement or Amendment
thereto to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on
May 11, 2011.
CITIGROUP INC.
Name: John C. Gerspach
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Title:
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Chief Financial Officer
|
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement or Amendment thereto has
been signed below by the following persons in the capacities
indicated on May 11, 2011.
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Signatures
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/s/ Vikram
Pandit
Vikram
S. Pandit
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Chief Executive Officer and Director
(Principal Executive Officer)
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/s/ John
C. Gerspach
John
C. Gerspach
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Chief Financial Officer
(Principal Financial Officer)
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/s/ Jeffrey
R. Walsh
Jeffrey
R. Walsh
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|
Controller and Chief Accounting Officer
(Principal Accounting Officer)
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*
Alain
J.P. Belda
|
|
Director
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*
Timothy
C. Collins
|
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Director
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*
Jerry
A. Grundhofer
|
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Director
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*
Robert
L. Joss
|
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Director
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*
Michael
E. O’Neill
|
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Director
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*
Richard
D. Parsons
|
|
Chairman of the Board
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*
Lawrence
R. Ricciardi
|
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Director
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*
Judith
Rodin
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Director
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II-8
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|
|
Signatures
|
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*
Robert
L. Ryan
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|
Director
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*
Anthony
M. Santomero
|
|
Director
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*
Diana
L. Taylor
|
|
Director
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*
William
S. Thompson, Jr.
|
|
Director
|
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|
|
|
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*
Ernesto
Zedillo
|
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Director
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*By:
|
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/s/ John
C. Gerspach
John
C. Gerspach
Attorney-in-Fact
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|
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, Citigroup Funding Inc. certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on
Form S-3
and has duly caused this Registration Statement or Amendment
thereto to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of New York, State of New York, on
May 11, 2011.
CITIGROUP FUNDING INC.
Name: Eric W. Aboaf
Title: President and Chairman
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement or Amendment thereto has
been signed below by the following persons in the capacities
indicated on May 11, 2011.
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Signatures
|
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|
/s/ Eric W.
Aboaf
Eric W.
Aboaf
|
|
President and Chairman
(Principal Executive Officer)
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|
/s/ Srini
Vasan
Srini
Vasan
|
|
Executive Vice President and Chief Financial Officer (Principal
Financial Officer)
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|
/s/ Michael
P. Conway
Michael
P. Conway
|
|
Vice President and Controller
(Principal Accounting Officer)
|
|
|
|
/s/ James
M. Garnett
James
M. Garnett
|
|
Director
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/s/ Saul
M. Rosen
Saul
M. Rosen
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|
Director
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/s/ Jeffrey R.
Walsh
Jeffrey R.
Walsh
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Director
|
II-10
EXHIBIT
INDEX
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Exhibit
|
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|
|
Number
|
|
|
|
Description
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|
1
|
(a)
|
|
—
|
|
Global Selling Agency Agreement, dated April 20, 2006,
relating to the Medium-Term Notes, Series D and
Series E, incorporated by reference to Exhibit 1.01 to
Citigroup’s Current Report on
Form 8-K
filed on April 25, 2006
(No. 1-09924).
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|
1
|
(b)
|
|
—
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|
Amendment No. 1 to Global Selling Agency Agreement, dated
March 10, 2009, relating to the Medium-Term Senior Notes,
Series D and Series E, incorporated by reference to
Exhibit 1.01 to Citigroup’s Current Report on
Form 8-K filed on March 11, 2009 (No. 1-09924).
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|
1
|
(c)
|
|
—
|
|
Selling Agency Agreement, dated November 22, 2006, relating
to the Index Warrants, incorporated by reference to
Exhibit 1.01 to Citigroup’s Current Report on
Form 8-K
filed on November 22, 2006
(No. 1-09924).
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|
1
|
(d)
|
|
—
|
|
Amendment No. 1 to Selling Agency Agreement, dated
March 10, 2009, relating to the Index Warrants,
incorporated by reference to Exhibit 1.02 to
Citigroup’s Current Report on Form 8-K filed on
March 11, 2009 (No. 1-09924).
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|
4
|
(a)
|
|
—
|
|
Senior Debt Indenture, dated as of June 1, 2005, among
Citigroup Funding Inc., Citigroup Inc. and The Bank of New York
Mellon, as successor trustee to JPMorgan Chase Bank, N.A.,
incorporated by reference to Exhibit 4(b) to the
Registrants’ registration statement on
Form S-3
filed on March 13, 2006
(Nos. 333-132370,
333-132370-01).
|
|
4
|
(b)
|
|
—
|
|
Subordinated Debt Indenture, dated as of June 1, 2005,
among Citigroup Funding Inc., Citigroup Inc. and Deutsche Bank
Trust Company Americas, as Trustee, incorporated by reference to
Exhibit 4(c) to the Registrants’ registration
statement on
Form S-3
filed on March 13, 2006
(Nos. 333-132370,
333-132370-01).
|
|
4
|
(c)
|
|
—
|
|
Forms of Medium-Term Registered Notes, Series D and
Series E, incorporated by reference to Exhibit 4(d) to
the Registrants’ registration statement on
Form S-3
filed on March 13, 2006
(Nos. 333-132370,
333-132370-01).
|
|
4
|
(d)
|
|
—
|
|
Forms of Medium-Term Temporary Global Notes, Series D and
Series E, incorporated by reference to Exhibit 4(f) to
the Registrants’ registration statement on
Form S-3
filed on March 13, 2006
(Nos. 333-132370,
333-132370-01).
|
|
4
|
(e)
|
|
—
|
|
Forms of Medium-Term Permanent Global Notes, Series D and
Series E, incorporated by reference to Exhibit 4(g) to
the Registrants’ registration statement on
Form S-3
filed on March 13, 2006
(Nos. 333-132370,
333-132370-01).
|
|
4
|
(f)
|
|
—
|
|
Index Warrant Agreement for Index Warrants, and form of Index
Warrant Certificate for Index Warrants in registered form,
incorporated by reference to Exhibits 4.01 and 4.02 to
Citigroup’s Current Report on
Form 8-K
filed on November 22, 2006
(No. 1-09924).
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|
5
|
(a)
|
|
—
|
|
Opinion of Douglas C. Turnbull, Esq.*
|
|
12
|
(a)
|
|
—
|
|
Calculation of Ratio of Income to Fixed Charges, incorporated by
reference to Exhibit 12.01 to Citigroup’s Quarterly
Report on
Form 10-Q
for the year ended March 31, 2011
(No. 1-09924).
|
|
12
|
(b)
|
|
—
|
|
Calculation of Ratio of Income to Combined Fixed Charges
Including Preferred Stock Dividends, incorporated by reference
to Exhibit 12.02 to Citigroup’s Quarterly Report on
Form 10-Q
for the year ended March 31, 2011
(No. 1-09924).
|
|
23
|
(a)
|
|
—
|
|
Consent of KPMG LLP, Independent Registered Public Accounting
Firm.*
|
|
23
|
(b)
|
|
—
|
|
Consent of Douglas C. Turnbull, Esq. (included in
Exhibit 5(a)).*
|
|
24
|
(a)
|
|
—
|
|
Powers of Attorney of Citigroup Inc. Directors.*
|
|
25
|
(a)
|
|
—
|
|
Form T-1
Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of The Bank of New York
Mellon, as successor trustee to JPMorgan Chase Bank, N.A. under
the Senior Debt Indenture.**
|
|
25
|
(b)
|
|
—
|
|
Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939, as amended, of Deutsche Bank
Trust Company Americas under the Subordinated Debt Indenture.**
|