<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-68949
PROSPECTUS SUPPLEMENT
(to prospectus dated March 8, 1999)
25,000,000 SHARES
[CITIGROUP LOGO]
COMMON STOCK
------------
This prospectus supplement, together with the accompanying prospec-
tus, may be used by one or more broker-dealer subsidiaries of Citigroup in
connection with offers and sales of Citigroup common stock in market-making
transactions, including block positioning and block trades, at negotiated prices
related to prevailing market prices at the time of sale. The shares of
Citigroup common stock that are the subject of these market-making transactions
may include shares that were issued prior to the effective date of the
registration statement, of which this prospectus supplement forms a part.
Any of Citigroup's broker-dealer subsidiaries, including Salomon
Smith Barney Inc., may act as principal or agent in such market-making
transactions.
SALOMON SMITH BARNEY
November 3, 1999
<PAGE>
TABLE OF CONTENTS
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Prospectus Summary.......................................... 2
Citigroup Inc............................................... 7
Use of Proceeds and Hedging................................. 8
Ratio of Income to Fixed Charges and Ratio of Income to
Combined Fixed Charges Including
Preferred Stock Dividends............................... 9
European Monetary Union..................................... 10
Description of Debt Securities.............................. 11
Description of Index Warrants............................... 19
Description of Capital Stock................................ 22
Description of Preferred Stock.............................. 25
Description of Depositary Shares............................ 28
Book-Entry Procedures and Settlement........................ 31
Plan of Distribution........................................ 33
ERISA Matters............................................... 35
Legal Matters............................................... 35
Experts..................................................... 35
</TABLE>
<PAGE>
PROSPECTUS
[CITIGROUP LOGO]
May Offer--
$6,000,000,000
Debt Securities
Index Warrants
Preferred Stock
Depositary Shares
Common Stock
Citigroup will provide the specific terms of these securities in supplements
to this prospectus. You should read this prospectus and the accompanying
prospectus supplement carefully before you invest.
------------------------
Neither the Securities and Exchange Commission nor any state securities or
insurance commission has approved or disapproved of these securities or
determined if this prospectus or any accompanying prospectus 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 Inc. These securities are not insured by the Federal
Deposit Insurance Corporation or any other governmental agency or
instrumentality.
------------------------
March 8, 1999
<PAGE>
PROSPECTUS SUMMARY
This summary provides a brief overview of the key aspects of Citigroup and
all material terms of the offered securities which 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:
- this prospectus, which explains the general terms of the securities that
Citigroup may offer;
- the accompanying prospectus supplement, which (1) explains the specific
terms of the securities being offered and (2) updates and changes
information in this prospectus; and
- the documents referred to in "Where You Can Find More Information" on page
6 for information on Citigroup, including its financial statements.
CITIGROUP INC.
Citigroup's businesses provide a broad range of financial services to
consumer and corporate customers around the world. Among these businesses are
Citibank, Commercial Credit, Primerica Financial Services, Salomon Smith Barney,
SSB Citi Asset Management, Travelers Life & Annuity and Travelers Property
Casualty.
On October 8, 1998, Citigroup changed its name from Travelers Group Inc. to
Citigroup Inc. in connection with the merger of Citicorp into a subsidiary of
Citigroup. Citigroup's principal executive office is at 153 East 53rd Street,
New York, NY 10043, and its telephone number is (212) 559-1000.
THE SECURITIES CITIGROUP MAY OFFER
Citigroup may use this prospectus to offer up to $6,000,000,000 of:
- debt securities;
- index warrants;
- preferred stock;
- depositary shares; and
- common stock.
A prospectus supplement will describe the specific types, amounts, prices,
and detailed terms of any of these offered securities.
DEBT SECURITIES
Debt securities are unsecured general obligations of Citigroup in the form
of senior or subordinated debt. Senior debt includes Citigroup's notes, debt and
guarantees and any other debt for money 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 payments on the senior debt were not made.
The senior and subordinated debt will be issued under separate indentures
between Citigroup 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 or
filed as exhibits to Citigroup's registration statement No. 333-68949,
Citigroup's most recent annual report on 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 Form 10-K. You can receive copies of these documents
by following the directions on page 6.
2
<PAGE>
GENERAL INDENTURE PROVISIONS THAT APPLY TO SENIOR AND SUBORDINATED DEBT
- Neither indenture limits the amount of debt that Citigroup may issue or
provides holders any protection should there be a highly leveraged
transaction involving Citigroup, although the senior debt indenture does
limit Citigroup's ability to pledge the stock of any subsidiary that meets
the financial thresholds in the indenture. These thresholds are described
below under "Description of Debt Securities."
- Each indenture allows for different types of debt securities, including
indexed securities, to be issued in series.
- The indentures allow Citigroup to merge or to consolidate with another
company, or sell all or substantially all of its assets to another
company. If any of these events occur, the other company would be required
to assume Citigroup's responsibilities for the debt. Unless the
transaction resulted in an event of default, Citigroup would be released
from all liabilities and obligations under the debt securities when the
other company assumed its responsibilities.
- The indentures provide that holders of 66 2/3% of the principal amount of
the senior debt securities 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 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.
- Citigroup may satisfy its obligations under the debt securities or be
released from its obligation 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's obligations
under the particular securities when due.
- 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.
EVENTS OF DEFAULT
The events of default specified in the indentures include:
- failure to pay principal when due;
- failure to pay required interest for 30 days;
- failure to make a required scheduled installment payment for 30 days;
- failure to perform other covenants for 90 days after notice; and
- certain events of insolvency or bankruptcy, whether voluntary or not.
REMEDIES
If there were a default, the trustee or holders of 25% of the principal
amount of 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 could rescind that acceleration of the
debt securities.
INDEX WARRANTS
Citigroup may issue index warrants independently or together with debt
securities. Citigroup will issue any series of index warrants under a separate
warrant agreement between Citigroup and a bank
3
<PAGE>
or trust company. You are encouraged to read the standard form of the warrant
agreement, which will be filed as an exhibit to one of Citigroup's future
current reports and incorporated by reference in its registration statement
No. 333-68949. You can receive copies of these documents by following the
directions on page 6.
Index warrants are securities that, when properly exercised by the
purchaser, entitle the purchaser to receive from Citigroup 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 for a series of index warrants will describe the
formula for determining the amount in cash or number of securities, if any, that
Citigroup 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 will generally issue index warrants in book-entry form, which
means that they will not be evidenced by physical certificates. Also, Citigroup
will generally list index warrants for trading on a national securities
exchange, such as the New York Stock Exchange, Inc., The Nasdaq-Amex Market
Group or the Chicago Board Options Exchange, Incorporated.
The warrant agreement for any series of index warrants will provide that
holders of a majority of the total principal 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 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 relating to each series of
index warrants will describe the important tax considerations.
PREFERRED STOCK
Citigroup may issue preferred stock with various terms to be established by
its board of directors or a committee designated by the board. Each series of
preferred stock will be more fully described in the particular prospectus
supplement that will accompany this prospectus, including redemption provisions,
rights in the event of liquidation, dissolution or winding up of Citigroup,
voting rights and conversion rights.
Generally, each series of preferred stock will rank on an equal basis with
each other series of preferred stock and will rank prior to Citigroup's common
stock. The prospectus supplement will also describe how and when dividends will
be paid on the series of preferred stock.
DEPOSITARY SHARES
Citigroup may issue depositary shares representing fractional shares of
preferred stock. Each particular series of depositary shares will be more fully
described in the prospectus supplement that will accompany this prospectus.
These depositary shares will be evidenced by depositary receipts and issued
under a deposit agreement between Citigroup and a bank or trust company. You are
encouraged to read the standard form of the deposit agreement, which is
incorporated by reference in Citigroup's registration statement No. 333-68949.
You can receive copies of this document by following the directions on page 6.
COMMON STOCK
Citigroup may issue common stock, par value $.01 per share. Holders of
common stock are entitled to receive dividends when declared by its board of
directors. Each holder of common stock is entitled to one vote per share. The
holders of common stock have no preemptive rights or cumulative voting rights.
4
<PAGE>
USE OF PROCEEDS
Citigroup will use the net proceeds it receives from any offering of these
securities for general corporate purposes, primarily to fund its operating units
and subsidiaries. Citigroup may use some of the proceeds to refinance or extend
the maturity of existing debt obligations. Citigroup 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 may sell the offered securities in any of the following ways:
- to or through underwriters or dealers;
- by itself directly;
- through agents; or
- through a combination of any of these methods of sale.
The prospectus supplement will explain the ways Citigroup 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 is granting the underwriters, dealers or agents.
If Citigroup 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 expects that the underwriters for any offering will include one or
more of its broker-dealer subsidiaries, including Salomon Smith Barney Inc.
These broker-dealer subsidiaries, including their successors, 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 or any of
its subsidiaries may use this prospectus and the related prospectus supplements
and pricing supplements in connection with these activities.
5
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
As required by the Securities Act of 1933, Citigroup filed a registration
statement (No. 333-68949) 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 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 rooms in Washington, D.C., New York, New
York and Chicago, Illinois. You can also request copies of the documents, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC. Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. These SEC filings are also available to the public from the
SEC's web site at http://www.sec.gov.
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 later with the SEC will automatically update information in this
prospectus. In all cases, you should rely on the later information over
different information included in this prospectus or the prospectus supplement.
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 of 1934:
(a) Annual Report on Form 10-K for the year ended December 31, 1998;
(b) Current Report on Form 8-K dated January 25, 1999; and
(c) Registration Statement on Form 8-B, dated May 10, 1988, describing our
common stock, including any amendments or reports filed for the purpose
of updating such description.
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:
Treasurer
Citigroup Inc.
153 East 53rd Street
New York, NY 10043
212-559-1000
You should rely only on the information provided in this prospectus and the
prospectus supplement, as well as the information incorporated by reference.
Citigroup has not authorized anyone to provide you with different information.
Citigroup is not making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information in this
prospectus, the prospectus supplement or any documents incorporated by reference
is accurate as of any date other than the date on the front of the applicable
document.
6
<PAGE>
CITIGROUP INC.
Citigroup's businesses provide a broad range of financial services to
consumer and corporate customers around the world. Among these businesses are
Citibank, Commercial Credit, Primerica Financial Services, Salomon Smith Barney,
SSB Citi Asset Management, Travelers Life & Annuity and Travelers Property
Casualty.
On October 8, 1998, Citigroup changed its name from Travelers Group Inc. to
Citigroup Inc. in connection with the merger of Citicorp into a subsidiary of
Citigroup.
Citigroup is a holding company and services its obligations primarily with
dividends and advances that it receives from subsidiaries. Citigroup's
subsidiaries that operate in the banking, insurance and securities business can
only pay dividends if they are in compliance with the applicable regulatory
requirements imposed on them by federal bank regulatory authorities, state
insurance departments and securities regulators. 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. Each of Citigroup's major operating subsidiaries
finances its operations on a stand-alone basis consistent with its
capitalization and ratings.
Under longstanding policy of The Board of Governors of the Federal Reserve
System, a bank holding company is expected to act as a source of financial
strength for its subsidiary banks and to commit resources to support such banks.
As a result of that policy, Citigroup may be required to commit resources to its
subsidiary banks.
The principal office of Citigroup is located at 153 East 53rd Street, New
York, NY 10043, and its telephone number is (212) 559-1000.
7
<PAGE>
USE OF PROCEEDS AND HEDGING
GENERAL. Citigroup will use the proceeds it receives from the sale of the
offered securities for general corporate purposes, principally to:
- fund the business of its operating units;
- fund investments in, or extensions of credit or capital contributions to,
its subsidiaries; and
- lengthen the average maturity of liabilities, which means that it could
reduce its short-term liabilities or refund maturing indebtedness.
Citigroup expects to incur additional indebtedness in the future to fund its
businesses. Citigroup or an affiliate 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 or
one or more of its subsidiaries 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 assets that are used to determine the relevant index or
indices. Citigroup or one or more of its subsidiaries may also purchase or
maintain positions in options, futures contracts, forward contracts or swaps, or
options on such securities, or other derivative or similar instruments relating
to the relevant index or underlying assets. Citigroup 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 expects that it or one or more of its subsidiaries 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 may take long or short positions in the index, the underlying assets,
options, futures contracts, forward contracts, swaps, or other derivative or
similar instruments related to the index and 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 or one or more of its subsidiaries 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 or one or more of its
subsidiaries may also take hedging positions in other types of appropriate
financial instruments that may become available in the future.
If Citigroup or one or more of its subsidiaries has a long hedge position
in, options contracts in, or other derivative or similar instruments related to,
the underlying assets or index, Citigroup or one or more of its subsidiaries may
liquidate all or a portion of its holdings at or about the time of the maturity
of 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. Citigroup 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 has no reason to believe that its hedging activity will have a
material impact on the price of such options, swaps, futures contracts, options
on the foregoing, or other derivative or similar instruments, or on the value of
the index or the underlying assets. However, Citigroup cannot guarantee you that
its hedging activities will not affect such prices or value. Citigroup will use
the remainder of the proceeds from the sale of index warrants and indexed notes
for the general corporate purposes described above.
8
<PAGE>
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.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Ratio of income to fixed charges (excluding interest on
deposits)................................................. 1.57 1.71 1.88 1.65 1.41
Ratio of income to fixed charges (including interest on
deposits)................................................. 1.33 1.43 1.51 1.39 1.25
Ratio of income to combined fixed charges including
preferred stock dividends (excluding interest on
deposits)................................................. 1.54 1.66 1.80 1.56 1.34
Ratio of income to combined fixed charges including
preferred stock dividends (including interest on
deposits)................................................. 1.32 1.41 1.48 1.35 1.21
</TABLE>
9
<PAGE>
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 participating
in Stage III of the European Economic and Monetary Union.
Stage III began on January 1, 1999 for the eleven participating member
states of the European Union that satisfied the economic convergence criteria in
the Treaty on European Union: Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain. Other member
states of the European Union may still become participating member states after
January 1, 1999.
Stage III includes the introduction of the Euro, which, along with the
present national currency of each participating member state, is legal tender in
the participating member states. It is currently anticipated that on and after
January 1, 2002, the national currencies of participating member states will
cease to exist and the sole legal tender in such states will be the Euro. The
European Union has adopted regulations providing specific rules for the
introduction of the Euro in substitution for the respective current national
currencies of such member states, and may adopt additional regulations or
legislation in the future relating to the Euro. It is anticipated that these
regulations or legislation will be supplemented by legislation of the individual
member states.
Pursuant to European Council Regulation No. 2866/98 of December 31, 1998,
one Euro equals:
<TABLE>
<S> <C>
- - 13.7603 Austrian schillings, - 1,936.27 Italian lire,
- - 40.3399 Belgian francs, - 40.3399 Luxembourg francs,
- - 5.94573 Finnish marks, - 2.20371 Dutch guilders,
- - 6.55957 French francs, - 200.482 Portugese escudos, or
- - 1.95583 German marks, - 166.386 Spanish pesetas.
- - 0.787564 Irish pounds,
</TABLE>
10
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The debt securities offered by this prospectus will be unsecured obligations
of Citigroup and will be either senior or subordinated debt. Senior debt will be
issued under a senior debt indenture. Subordinated debt 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." Forms of the indentures have
been filed with the SEC and are incorporated by reference in or filed as
exhibits to the registration statement on Form S-3 (No. 333-68949) under the
Securities Act of 1933 of which this prospectus forms a part.
The following briefly summarizes the material provisions of the indentures
and the debt securities, other than pricing and related terms disclosed in the
accompanying prospectus supplement. 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 a series
of debt securities, which will be described in more detail in the applicable
prospectus supplement. Copies of the indentures may be obtained from Citigroup
or the applicable trustee. So that you may easily locate the more detailed
provisions, the numbers in parentheses below refer to sections in the applicable
indenture or, if no indenture is specified, to sections in each of the
indentures. Wherever particular sections or defined terms of the applicable
indenture are referred to, such sections or defined terms are incorporated into
this prospectus by reference, and the statement in this prospectus is qualified
by that reference.
Unless otherwise provided in the applicable prospectus supplement, the
trustee under the senior debt indenture will be The Bank of New York, and the
trustee under the subordinated debt indenture will be The First National Bank of
Chicago.
GENERAL
The indentures provide that unsecured senior or subordinated debt securities
of Citigroup may be issued in one or more series, with different terms, in each
case as authorized from time to time by Citigroup. Citigroup also has the right
to "reopen" a previous issue of a series of debt securities by issuing
additional debt securities of such series.
Federal income tax consequences and other special considerations applicable
to any debt securities issued by Citigroup at a discount will be described in
the applicable prospectus supplement.
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,
to participate in the assets of the subsidiary upon the subsidiary's
liquidation.
The applicable prospectus supplement relating to any series of debt
securities will describe the following terms, where applicable:
- the title of the debt securities;
- whether the debt securities will be senior or subordinated debt;
- the total principal amount of the debt securities;
- the percentage of the principal amount at which the debt securities will
be sold and, if applicable, the method of determining the price;
- the maturity date or dates;
- the interest rate or the method of computing the interest rate;
- 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;
11
<PAGE>
- if other than in United States dollars, the currency or currency unit in
which payment will be made;
- if the amount of any payment may be determined with reference to an index
or formula based on a currency or currency unit other than that in which
the debt securities are payable, the manner in which the amounts will be
determined;
- if any payments may be made at the election of Citigroup or a holder of
debt securities in a currency or currency unit other than that in which
the debt securities are stated to be payable, the periods within which and
the terms upon which such election may be made;
- the location where payments on the debt securities will be made;
- the terms and conditions on which the debt securities may be redeemed at
the option of Citigroup;
- any obligation of Citigroup 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;
- if other than the principal amount, the portion of the principal amount of
the debt securities payable if the maturity is accelerated;
- any provisions for the discharge of Citigroup's obligations relating to
the debt securities by deposit of funds or United States government
obligations;
- 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;
- the date of any global security if other than the original issuance of the
first debt security to be issued;
- any material provisions of the applicable indenture described in this
prospectus that do not apply to the debt securities; and
- any other specific terms of the debt securities (SECTION 2.02).
The terms on which a series of debt securities may be convertible into or
exchangeable for common stock or other securities of Citigroup will be set forth
in the prospectus supplement relating to such series. Such terms will include
provisions as to whether conversion or exchange is mandatory, at the option of
the holder or at the option of Citigroup. The terms may include provisions
pursuant to which the number of shares of common stock or other securities of
Citigroup to be received by the holders of such series of debt securities may be
adjusted.
The debt securities will be issued only 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 provided in the
accompanying prospectus supplement, debt securities denominated in United States
dollars will be issued only in denominations of $1,000 and whole multiples of
$1,000 (SECTION 2.01). The prospectus supplement relating to offered securities
denominated in a foreign or composite currency will specify the denomination of
the offered 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 corporate trust office of the relevant Trustee in New York City.
Holders will not have to pay any service charge for any registration of transfer
or exchange of debt securities, but Citigroup may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
with such registration of transfer. (SECTION 2.05)
12
<PAGE>
PAYMENT AND PAYING AGENTS
Distributions on the debt securities other than those represented by global
notes will be made in the designated currency against surrender of the debt
securities at the principal corporate trust office of the relevant trustee in
New York City. Payment will be made to the registered holder at the close of
business on the record date for such payment. Interest payments will be made at
the principal corporate trust office of the relevant trustee in New York City,
or by a check mailed to the holder at his registered address (SECTIONS 2.01 AND
5.02). Payments in any other manner will be specified in the prospectus
supplement.
SENIOR DEBT
The senior debt securities will be issued under the senior debt indenture
and will rank on an equal basis with all other unsecured debt of Citigroup
except subordinated debt.
SUBORDINATED DEBT
The subordinated debt securities will be issued under the subordinated debt
indenture 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) of Citigroup.
If Citigroup defaults in the payment of any principal of, or premium, if
any, or interest on any Senior Indebtedness when it becomes due and payable
after any applicable grace period, then, unless and until the default is cured
or waived or ceases to exist, Citigroup cannot make a payment on account of or
redeem or otherwise acquire the subordinated debt securities. Nevertheless,
holders of subordinated debt securities may still receive and retain:
- securities of Citigroup or any other corporation provided for by a plan of
reorganization or readjustment that are subordinate, at least to the same
extent that the subordinated debt securities are subordinated to Senior
Indebtedness; and
- payments made from a defeasance trust as described below.
If there is any insolvency, bankruptcy, liquidation or other similar
proceeding relating to Citigroup, its creditors or its property, then all Senior
Indebtedness must be paid in full before any payment may be made to any holders
of subordinated debt securities. Holders of subordinated debt securities must
return and deliver any payments received by them, other than in a plan of
reorganization or through a defeasance trust as described below, directly to the
holders of Senior Indebtedness until all Senior Indebtedness is paid in full.
(SUBORDINATED DEBT INDENTURE, SECTION 14.01).
"Senior Indebtedness" means:
(1) the principal, premium, if any, and interest in respect of
(A) indebtedness of Citigroup for money borrowed and (B) indebtedness
evidenced by securities, notes, debentures, bonds or other similar
instruments issued by Citigroup, including the senior debt securities;
(2) all capital lease obligations of Citigroup;
(3) all obligations of Citigroup issued or assumed as the deferred purchase
price of property, all conditional sale obligations of Citigroup and all
obligations of Citigroup under any conditional sale or title retention
agreement, but excluding trade accounts payable in the ordinary course of
business;
(4) all obligations of Citigroup in respect of any letters of credit,
bankers acceptance, security purchase facilities and similar credit
transactions;
(5) all obligations of Citigroup in respect of interest rate swap, cap or
other agreements, interest rate future or options contracts, currency
swap agreements, currency future or option contracts and other similar
agreements;
13
<PAGE>
(6) all obligations of the type referred to in clauses (1) through (5) of
other persons for the payment of which Citigroup is responsible or liable
as obligor, guarantor or otherwise; and
(7) all obligations of the type referred to in clauses (1) through (6) of
other persons secured by any lien on any property or asset of Citigroup
whether or not such obligation is assumed by Citigroup;
but Senior Indebtedness does not include:
(a) subordinated debt securities;
(b) any indebtedness that by its terms is subordinated to, or ranks on an
equal basis with, subordinated debt securities; and
(c) any indebtedness between or among Citigroup and its affiliates,
including (1) any Junior Subordinated Debt, (2) any Capital
Securities Guarantees and (3) all other debt securities and
guarantees in respect of those debt securities issued to any other
trust, or a trustee of such trust, partnership or other entity
affiliated with Citigroup which is a financing vehicle of Citigroup
in connection with the issuance by such financing vehicle of capital
securities or other securities guaranteed by Citigroup pursuant to an
instrument that ranks on an equal basis with, or junior to, the
Capital Securities Guarantees.
"Junior Subordinated Debt" means Citigroup's:
- 7% Junior Subordinated Deferrable Interest Debentures due November 15,
2028;
- 6.850% Junior Subordinated Deferrable Interest Debentures due January 22,
2038;
- 7 5/8% Junior Subordinated Deferrable Interest Debentures due December 1,
2036;
- 7 3/4% Junior Subordinated Deferrable Interest Debentures due December 1,
2036;
- 8% Deferrable Interest Debentures due September 30, 2036;
- other notes or other obligations which may be issued under the indenture,
dated as of October 7, 1996, between Citigroup and The Chase Manhattan
Bank, as trustee; and
- indebtedness that is by its terms subordinated to, or ranks on an equal
basis with, the Junior Subordinated Debt.
"Capital Securities Guarantees" means the guarantees issued by Citigroup in
connection with:
- the 7% Trust Preferred Securities of Citigroup Capital V;
- the 6.850% Trust Preferred Securities of Citigroup Capital IV;
- the 7 5/8% Trust Preferred Securities of Citigroup Capital III;
- the 7 3/4% Trust Preferred Securities of Citigroup Capital II;
- the 8% Trust Preferred Securities of Citigroup Capital I; and
- any existing or future preferred or preference stock, including capital
securities, that is by its terms subordinated to, or ranks on an equal
basis with, the Junior Subordinated Debt.
COVENANTS
LIMITATIONS ON LIENS. The senior debt indenture provides that Citigroup
will not, and will not permit any Subsidiary to, incur, issue, assume or
guarantee any indebtedness for money borrowed if such indebtedness is secured by
a pledge of, lien on, or security interest in any shares of Voting Stock of any
Significant Subsidiary, without providing that each series of senior debt
securities and, at
14
<PAGE>
Citigroup's option, any other senior indebtedness ranking equally with such
series of senior debt securities, is secured equally and ratably with such
indebtedness. This limitation shall not apply to indebtedness secured by a
pledge of, lien on or security interest in any shares of Voting Stock of any
corporation at the time it becomes a Significant Subsidiary (SENIOR DEBT
INDENTURE, SECTION 5.04). The subordinated debt indenture does not contain a
similar provision.
"Significant Subsidiary" means a Subsidiary, including its Subsidiaries,
that meets any of the following conditions:
- Citigroup's and its other Subsidiaries' investments in and advances to the
Subsidiary exceed 10 percent of the total assets of Citigroup and its
Subsidiaries consolidated as of the end of the most recently completed
fiscal year;
- Citigroup's and its other Subsidiaries' proportionate share of the total
assets of the Subsidiary after intercompany eliminations exceeds
10 percent of the total assets of Citigroup and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or
- Citigroup's and its other Subsidiaries' equity in the income from
continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principles of the Subsidiary
exceeds 10 percent of such income of Citigroup and its Subsidiaries
consolidated for the most recently completed fiscal year.
"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.
"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 1.02 AND 5.04).
LIMITATIONS ON MERGERS AND SALES OF ASSETS. The indentures provide that
Citigroup will not merge or consolidate with another corporation or sell other
than for cash or lease all or substantially all its assets to another
corporation, or purchase all or substantially all the assets of another
corporation unless:
- either (1) Citigroup is the continuing corporation, or (2) the successor
corporation, if other than Citigroup, expressly assumes by supplemental
indenture the obligations evidenced by the securities issued pursuant to
the indenture and
- immediately after the transaction, there would not be any default in the
performance of any covenant or condition of the indenture (SENIOR DEBT
INDENTURE, SECTIONS 5.05 AND 14.01; SUBORDINATED DEBT INDENTURE, SECTIONS
5.04 AND 15.01).
Other than the restrictions described above, the indentures do not contain
any covenants or provisions that would protect holders of the debt securities in
the event of a highly leveraged transaction.
MODIFICATION OF THE INDENTURES
Under the indentures, Citigroup and the relevant trustee can enter into
supplemental indentures to establish the form and terms of any series of debt
securities without obtaining the consent of any holder of debt securities.
Citigroup and the trustee may, with the consent of the holders of at least
66 2/3% 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, modify the applicable indenture or the rights of the holders of the
securities of such series to be affected.
15
<PAGE>
No such modification may, without the consent of the holder of each security
so affected:
- extend the fixed maturity of any such securities,
- reduce the rate or extend the time of payment of interest on such
securities,
- reduce the principal amount of such securities or the premium, if any, on
such securities,
- reduce the amount of the principal of any securities issued originally at
a discount,
- change the currency in which any such securities are payable, or
- impair the right to sue for the enforcement of any such payment on or
after the maturity of such securities.
In addition, no such modification may:
- reduce the percentage of securities referred to above whose holders need
to consent to the modification without the consent of such holders; or
- change, without the written consent of the trustee, the rights, duties or
immunities of the trustee (SECTIONS 13.01 AND 13.02).
In addition, the subordinated debt indenture may not be amended without the
consent of each holder of subordinated debt securities affected thereby to
modify the subordination of the subordinated debt securities issued under that
indenture in a manner adverse to the holders of the subordinated debt securities
(SUBORDINATED DEBT INDENTURE, SECTION 13.02).
DEFAULTS
Each indenture provides that events of default regarding any series of debt
securities will be:
- failure to pay required interest on any debt security of such series for
30 days;
- failure to pay principal, other than a scheduled installment payment, or
premium, if any, on any debt security of such series when due;
- failure to make any required scheduled installment payment for 30 days on
debt securities of such series;
- 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
- certain events of bankruptcy or insolvency, whether voluntary or not
(SECTION 6.01).
If an event of default regarding debt securities of any series issued under
the indentures should occur and be continuing, either the trustee or the holders
of 25% in the principal amount of outstanding debt securities of such series may
declare each debt security of that series due and payable (SECTION 6.02).
Citigroup is required to file annually with the trustee a statement of an
officer as to the fulfillment by Citigroup of its obligations under the
indenture during the preceding year (SENIOR DEBT INDENTURE, SECTION 5.06;
SUBORDINATED DEBT INDENTURE, SECTION 5.05).
No event of default regarding one series of debt securities issued under an
indenture is necessarily an event of default regarding any other series of debt
securities (SECTION 6.02).
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 defaults regarding such series (SECTIONS 6.02
AND 6.06). The trustee generally will not be requested, ordered or directed by
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 10.01).
16
<PAGE>
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 such series (SECTION 6.05).
Before any holder of any series of debt securities may institute action for
any remedy, except payment on such 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 6.07).
DEFEASANCE
SENIOR DEBT INDENTURE. If so specified when the senior debt securities of a
particular series is created, after Citigroup has deposited with the trustee,
cash or government securities, in trust for the benefit of the holders
sufficient to pay the principal of, premium, if any, and interest on the senior
debt securities of such series when due, then Citigroup, at its option:
- will be deemed to have paid and satisfied its obligations on all
outstanding senior debt securities of such series, which is known as
"defeasance and discharge;" or
- will cease to be under any obligation, other than to pay when due the
principal of, premium, if any, and interest on such senior debt
securities, relating to the senior debt securities of such series, which
is known as "covenant defeasance."
In the case of covenant defeasance, Citigroup must also deliver to the
trustee an opinion of counsel to the effect that the holders of the senior debt
securities of such series will have no federal income tax consequences as a
result of such deposit.
When there is a defeasance and discharge, (1) the senior debt indenture will
no longer govern the senior debt securities of such series, (2) Citigroup will
no longer be liable for payment and (3) the holders of such senior debt
securities will be entitled only to the deposited funds. When there is a
covenant defeasance, however, Citigroup will continue to be obligated to make
payments when due if the deposited funds are not sufficient.
The obligations and rights under the senior debt indenture regarding
compensation, reimbursement and indemnification of the trustee, optional
redemption, mandatory and optional scheduled installment payments, if any,
registration of transfer and exchange of the senior debt securities of such
series, replacement of mutilated, destroyed, lost or stolen senior debt
securities and certain other administrative provisions will continue even if
Citigroup exercises its defeasance and discharge or covenant defeasance options
(SENIOR DEBT INDENTURE, SECTIONS 11.03 AND 11.04).
Under current federal income tax law, defeasance and discharge would be
treated as a taxable exchange of the senior debt securities for an interest in
the trust. As a consequence, each holder of the senior debt securities would
recognize gain or loss equal to the difference between the value of the holder's
interest in the trust and holder's tax basis for the senior debt securities
deemed exchanged. Each holder would then be required to include in income his
share of any income, gain and loss recognized by the trust. Even though federal
income tax on the deemed exchange would be imposed on a holder, the holder would
not receive any cash until the maturity or an earlier redemption of the senior
debt securities, except for any current interest payments.
Under current federal income tax law, a covenant defeasance would not be
treated as a taxable exchange of senior debt securities. Prospective investors
are urged to consult their own tax advisors as to the specific consequences of a
defeasance and discharge, including the applicability and effect of tax laws
other than the federal income tax law.
17
<PAGE>
SUBORDINATED DEBT INDENTURE. The defeasance and discharge and covenant
defeasance provisions contained in the subordinated debt indenture are
substantially the same as those described above for the senior debt indenture
(SUBORDINATED DEBT INDENTURE, SECTIONS 11.01, 11.02, 11.03, 11.04 AND 11.05).
Under the subordinated debt indenture, Citigroup must also deliver to the
trustee an opinion of counsel to the effect that the holders of the subordinated
debt securities will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance and discharge or covenant
defeasance and that federal income tax would be imposed on the holders in the
same manner as if such defeasance and discharge had not occurred. In the case of
a defeasance and discharge, such opinion must be based upon a ruling or
administrative pronouncement of the IRS.
CONCERNING THE TRUSTEES
Citigroup has had and may continue to have banking relationships with the
trustees in the ordinary course of business.
18
<PAGE>
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 prospectus supplement. You should read the particular terms of the
index warrants that are offered by Citigroup, which will be described in more
detail in a prospectus supplement. The prospectus 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 between Citigroup and a bank or trust company, as index warrant
agent. 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 under the applicable index warrant agreement and will not
assume any obligation or relationship of agency or trust for or with any owners
of such index warrants. A copy of the form of index warrant agreement, including
the form of certificate or global certificate that will represent the index
warrant certificate, will be filed as an exhibit to a document 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 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 from
Citigroup, 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:
- specified securities or securities indices;
- specified foreign currencies or currency indices;
- a combination thereof; or
- changes in such measure or differences between two or more such measures.
The prospectus supplement for a series of index warrants will describe the
formula or methodology to be applied to the relevant index or indices to
determine the amount payable or distributable on the index warrants.
If so specified in the prospectus supplement, the index warrants will
entitle the warrant holder to receive from Citigroup a minimum or maximum amount
upon automatic exercise at expiration or the happening of any other event
described in the prospectus 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.
You should read the prospectus supplement applicable to any 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 prospectus supplement.
19
<PAGE>
Unless otherwise specified in the applicable prospectus supplement,
Citigroup 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 prospectus supplement relating to any series of index
warrants will describe the following:
- the aggregate number of such index warrants;
- the offering price of such index warrants;
- the measure or measures by which payment or distribution on such index
warrants will be determined;
- certain information regarding the underlying securities, foreign
currencies or indices;
- 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;
- the date on which the index warrants may first be exercised and the date
on which they expire;
- any minimum number of index warrants exercisable at any one time;
- any maximum number of index warrants that may, at Citigroup's election, be
exercised by all warrant holders or by any person or entity on any day;
- any provisions permitting a warrant holder to condition an exercise of
index warrants;
- the method by which the index warrants may be exercised;
- 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;
- the method of making any foreign currency translation applicable to
payments or distributions on the index warrants;
- 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;
- the time or times at which amounts will be payable or distributable in
respect of such index warrants following exercise or automatic exercise;
- any national securities exchange on, or self-regulatory organization with
which, such index warrants will be listed;
- any provisions for issuing such index warrants in certificated form;
- 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
- any other terms of such index warrants.
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 relating to each series of index
warrants will describe these tax considerations. The summary of United States
federal income tax considerations contained in the prospectus supplement will be
presented for
20
<PAGE>
informational purposes only, however, and will not be intended as legal or tax
advice to prospective purchasers. You are urged to consult your own tax advisors
before purchasing any index warrants.
LISTING
Unless otherwise indicated in the prospectus supplement, the index warrants
will be listed on a national securities exchange or with a self-regulatory
organization, in each case as specified in the prospectus 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 and the index warrant agent, without the consent of the
holders of any index warrants, for any of the following purposes:
- curing any ambiguity or curing, correcting or supplementing any defective
or inconsistent provision;
- maintaining the listing of such index warrants on any national securities
exchange or with any other self-regulatory organization;
- registering such index warrants under the Exchange Act, permitting the
issuance of individual index warrant certificates to warrant holders,
reflecting the issuance by Citigroup of additional index warrants of the
same series or reflecting the appointment of a successor depository; or
- for any other purpose which Citigroup may deem necessary or desirable and
which will not materially and adversely affect the interests of the
warrant holders.
Citigroup 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
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:
- changes the amount to be paid to the warrant holder or the manner in which
that amount is to be determined;
- shortens the period of time during which the index warrants may be
exercised;
- otherwise materially and adversely affects the exercise rights of the
holders of the index warrants; or
- 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.
MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITION
If at any time there is a merger or consolidation involving Citigroup or a
sale, transfer, conveyance, other than lease, or other disposition of all or
substantially all of the assets of Citigroup, then the assuming corporation will
succeed to the obligations of Citigroup 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 and may then be
dissolved, wound up or liquidated.
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 his own behalf
his right to exercise, and to receive payment for, his index warrants.
21
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
As of the date of this prospectus, Citigroup's authorized capital stock
consists of 6 billion shares of common stock and 30 million shares of preferred
stock. The following briefly summarizes the material terms of Citigroup's common
stock and outstanding preferred stock. You should read the more detailed
provisions of Citigroup's certificate of incorporation and the certificate of
designation relating to any series of preferred stock for provisions that may be
important to you.
COMMON STOCK
As of December 31, 1998, Citigroup had outstanding approximately
2.3 billion shares of its common stock. Each holder of common stock is entitled
to one vote per share for the election of directors and for all other matters to
be voted on by Citigroup's stockholders. Except as otherwise provided by law,
the holders of shares of common stock vote as one class together with holders of
the shares of the outstanding Series I Preferred Stock and Series K Preferred
Stock, which are described below. Holders of common stock may not cumulate their
votes in the election of directors, and are entitled to share equally in the
dividends that may be declared by the board of directors, but only after payment
of dividends required to be paid on outstanding shares of preferred stock.
Upon voluntary or involuntary liquidation, dissolution or winding up of
Citigroup, the holders of the common stock share ratably in the assets remaining
after payments to creditors and provision for the preference of any preferred
stock. There are no preemptive or other subscription rights, conversion rights
or redemption or scheduled installment payment provisions relating to shares of
common stock. All of the outstanding shares of common stock are fully paid and
nonassessable. The transfer agent and registrar for the common stock is
Citibank, N.A. The common stock is listed on The New York Stock Exchange, Inc.
and The Pacific Exchange, Inc.
PREFERRED STOCK
The general terms of Citigroup's preferred stock are described below under
"Description of Preferred Stock."
As of the date of this prospectus, Citigroup had outstanding the following
series of preferred stock with the following terms:
<TABLE>
<CAPTION>
NUMBER OF REDEMPTION DATE NEXT
SHARES DIVIDENDS PER PRICE PER REDEEMABLE GENERAL
TITLE OF SERIES OUTSTANDING YEAR SHARE ($) BY CITIGROUP VOTING RIGHTS
- --------------- ----------- ------------------ ------------ ---------------------- -------------
<S> <C> <C> <C> <C> <C>
6.365% Cumulative Preferred Stock,
Series F.......................... 1,600,000 6.365% 250 June 16, 2007 No
6.213% Cumulative Preferred Stock,
Series G.......................... 800,000 6.213% 250 July 11, 2007 No
6.231% Cumulative Preferred Stock,
Series H.......................... 800,000 6.231% 250 September 8, 2007 No
Series I Cumulative Convertible
Preferred Stock................... 140,000(1) $90.00 1,000 October 31, 1999(7) Yes(10)
8.40% Cumulative Preferred Stock,
Series K.......................... 500,000 $42.00 500 March 31, 2001 Yes(10)
9.50% Cumulative Preferred Stock,
Series L.......................... --(2) 9.50% 500 June 30, 2001 Yes(10)
5.864% Cumulative Preferred Stock,
Series M.......................... 800,000 5.864% 250 October 8, 2007 No
Graduated Rate Cumulative Preferred
Stock, Series O................... 625,000 Variable Rate(3) 100 August 15, 1999(8) No
Adjustable Rate Cumulative Preferred
Stock, Series Q................... 700,000 Variable Rate(4) 250 May 31, 1999 No
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF REDEMPTION DATE NEXT
SHARES DIVIDENDS PER PRICE PER REDEEMABLE GENERAL
TITLE OF SERIES OUTSTANDING YEAR SHARE ($) BY CITIGROUP VOTING RIGHTS
- --------------- ----------- ------------------ ------------ ---------------------- -------------
<S> <C> <C> <C> <C> <C>
Adjustable Rate Cumulative Preferred
Stock, Series R................... 400,000 Variable Rate(4) 250 August 31, 1999 No
8.30% Noncumulative Preferred Stock,
Series S.......................... 500,000 8.30% 250 November 15, 1999 No
8 1/2% Noncumulative Preferred
Stock, Series T................... 600,000 8.50% 250 February 15, 2000 No
7 3/4% Cumulative Preferred Stock,
Series U.......................... 500,000 7.75% 250 May 15, 2000 No
Fixed Adjustable Rate Cumulative
Preferred Stock, Series V......... 250,000 Variable Rate(5) 500 February 15, 2006(9) No
Cumulative Adjustable Rate Preferred
Stock, Series Y................... 2,262 Variable Rate(6) 100,000 On any payment date No
5.321% Cumulative Preferred Stock,
Series YY......................... 987 5.321% 1,000,000 December 22, 2018 No
</TABLE>
Where the above table indicates that the holders of the preferred stock have
no general voting rights, this means that they do not vote on matters submitted
to a vote of the common stockholders. However, the holders of this preferred
stock do have other special voting rights (1) that are required by law, (2) that
apply if there is a default in paying dividends for the equivalent of six
calendar quarters, in some cases whether or not consecutive, and (3) when
Citigroup wants to create any class of stock having a preference as to dividends
or distributions of assets over such series or alter or change the provisions of
the certificate of incorporation so as to adversely affect the powers,
preferences or rights of the holders of such series. These special voting rights
apply to all series of preferred stock listed above.
- ------------------------------
(1) Each share of Series I Preferred Stock is convertible at the holder's option
into 44.60526 shares of common stock, subject to anti-dilution adjustment.
(2) The Series L Preferred Stock will be issuable upon the settlement of
purchase contracts issued as a component of the 9 1/2% Trust Preferred Stock
Units of SI Financing Trust I, a subsidiary of Salomon Smith Barney
Holdings Inc. Holders must settle the purchase contracts on June 30, 2021;
however, SSBH has the option to accelerate settlement to June 30, 2001.
(3) For all quarterly dividend periods ending on or prior to August 15, 1999,
the annual dividend rate is the Five-Year Treasury Rate (as defined in the
Series O Preferred Stock Certificate of Designation) plus 1.50%. Between
August 15, 1999 and August 15, 2004, the annual dividend rate will be the
Five-Year Treasury Rate plus 2.25%. Prior to August 15, 2004, the above
rates may not be less than 7.00% nor greater than 14.00% per year, and after
August 15, 2004, the rates may not be less than 8.00% nor greater than
16.00% per year. The dividend rate will be increased in the event of
specified changes in the Internal Revenue Code that would decrease the
dividends received deduction applicable to corporate stockholders (a "Change
in Tax Law").
(4) For each dividend period the dividend rate will be equal to 84% of the
Effective Rate, but not less than 4.50% per year or more than 10.50% per
year. The "Effective Rate" for any dividend period will be equal to the
highest of the Treasury Bill Rate, the Ten Year Constant Maturity Rate and
the Thirty Year Constant Maturity Rate, each as defined in the relevant part
of the Certificate of Incorporation.
(5) The Series V Preferred Stock provides for a cumulative dividend at a rate
that changes over time. For each dividend period up to but not including
February 15, 2006, the dividend rate will be 5.86% per year. For each
dividend period beginning on or after February 15, 2006, the dividend rate
will be equal to 0.50% plus the Effective Rate, but not less than 6.00% or
more than 12.00%. The dividend rate will be increased in the event of a
Change in Tax Law.
(6) The holders of the Series Y Preferred Stock are entitled to a cumulative
quarterly dividend at an annual rate equal to the greater of (a) the Short
Term Rate and (b) 4.85%. The "Short Term Rate" generally will be equal to
either 85% or 78% of the Money Market Yield, as defined in the certificate
of incorporation, of the 90-day rate for commercial paper multiplied by the
stock's $100,000 per share liquidation value.
(7) Redemption is mandatory.
(8) If not redeemed on August 15, 1999, also redeemable at any time after August
15, 2004 or following a Change in Tax Law.
(9) Prior to February 15, 2006, in the event of a Change in Tax Law, Citigroup
at its option may redeem all, but not less than all, of the Series V
Preferred Stock at a price declining over time from $525 per share to $500
per share.
23
<PAGE>
(10) Holders of shares of Series I Preferred Stock are entitled to 44.60526
votes per share, and holders of shares of Series K and L Preferred Stock are
entitled to three votes per share, when voting as a class with the common
stock, subject to anti-dilution adjustment. The shares of Series I Preferred
Stock are entitled to vote together as a class with the shares of common
stock and any other shares of capital stock also then entitled to vote as a
class with the common stock on all matters submitted to a vote of
stockholders of Citigroup. In addition, holders of Series I and K Preferred
Stock together with all other series of preferred stock, voting as one
class, must give their approval by a two-thirds vote of shares of preferred
stock then outstanding to some types of liquidation, merger and asset sale
transactions. Finally, without obtaining the approval of a majority of the
outstanding shares of Series I and K Preferred Stock voting separately as a
class, Citigroup may not amend the certificate of incorporation to increase
the authorized amount of preferred stock or to authorize any other stock
ranking on a parity with the preferred stock either as to payment of
dividends or upon liquidation.
IMPORTANT PROVISIONS OF CITIGROUP'S CERTIFICATE OF INCORPORATION AND BY-LAWS
BUSINESS COMBINATIONS. The certificate of incorporation generally requires
the affirmative vote of at least 66 2/3% of the votes entitled to be cast by the
holders of the then outstanding shares of voting stock, voting together as a
single class, to approve any merger or other business combination between
Citigroup and any interested stockholder, unless (1) the transaction has been
approved by a majority of the continuing directors of Citigroup, or (2) minimum
price, form of consideration and procedural requirements are satisfied. An
"interested stockholder" as defined in the certificate of incorporation
generally means a person who owns at least 25% of the voting stock of Citigroup.
AMENDMENTS TO CERTIFICATE OF INCORPORATION AND BY-LAWS. The affirmative
vote of the holders of at least 75% of the voting power of the shares entitled
to vote for the election of directors is required to amend the provisions of the
certificate of incorporation relating to the issuance of preferred stock or
common stock. Amendments of provisions of the certificate of incorporation
relating to business combinations generally require a vote of the holders of
66 2/3% of the then outstanding shares of voting stock, unless 75% of the board
of directors recommend such amendment and the directors comprising such 75%
would qualify as continuing directors. The board of directors, at any meeting,
may alter or amend the by-laws upon the affirmative vote of at least 66 2/3% of
the entire board of directors. A "continuing director" as defined in the
certificate of incorporation generally means a director who is not related to an
interested stockholder who held that position before an interested stockholder
became an interested stockholder.
VACANCIES. Vacancies on the board of directors resulting from an increase
in the number of directors may be filled by a majority of the board of directors
then in office, so long as a quorum is present. Any other vacancies on the board
of directors may be filled by a majority of the directors then in office, even
if less than a quorum. Any director elected to fill a vacancy that did not
result from increasing the size of the board of directors shall hold office for
a term coinciding with the predecessor director's remaining term.
24
<PAGE>
DESCRIPTION OF PREFERRED STOCK
The following briefly summarizes the material terms of Citigroup's preferred
stock, other than pricing and related terms disclosed in the accompanying
prospectus supplement. You should read the particular terms of any series of
preferred stock offered by Citigroup which will be described in more detail in
any prospectus supplement relating to such series, together with the more
detailed provisions of Citigroup's restated certificate of incorporation and the
certificate of designation relating to each particular series of preferred stock
for provisions that may be important to you. The certificate of incorporation
and a certificate of designation relating to the Series YY Preferred Stock are
filed as exhibits to the registration statement of which this prospectus forms a
part. The certificate of designation relating to the particular series of
preferred stock offered by the accompanying prospectus supplement and this
prospectus will be filed as an exhibit to a document incorporated by reference
in the registration statement. The prospectus supplement will also state whether
any of the terms summarized below do not apply to the series of preferred stock
being offered. For a description of Citigroup's outstanding preferred stock, see
"Description of Capital Stock."
GENERAL
Under Citigroup's certificate of incorporation, the board of directors of
Citigroup is authorized to issue shares of preferred stock in one or more
series, and to establish from time to time a series of preferred stock with the
following terms specified:
- the number of shares to be included in the series;
- the designation, powers, preferences and rights of the shares of the
series; and
- the qualifications, limitations or restrictions of such series, except as
otherwise stated in the certificate of incorporation.
Prior to the issuance of any series of preferred stock, the board of
directors of Citigroup will adopt resolutions creating and designating the
series as a series of preferred stock and the resolutions will be filed in a
certificate of designation as an amendment to the certificate of incorporation.
The term "board of directors of Citigroup" includes any duly authorized
committee.
The rights of holders of the preferred stock offered may be adversely
affected by the rights of holders of any shares of preferred stock that may be
issued in the future. The board of directors may cause shares of preferred stock
to be issued in public or private transactions for any proper corporate purpose.
Examples of proper corporate purposes include issuances to obtain additional
financing in connection with acquisitions or otherwise, and issuances to
officers, directors and employees of Citigroup and its subsidiaries pursuant to
benefit plans or otherwise. Shares of preferred stock issued by Citigroup may
have the effect of rendering more difficult or discouraging an acquisition of
Citigroup deemed undesirable by the board of directors of Citigroup.
Under existing interpretations of The Board of Governors of the Federal
Reserve System and the Office of Thrift Supervision, if the holders of the
preferred stock become entitled to vote for the election of directors because
dividends on the preferred stock are in arrears as described below, preferred
stock may then be deemed a "class of voting securities" and a holder of 25% or
more of the preferred stock or a holder of 5% or more of the preferred stock
that otherwise exercises a "controlling influence" over Citigroup may then be
regulated as a "bank holding company" in accordance with the Bank Holding
Company Act. Moreover, a holder of 25% or more of the preferred stock or a
holder of 10% or more of the preferred stock that otherwise possesses certain
"control factors" relating
25
<PAGE>
to Citigroup may then be regulated as a "savings and loan holding company" in
accordance with the Home Owner's Loan Act of 1933. In addition, at such time:
- any bank holding company or foreign bank with a U.S. presence generally
would be required to obtain the approval of the Federal Reserve Board
under the BHC Act to acquire or retain 5% or more of the preferred stock;
- any person other than a bank holding company may be required to obtain the
approval of the Federal Reserve Board and the OTS under the Change in Bank
Control Act to acquire or retain 10% or more of the preferred stock; and
- any savings and loan holding company generally could not retain in excess
of 5% of the preferred stock.
Before exercising its option to redeem any shares of preferred stock, Citigroup
will obtain the approval of the Federal Reserve Board if then required by
applicable law.
The preferred stock will be, when issued, fully paid and nonassessable.
Holders of preferred stock will not have any preemptive or subscription rights
to acquire more stock of Citigroup.
The transfer agent, registrar, dividend disbursing agent and redemption
agent for shares of each series of preferred stock will be named in the
prospectus supplement relating to such series.
RANK
Unless otherwise specified in the prospectus supplement relating to the
shares of any series of preferred stock, such shares will rank on an equal basis
with each other series of preferred stock and prior to the common stock as to
dividends and distributions of assets.
DIVIDENDS
Holders of each series of preferred stock will be entitled to receive cash
dividends, when, as and if declared by the board of directors of Citigroup out
of funds legally available for dividends. The rates and dates of payment of
dividends will be set forth in the prospectus supplement relating to each series
of preferred stock. Dividends will be payable to holders of record of preferred
stock as they appear on the books of Citigroup or, if applicable, the records of
the depositary referred to below under "Description of Depositary Shares," on
the record dates fixed by the board of directors. Dividends on any series of
preferred stock may be cumulative or noncumulative.
Citigroup may not declare, pay or set apart for payment dividends on the
preferred stock unless full dividends on any other series of preferred stock
that ranks on an equal or senior basis have been paid or sufficient funds have
been set apart for payment for
- all prior dividend periods of the other series of preferred stock that pay
dividends on a cumulative basis; or
- the immediately preceding dividend period of the other series of preferred
stock that pay dividends on a noncumulative basis.
Partial dividends declared on shares of preferred stock and any other series
of preferred stock ranking on an equal basis as to dividends will be declared
pro rata. A pro rata declaration means that the ratio of dividends declared per
share to accrued dividends per share will be the same for both series of
preferred stock.
Similarly, Citigroup may not declare, pay or set apart for payment non-stock
dividends or make other payments on the common stock or any other stock of
Citigroup ranking junior to the preferred stock until full dividends on the
preferred stock have been paid or set apart for payment for
26
<PAGE>
- all prior dividend periods if the preferred stock pays dividends on a
cumulative basis; or
- the immediately preceding dividend period if the preferred stock pays
dividends on a noncumulative basis.
CONVERSION AND EXCHANGE
The prospectus supplement for any series of preferred stock will state the
terms, if any, on which shares of that series are convertible into or
exchangeable for shares of Citigroup's common stock.
REDEMPTION
If so specified in the applicable prospectus supplement, a series of
preferred stock may be redeemable at any time, in whole or in part, at the
option of Citigroup or the holder thereof and may be mandatorily redeemed.
Any partial redemptions of preferred stock will be made in a way that the
board of directors decides is equitable.
Unless Citigroup defaults in the payment of the redemption price, dividends
will cease to accrue after the redemption date on shares of preferred stock
called for redemption and all rights of holders of such shares will terminate
except for the right to receive the redemption price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
Citigroup, holders of each series of preferred stock will be entitled to receive
distributions upon liquidation in the amount set forth in the prospectus
supplement relating to such series of preferred stock, plus an amount equal to
any accrued and unpaid dividends. Such distributions will be made before any
distribution is made on any securities ranking junior relating to liquidation,
including common stock.
If the liquidation amounts payable relating to the preferred stock of any
series and any other securities ranking on a parity regarding liquidation rights
are not paid in full, the holders of the preferred stock of such series and such
other securities will share in any such distribution of available assets of
Citigroup on a ratable basis in proportion to the full liquidation preferences.
Holders of such series of preferred stock will not be entitled to any other
amounts from Citigroup after they have received their full liquidation
preference.
VOTING RIGHTS
The holders of shares of preferred stock will have no voting rights, except:
- as otherwise stated in the prospectus supplement;
- as otherwise stated in the certificate of designation establishing such
series; or
- as required by applicable law.
27
<PAGE>
DESCRIPTION OF DEPOSITARY SHARES
The following briefly summarizes the material provisions of the deposit
agreement and of the depositary shares and depositary receipts, other than
pricing and related terms disclosed in the accompanying prospectus supplement.
You should read the particular terms of any depositary shares and any depositary
receipts that are offered by Citigroup and any deposit agreement relating to a
particular series of preferred stock which will be described in more detail in a
prospectus supplement. The prospectus supplement will also state whether any of
the generalized provisions summarized below do not apply to the depositary
shares or depositary receipts being offered. A copy of the form of deposit
agreement, including the form of depositary receipt, is incorporated by
reference as an exhibit in the registration statement of which this prospectus
forms a part. You should read the more detailed provisions of the deposit
agreement and the form of depositary receipt for provisions that may be
important to you.
GENERAL
Citigroup may, at its option, elect to offer fractional shares of preferred
stock, rather than full shares of preferred stock. In such event, Citigroup will
issue receipts for depositary shares, each of which will represent a fraction of
a share of a particular series of preferred stock.
The shares of any series of preferred stock represented by depositary shares
will be deposited under a deposit agreement between Citigroup and a bank or
trust company selected by Citigroup having its principal office in the United
States and having a combined capital and surplus of at least $50,000,000, as
preferred stock depositary. Each owner of a depositary share will be entitled to
all the rights and preferences of the underlying preferred stock, including
dividend, voting, redemption, conversion and liquidation rights, in proportion
to the applicable fraction of a share of preferred stock represented by such
depositary share.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock in accordance
with the terms of the applicable prospectus supplement.
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or other
cash distributions received in respect of the deposited preferred stock to the
record holders of depositary shares relating to such preferred stock in
proportion to the number of such depositary shares owned by such holders.
The preferred stock depositary will distribute any property received by it
other than cash to the record holders of depositary shares entitled thereto. If
the preferred stock depositary determines that it is not feasible to make such
distribution, it may, with the approval of Citigroup, sell such property and
distribute the net proceeds from such sale to such holders.
REDEMPTION OF PREFERRED STOCK
If a series of preferred stock represented by depositary shares is to be
redeemed, the depositary shares will be redeemed from the proceeds received by
the preferred stock depositary resulting from the redemption, in whole or in
part, of such series of preferred stock. The depositary shares will be redeemed
by the preferred stock depositary at a price per depositary share equal to the
applicable fraction of the redemption price per share payable in respect of the
shares of preferred stock so redeemed.
Whenever Citigroup redeems shares of preferred stock held by the preferred
stock depositary, the preferred stock depositary will redeem as of the same date
the number of depositary shares representing shares of preferred stock so
redeemed. If fewer than all the depositary shares are to be redeemed,
28
<PAGE>
the depositary shares to be redeemed will be selected by the preferred stock
depositary by lot or ratably or by any other equitable method as the preferred
stock depositary may decide.
WITHDRAWAL OF PREFERRED STOCK
Unless the related depositary shares have previously been called for
redemption, any holder of depositary shares may receive the number of whole
shares of the related series of preferred stock and any money or other property
represented by such depositary receipts after surrendering the depositary
receipts at the corporate trust office of the preferred stock depositary.
Holders of depositary shares making such withdrawals will be entitled to receive
whole shares of preferred stock on the basis set forth in the related prospectus
supplement for such series of preferred stock.
However, holders of such whole shares of preferred stock will not be
entitled to deposit such preferred stock under the deposit agreement or to
receive depositary receipts for such preferred stock after such withdrawal. If
the depositary shares surrendered by the holder in connection with such
withdrawal exceed the number of depositary shares that represent the number of
whole shares of preferred stock to be withdrawn, the preferred stock depositary
will deliver to such holder at the same time a new depositary receipt evidencing
such excess number of depositary shares.
VOTING DEPOSITED PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
deposited preferred stock are entitled to vote, the preferred stock depositary
will mail the information contained in such notice of meeting to the record
holders of the depositary shares relating to such series of preferred stock.
Each record holder of such depositary shares on the record date will be entitled
to instruct the preferred stock depositary to vote the amount of the preferred
stock represented by such holder's depositary shares. The preferred stock
depositary will try to vote the amount of such series of preferred stock
represented by such depositary shares in accordance with such instructions.
Citigroup will agree to take all reasonable actions that the preferred stock
depositary determines as necessary to enable the preferred stock depositary to
vote as instructed. The preferred stock depositary will vote all shares of any
series of preferred stock held by it proportionately with instructions received
if it does not receive specific instructions from the holders of depositary
shares representing such series of preferred stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between Citigroup and the preferred stock depositary. However, any amendment
that imposes additional charges or materially and adversely alters any
substantial existing right of the holders of depositary shares will not be
effective unless such amendment has been approved by the holders of at least a
majority of the affected depositary shares then outstanding. Every holder of an
outstanding depositary receipt at the time any such amendment becomes effective,
or any transferee of such holder, shall be deemed, by continuing to hold such
depositary receipt, or by reason of the acquisition thereof, to consent and
agree to such amendment and to be bound by the deposit agreement, which has been
amended thereby. The deposit agreement automatically terminates if:
- all outstanding depositary shares have been redeemed;
- each share of preferred stock has been converted into or exchanged for
common stock; or
- a final distribution in respect of the preferred stock has been made to
the holders of depositary shares in connection with any liquidation,
dissolution or winding up of Citigroup.
29
<PAGE>
The deposit agreement may be terminated by Citigroup at any time and the
preferred stock depositary will give notice of such termination to the record
holders of all outstanding depositary receipts not less than 30 days prior to
the termination date. In such event, the preferred stock depositary will deliver
or make available for delivery to holders of depositary shares, upon surrender
of such depositary shares, the number of whole or fractional shares of the
related series of preferred stock as are represented by such depositary shares.
CHARGES OF PREFERRED STOCK DEPOSITARY; TAXES AND OTHER GOVERNMENTAL CHARGES
No fees, charges and expenses of the preferred stock depositary or any agent
of the preferred stock depositary or of any registrar shall be payable by any
person other than Citigroup, except for any taxes and other governmental charges
and except as provided in the deposit agreement. If the preferred stock
depositary incurs fees, charges or expenses for which it is not otherwise liable
hereunder at the election of a holder of a depositary receipt or other person,
such holder or other person will be liable for such fees, charges and expenses.
RESIGNATION AND REMOVAL OF DEPOSITARY
The preferred stock depositary may resign at any time by delivering to
Citigroup notice of its intent to do so, and Citigroup may at any time remove
the preferred stock depositary, any such resignation or removal to take effect
upon the appointment of a successor preferred stock depositary and its
acceptance of such appointment. Such successor preferred stock depositary must
be appointed within 60 days after delivery of the notice of resignation or
removal and must be a bank or trust company having its principal office in the
United States and having a combined capital and surplus of at least $50,000,000.
MISCELLANEOUS
The preferred stock depositary will forward all reports and communications
from Citigroup which are delivered to the preferred stock depositary and which
Citigroup is required to furnish to the holders of the deposited preferred
stock.
Neither the preferred stock depositary nor Citigroup will be liable if it is
prevented or delayed by law or any circumstances beyond its control in
performing its obligations under the deposit agreement. The obligations of
Citigroup and the preferred stock depositary under the deposit agreement will be
limited to performance with honest intentions of their duties thereunder and
they will not be obligated to prosecute or defend any legal proceeding in
respect of any depositary shares, depositary receipts or shares of preferred
stock unless satisfactory indemnity is furnished. Citigroup and the preferred
stock depositary may rely upon written advice of counsel or accountants, or upon
information provided by holders of depositary receipts or other persons believed
to be competent and on documents believed to be genuine.
30
<PAGE>
BOOK-ENTRY PROCEDURES AND SETTLEMENT
Most series of debt securities and index warrants will be book-entry
securities. Upon issuance, all book-entry securities of the same issue will be
represented by one or more fully registered global securities, without interest
coupons. Each global security will be deposited with, or on behalf of, The
Depository Trust Company, a securities depository, and will be registered in the
name of DTC or a nominee of DTC. DTC will thus be the only registered holder of
these debt securities or index warrants and will be considered the sole owner of
the securities for purposes of the indenture or index warrant agreement.
Purchasers may only hold interests in the global notes or index warrants
through DTC if they are a participant in the DTC system. Purchasers may also
hold interests through a securities intermediary--banks, brokerage houses and
other institutions that maintain securities accounts for customers--that has an
account with DTC or its nominee. DTC will maintain accounts showing the
securities holdings of its participants, and these participants will in turn
maintain accounts showing the securities holdings of their customers. Some of
these customers may themselves be securities intermediaries holding debt
securities or index warrants for their customers. Thus, each beneficial owner of
a book-entry security will hold that security indirectly through a hierarchy of
intermediaries, with DTC at the "top" and the beneficial owner's own securities
intermediary at the "bottom."
The securities of each beneficial owner of a book-entry security will be
evidenced solely by entries on the books of the beneficial owner's securities
intermediary. The actual purchaser of the securities will generally not be
entitled to have the securities represented by the global securities registered
in its name and will not be considered the owner under the indenture or index
warrant agreement. In most cases, a beneficial owner will also not be able to
obtain a paper certificate evidencing the holder's ownership of securities. The
book-entry system for holding securities eliminates the need for physical
movement of certificates and is the system through which most publicly traded
common stock is held in the United States. However, the laws of some
jurisdictions require some purchasers of securities to take physical delivery of
their securities in definitive form. These laws may impair the ability to
transfer book-entry securities.
A beneficial owner of book-entry securities represented by a global security
may exchange the securities for definitive (paper) securities only if:
(a) DTC is unwilling or unable to continue as depositary for such global
security and Citigroup is unable to find a qualified replacement for DTC
within 90 days;
(b) at any time DTC ceases to be a clearing agency registered under the
Securities Exchange Act of 1934; or
(c) Citigroup in its sole discretion decides to allow some or all book-entry
securities to be exchangeable for definitive securities in registered
form.
Unless we indicate otherwise in the applicable prospectus supplement, any
global security that is exchangeable will be exchangeable in whole for
definitive securities in registered form, with the same terms and of an equal
aggregate principal amount, in denominations of $1,000 and whole multiples of
$1,000. Definitive notes or index warrants will be registered in the name or
names of the person or persons specified by DTC in a written instruction to the
registrar of the securities. DTC may base its written instruction upon
directions it receives from its participants.
In this prospectus and the accompanying prospectus supplement, for
book-entry securities, references to actions taken by security holders will mean
actions taken by DTC upon instructions from its participants, and references to
payments and notices of redemption to security holders and notices of redemption
to DTC as the registered holder of the securities for distribution to
participants in accordance with DTC's procedures.
31
<PAGE>
DTC is a limited purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered under section 17A of the Securities Exchange Act of 1934. The
rules applicable to DTC and its participants are on file with the SEC.
DTC's management is aware that some computer applications, systems, and the
like for processing dates that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "Year 2000 problems."
DTC has informed its participants and other members of the financial community
that it has developed and is implementing a program so that its systems, as they
relate to the timely payment of distributions to securityholders, book-entry
deliveries, and settlement of trades within DTC, continue to function
appropriately. This program includes a technical assessment and a remediation
plan, each of which is complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within appropriate time frames.
Citigroup will not have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests in the book-entry securities or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
32
<PAGE>
PLAN OF DISTRIBUTION
Citigroup may offer the offered securities in one or more of the following
ways from time to time:
- to or through underwriters or dealers;
- by itself directly;
- through agents; or
- through a combination of any of these methods of sale.
Any such underwriters, dealers or agents may include any broker-dealer
subsidiary of Citigroup.
The prospectus supplement relating to an offering of offered securities will
set forth the terms of such offering, including:
- the name or names of any underwriters, dealers or agents;
- the purchase price of the offered securities and the proceeds to Citigroup
from such sale;
- any underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' compensation;
- the initial public offering price;
- any discounts or concessions to be allowed or reallowed or paid to
dealers; and
- any securities exchanges on which such offered securities may be listed.
Any initial public offering prices, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
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 either offered to the public through
underwriting syndicates represented by one or more managing underwriters or by
one or more underwriters without a syndicate. Unless otherwise set forth in the
prospectus supplement, 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, underwriters may
over-allot or effect transactions that stabilize, maintain or otherwise affect
the market price of the offered securities at levels above those that might
otherwise prevail in the open market, including by entering stabilizing bids,
effecting syndicate covering transactions or imposing penalty bids, each of
which is described below.
- A stabilizing bid means the placing of any bid, or the effecting of any
purchase, for the purpose of pegging, fixing or maintaining the price of a
security.
- A syndicate covering transaction means the placing of any bid on behalf of
the underwriting syndicate or the effecting of any purchase to reduce a
short position created in connection with the offering.
- A penalty bid means an arrangement that permits the managing underwriter
to reclaim a selling concession from a syndicate member in connection with
the offering when offered securities originally sold by the syndicate
member are purchased in syndicate covering transactions.
33
<PAGE>
These transactions may be effected on the NYSE, in the over-the-counter
market, or otherwise. Underwriters are not required to engage in any of these
activities, or to continue such activities if commenced.
If dealers are utilized in the sale of offered securities, Citigroup 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 prospectus supplement relating to that
transaction.
Offered securities may be sold directly by Citigroup to one or more
institutional purchasers, or through agents designated by Citigroup 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 to such agent will be set forth,
in the prospectus supplement relating to that offering. Unless otherwise
indicated in such prospectus supplement, 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 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 prospectus supplement.
If so indicated in the applicable prospectus supplement, Citigroup will
authorize agents, underwriters or dealers to solicit offers from certain types
of institutions to purchase offered securities from Citigroup at the public
offering price set forth in such prospectus 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
prospectus supplement and the prospectus supplement will set forth the
commission payable for solicitation of such contracts.
The broker-dealer subsidiaries of Citigroup are members of the National
Association of Securities Dealers, Inc. and may participate in distributions of
the offered securities. Accordingly, offerings of offered securities in which
Citigroup's broker-dealer subsidiaries participate will conform with the
requirements set forth in Rule 2720 of the Conduct Rules of the NASD.
This prospectus, together with any applicable prospectus supplement may also
be used by any broker-dealer subsidiary of Citigroup in connection with offers
and sales of the offered securities in market-making transactions at negotiated
prices related to prevailing market prices at the time of sale. Any of
Citigroup's broker-dealer subsidiaries, including Salomon Smith Barney Inc., may
act as principal or agent in such transactions. None of Citigroup's
broker-dealer subsidiaries 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.
Underwriters, dealers and agents may be entitled, under agreements with
Citigroup, to indemnification by Citigroup relating to material misstatements
and omissions. Underwriters, dealers and agents may be customers of, engage in
transactions with, or perform services for, Citigroup and affiliates of
Citigroup in the ordinary course of business.
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 national securities exchange. No assurance can be
given that there will be a market for the offered securities.
34
<PAGE>
ERISA MATTERS
Citigroup has subsidiaries, including insurance company subsidiaries and its
broker-dealer subsidiaries, that provide services to many employee benefit
plans. Citigroup and any direct or indirect subsidiary of Citigroup may each be
considered a "party in interest" within the meaning of the Employee Retirement
Income Security Act of 1974, and a "disqualified person" under corresponding
provisions of the Internal Revenue Code of 1986, relating to many employee
benefit plans. "Prohibited transactions" within the meaning of ERISA and the
Code may result if any offered securities are acquired by an employee benefit
plan relating to which Citigroup or any direct or indirect subsidiary of
Citigroup is a party in interest, unless such offered securities are acquired
pursuant to an applicable exemption. Any employee benefit plan or other entity
subject to which such provisions of ERISA or the Code apply proposing to acquire
the offered securities should consult with its legal counsel.
LEGAL MATTERS
Stephanie B. Mudick, Esq., General Counsel-Corporate Law and an Assistant
Secretary of Citigroup, 153 East 53rd Street, New York, New York 10043 and/or
Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, or counsel to be
identified in the applicable prospectus supplement, will act as legal counsel to
Citigroup. Ms. Mudick beneficially owns, or has rights to acquire under
Citigroup's employee benefit plans, an aggregate of less than 1% of Citigroup's
common stock. Dewey Ballantine LLP, New York, New York, or other counsel
identified in the applicable prospectus supplement, will act as legal counsel to
the underwriters. Dewey Ballantine LLP has from time to time acted as counsel
for Citigroup and its subsidiaries and may do so in the future. Kenneth J.
Bialkin, a partner of Skadden, Arps, Slate, Meagher & Flom LLP, is a director of
Citigroup, and he and other attorneys in such firm beneficially own an aggregate
of less than 1% of the common stock of Citigroup. A member of Dewey Ballantine
LLP participating in this matter is the beneficial owner of an aggregate of less
than 1% of Citigroup's common stock.
EXPERTS
The consolidated financial statements of Citigroup Inc. as of December 31,
1998 and 1997, and for each of the years in the three-year period ended
December 31, 1998, have been audited by KPMG LLP, independent certified public
accountants, as set forth in their report on the consolidated financial
statements. The consolidated financial statements are included in Citigroup's
annual report on Form 10-K for the year ended December 31, 1998, and
incorporated by reference in this prospectus. The report of KPMG LLP also is
incorporated by reference in this prospectus. This report states that KPMG LLP
did not audit the consolidated financial statements of Salomon Inc and its
subsidiaries for the year ended December 31, 1996, appearing in Salomon Inc's
annual report on Form 10-K for the year ended December 31, 1996. The report also
states that their opinion regarding any amounts derived from the Salomon
financial statements is based on the report of Arthur Andersen LLP. The
consolidated financial statements of Citigroup referred to above are
incorporated by reference in this prospectus in reliance upon such reports and
upon the authority of said firms as experts in accounting and auditing. To the
extent that KPMG LLP audits and reports on consolidated financial statements of
Citigroup issued at future dates, and consents to the use of their report
thereon, such consolidated financial statements also will be incorporated by
reference in the registration statement in reliance upon their report and said
authority.
35
