<PAGE> 1
Filed pursuant to Rule 424(b)(2)
Registration Number 333-37992
PROSPECTUS SUPPLEMENT
(To prospectus dated June 19, 2000)
$8,050,000,000
CITIGROUP LOGO
MEDIUM-TERM SENIOR NOTES, SERIES C
MEDIUM-TERM SUBORDINATED NOTES, SERIES C
DUE NINE MONTHS OR MORE FROM THE DATE OF ISSUE
GENERAL TERMS OF SALE
The following terms will generally apply to the medium-term senior and
subordinated notes that we will sell from time to time using this prospectus
supplement and the attached prospectus. Citigroup will include information on
the specific terms for each note in a pricing supplement to this prospectus
supplement that Citigroup will deliver to prospective buyers of any note. The
maximum amount that Citigroup expects to receive from the sale of the notes is
between $8,039,937,500 and $7,969,500,000 after paying the agent commissions of
between $10,062,500 and $80,500,000.
<TABLE>
<S> <C> <C> <C>
MATURITY: 9 months or more from the INTEREST RATES: Fixed, floating, or zero
date of issue. coupon.
INDEXED NOTES: Payments of interest or RANKING: Senior notes are part of our
principal may be linked to senior indebtedness; and
the price of one or more subordinated notes are part
securities, currencies, of our subordinated
commodities or other goods. indebtedness.
REDEMPTION: Terms of specific notes may OTHER TERMS: You should review
permit or require redemption "Description of the Notes"
or repurchase at our option and the pricing supplement
or your option. for features that apply to
your notes.
RISKS: Index and currency risks may
exist.
</TABLE>
------------------------
CONSIDER CAREFULLY THE INFORMATION UNDER "RISK FACTORS" BEGINNING ON PAGE
S-3 OF THIS PROSPECTUS SUPPLEMENT.
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 supplement or any accompanying prospectus or
pricing supplement is truthful or complete. Any representation to the contrary
is a criminal offense.
These notes are not deposits or savings accounts but are unsecured debt
obligations of Citigroup Inc. These notes are not insured by the Federal Deposit
Insurance Corporation or any other governmental agency or instrumentality.
SALOMON SMITH BARNEY
June 19, 2000
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors................................................ S-3
Important Currency Information.............................. S-6
Description of the Notes.................................... S-7
United States Federal Income Tax Considerations............. S-31
Plan of Distribution........................................ S-38
Legal Matters............................................... S-39
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Prospectus Summary.......................................... 1
Citigroup Inc. ............................................. 6
Use of Proceeds and Hedging................................. 7
Ratio of Income to Fixed Charges and Ratio of Income to
Combined Fixed Charges Including Preferred Stock
Dividends................................................. 8
European Monetary Union..................................... 9
Description of Debt Securities.............................. 10
Description of Index Warrants............................... 17
Description of Capital Stock................................ 20
Description of Preferred Stock.............................. 23
Description of Depositary Shares............................ 26
Book-Entry Procedures and Settlement........................ 29
Plan of Distribution........................................ 30
ERISA Matters............................................... 32
Legal Matters............................................... 32
Experts..................................................... 32
</TABLE>
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RISK FACTORS
CHANGES IN EXCHANGE RATES AND EXCHANGE CONTROLS COULD RESULT IN A SUBSTANTIAL
LOSS TO YOU.
An investment in foreign currency notes, which are notes denominated in a
specified currency other than U.S. dollars, entails significant risks that are
not associated with a similar investment in a security denominated in U.S.
dollars. Similarly, an investment in an indexed note, on which all or a part of
any payment due is based on a currency other than U.S. dollars, has significant
risks that are not associated with a similar investment in non-indexed notes.
Such risks include, but are not limited to:
- the possibility of significant market changes in rates of exchange
between U.S. dollars and such specified currency;
- the possibility of significant changes in rates of exchange between U.S.
dollars and the specified currency resulting from official redenomination
relating to such specified currency; and
- the possibility of the imposition or modification of foreign exchange
controls by either the United States or foreign governments.
Such risks generally depend on factors over which Citigroup has no control and
which cannot be readily foreseen, such as
- economic events;
- political events; and
- the supply of, and demand for, the relevant currencies.
In recent years, rates of exchange between the U.S. dollar and some foreign
currencies in which Citigroup's notes may be denominated and between these
foreign currencies and other foreign currencies, have been volatile. This
volatility may be expected in the future. Fluctuations that have occurred in any
particular exchange rate in the past are not necessarily indicative, however, of
fluctuations that may occur in the rate during the term of any foreign currency
note. Depreciation of the specified currency of a foreign currency note against
U.S. dollars would result in a decrease in the effective yield of such foreign
currency note below its coupon rate and could result in a substantial loss to
the investor on a U.S. dollar basis.
Governments have imposed from time to time, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a specified currency other than U.S. dollars at the time of payment of
principal, any premium, or interest on a foreign currency note. There can be no
assurance that exchange controls will not restrict or prohibit payments of
principal, any premium, or interest denominated in any such specified currency.
Even if there are no actual exchange controls, it is possible that such
specified currency would not be available to Citigroup when payments on such
note are due because of circumstances beyond the control of Citigroup. In this
event, Citigroup will make required payments in U.S. dollars on the basis
described in this prospectus supplement. You should consult your own financial
and legal advisors as to the risks of an investment in notes denominated in a
currency other than U.S. dollars. See "-- The Unavailability of Currencies Could
Result in a Substantial Loss to You" and "Description of the Notes -- Payment of
Principal and Interest" below.
The information set forth in this prospectus supplement is directed to
prospective purchasers of notes who are United States residents. Citigroup
disclaims any responsibility to advise prospective purchasers who are residents
of countries other than the United States regarding any matters that may affect
the purchase or holding of, or receipt of payments of principal, premium or
interest on, notes. Such persons should consult their advisors with regard to
these matters. Any pricing supplement relating to notes having a specified
currency other than U.S. dollars will contain a description of any material
exchange controls affecting such currency and any other required information
concerning such currency.
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THE UNAVAILABILITY OF CURRENCIES COULD RESULT IN A SUBSTANTIAL LOSS TO YOU.
Except as set forth below, if payment on a note is required to be made in a
specified currency other than U.S. dollars and such currency is --
- unavailable due to the imposition of exchange controls or other
circumstances beyond Citigroup's control;
- no longer used by the government of the country issuing such currency; or
- no longer used for the settlement of transactions by public institutions
of the international banking community --
then all payments on such note shall be made in U.S. dollars until such currency
is again available or so used. The amounts so payable on any date in such
currency shall be converted into U.S. dollars on the basis of the most recently
available market exchange rate for such currency or as otherwise indicated in
the applicable pricing supplement. Any payment on such note made under such
circumstances in U.S. dollars will not constitute an event of default under the
indenture under which such note shall have been issued.
If the specified currency of a note is officially redenominated, other than
as a result of European Monetary Union, such as by an official redenomination of
any such specified currency that is a composite currency, then the payment
obligations of Citigroup on such note will be the amount of redenominated
currency that represents the amount of Citigroup's obligations immediately
before the redenomination. The notes will not provide for any adjustment to any
amount payable under such notes as a result of
- any change in the value of the specified currency of such notes relative
to any other currency due solely to fluctuations in exchange rates; or
- any redenomination of any component currency of any composite currency,
unless such composite currency is itself officially redenominated.
For a description of European Monetary Union, see "European Monetary Union" in
the prospectus and any disclosure on European Monetary Union in an applicable
pricing supplement.
Currently, there are limited facilities in the United States for conversion
of U.S. dollars into foreign currencies, and vice versa. In addition, banks do
not generally offer non-U.S. dollar-denominated checking or savings account
facilities in the United States. Accordingly, payments on notes made in a
currency other than U.S. dollars will be made from an account at a bank located
outside the United States, unless otherwise specified in the applicable pricing
supplement.
JUDGMENTS IN A FOREIGN CURRENCY COULD RESULT IN A SUBSTANTIAL LOSS TO YOU.
The notes will be governed by, and construed in accordance with, the law of
New York State. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of New York State provides,
however, that an action based upon an obligation denominated in a currency other
than U.S. dollars will be rendered in the foreign currency of the underlying
obligation. Any judgment awarded in such an action will be converted into U.S.
dollars at the rate of exchange prevailing on the date of the entry of the
judgment or decree.
CHANGES IN THE VALUE OF UNDERLYING ASSETS OF INDEXED NOTES COULD RESULT IN A
SUBSTANTIAL LOSS
TO YOU.
An investment in indexed notes may have significant risks that are not
associated with a similar investment in a debt instrument that:
- has a fixed principal amount;
- is denominated in U.S. dollars; and
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- bears interest at either a fixed rate or a floating rate based on
nationally published interest rate references.
The risks of a particular indexed note will depend on the terms of such
indexed note. Such risks may include, but are not limited to, the possibility of
significant changes in the prices of:
- the underlying assets;
- another objective price; and
- economic or other measures making up the relevant index.
Underlying assets could include:
- securities;
- currencies;
- intangibles;
- goods;
- articles; and
- commodities.
The risks associated with a particular indexed note generally depend on
factors over which Citigroup has no control and which cannot readily be
foreseen. These risks include:
- economic events;
- political events; and
- the supply of, and demand for, the underlying assets.
In recent years, currency exchange rates and prices for various underlying
assets have been highly volatile. Such volatility may be expected in the future.
Fluctuations in any such rates or prices that have occurred in the past are not
necessarily indicative, however, of fluctuations that may occur during the term
of any indexed note.
In considering whether to purchase indexed notes, you should be aware that
the calculation of amounts payable on indexed notes may involve reference to:
- an index determined by an affiliate of Citigroup; or
- prices that are published solely by third parties or entities which are
not regulated by the laws of the United States.
The risk of loss as a result of linking of principal or interest payments on
indexed notes to an index and to the underlying assets can be substantial. You
should consult your own financial and legal advisors as to the risks of an
investment in indexed notes.
------------------------
You should only rely on the information contained or incorporated by
reference in this prospectus supplement, the prospectus and any pricing
supplement. Citigroup has not, and the agent has not, authorized any other
person to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. Citigroup is
not, and the agent is not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement and the prospectus, as
well as information Citigroup previously filed with the Securities and Exchange
Commission and incorporated by reference, is accurate as of the date of the
applicable document. Citigroup's business, financial condition, results of
operations and prospects may have changed since that date.
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IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for each note in a currency specified by
Citigroup for such note. If requested by a prospective purchaser of a note
having a specified currency other than U.S. dollars, the agent may at its
discretion arrange for the exchange of U.S. dollars into such specified currency
to enable the purchaser to pay for such note. Each such exchange will be made by
the agent on the terms, conditions, limitations and charges that the agent may
from time to time establish in accordance with its regular foreign exchange
practice shall control the exchange. The purchaser must pay all costs of
exchange.
References in this prospectus supplement to "U.S. dollars," "U.S.$,"
"dollar" or "$" are to the lawful currency of the United States.
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DESCRIPTION OF THE NOTES
The following description of the particular terms of the Medium-Term Senior
Notes, Series C and Medium-Term Subordinated Notes, Series C supplements the
description of the general terms and provisions of the debt securities set forth
in the prospectus. If any specific information regarding the notes in this
prospectus supplement is inconsistent with the more general terms of the debt
securities described in the prospectus, you should rely on the information in
this prospectus supplement.
The pricing supplement for each offering of notes will contain the specific
information and terms for that offering. If any information in the pricing
supplement, including any changes in the method of calculating interest on any
note, is inconsistent with this prospectus supplement, you should rely on the
information in the pricing supplement. The pricing supplement may also add,
update or change information contained in the prospectus and this prospectus
supplement. It is important for you to consider the information contained in the
prospectus, this prospectus supplement and the pricing supplement in making your
investment decision.
GENERAL
Introduction. The senior notes are a series of senior debt securities
issued under Citigroup's senior debt indenture. The subordinated notes are a
series of subordinated debt securities issued under Citigroup's subordinated
debt indenture. At the date of this prospectus supplement, the notes offered
pursuant to this prospectus supplement are limited to an aggregate initial
public offering price or purchase price of up to $8,050,000,000 or its
equivalent in one or more foreign or composite currencies. This amount is
subject to reduction as a result of the sale of other securities under the
registration statement of which this prospectus supplement and the accompanying
prospectus form a part, or under a registration statement to which this
prospectus supplement and the accompanying prospectus also relate.
The amount of notes sold of either series will reduce the amount of notes
of the other series that may be sold. Citigroup reserves the right to withdraw,
cancel or modify the offer made by this prospectus supplement without notice.
The aggregate amount of notes may be increased from time to time to such larger
amount as may be authorized by Citigroup.
The U.S. dollar equivalent of the public offering price or purchase price
of a note having a specified currency other than U.S. dollars will be determined
on the basis of the market exchange rate. This market exchange rate will be the
noon buying rate in New York City for cable transfers in foreign currencies as
certified for customs purposes by the Federal Reserve Bank of New York for such
specified currency on the applicable issue date. Such determination will be made
by Citigroup or its agent, as the exchange rate agent for the applicable series
of notes.
Ranking. The senior notes will constitute part of the senior indebtedness
of Citigroup and will rank on an equal basis with all other unsecured debt of
Citigroup other than subordinated debt. The subordinated notes will be
subordinate and junior in the right of payment, to the extent and in the manner
set forth in the subordinated debt indenture, to all senior indebtedness of
Citigroup. See "Description of Debt Securities -- Subordinated Debt" in the
prospectus.
On a consolidated basis, the aggregate principal amount of senior
indebtedness of Citigroup outstanding as of March 31, 2000 was approximately
$73.7 billion. This senior indebtedness consisted of approximately $39.3 billion
of term debt, approximately $18.5 billion of commercial paper and approximately
$15.9 billion of other short-term borrowings.
Forms of Notes. The notes will be issued in fully registered form only,
without coupons. Each note will be issued initially as a book-entry note, which
will be a global security registered in the name of a nominee of DTC, as
depository, or such other depository named in the pricing supplement.
Alternatively, if specified in the applicable pricing supplement, each note will
be issued initially as a certificated note, which will be a certificate issued
in temporary or definitive form. Except as set forth in the prospectus under
"Book-Entry Procedures and Settlement," book-entry notes will not be issuable as
certificated notes. See "Book-Entry System" below.
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Denominations. Unless otherwise specified in the applicable pricing
supplement, the authorized denominations of notes denominated in U.S. dollars
will be $1,000 and any larger amount that is a whole multiple of $1,000. The
authorized denominations of notes that have a specified currency other than U.S.
dollars will be the approximate equivalents in the specified currency.
Maturity. Unless otherwise specified in the applicable pricing supplement,
each note will mature on a stated maturity date. Such stated maturity date will
be a business day more than nine months from its date of issue, as selected by
the purchaser and agreed to by Citigroup. The stated maturity date may be
extended at the option of Citigroup. Each note may also be redeemed at the
option of Citigroup, or repaid at the option of the holder, prior to its stated
maturity. Each note that has a specified currency of pounds sterling will mature
in compliance with the regulations the Bank of England may promulgate from time
to time.
Additional Information. The pricing supplement relating to a note will
describe the following terms:
- the specified currency for such note;
- whether such note
(1) is a fixed rate note;
(2) is a floating rate note;
(3) is an amortizing note, meaning that a portion or all the principal
amount is payable prior to stated maturity in accordance with a
schedule, by application of a formula, or based on an index; and/or
(4) is an indexed note on which payments of interest or principal may be
linked to the price of one or more securities, currencies,
commodities or other goods;
- the price at which such note will be issued, which will be expressed as a
percentage of the aggregate principal amount or face amount;
- the original issue date on which such note will be issued;
- the date of the stated maturity;
- if such note is a fixed rate note, the rate per annum at which such note
will bear any interest, and whether and the manner in which such rate may
be changed prior to its stated maturity;
- if such note is a floating rate note, relevant terms such as:
(1) the base rate;
(2) the initial interest rate;
(3) the interest reset period or the interest reset dates;
(4) the interest payment dates;
(5) any index maturity;
(6) any maximum interest rate;
(7) any minimum interest rate;
(8) any spread or spread multiplier; and
(9) any other terms relating to the particular method of calculating the
interest rate for such note and whether and how such spread or
spread multiplier may be changed prior to stated maturity;
- whether such note is a note issued originally at a discount;
- if such note is an amortizing note, the terms for repayment prior to
stated maturity;
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- if such note is an indexed note, in the case of an indexed rate note, the
manner in which the amount of any interest payment will be determined or,
in the case of an indexed principal note, its face amount and the manner
in which the principal amount payable at stated maturity will be
determined;
- whether such note may be redeemed at the option of Citigroup, or repaid
at the option of the holder, prior to stated maturity as described under
"Optional Redemption, Repayment and Repurchase" below and the terms of
its redemption or repayment;
- whether such note may have an optional extension beyond its stated
maturity as described under "Extension of Maturity" below;
- whether such note will be represented by a global security or a
certificate issued in definitive form;
- any special United States federal income tax consequences of the
purchase, ownership and disposition of a particular issuance of notes;
- whether such note is a renewable note, and, if so, its specific terms;
- the use of proceeds, if materially different than that disclosed in the
accompanying prospectus; and
- any other terms of such note provided in the accompanying prospectus to
be set forth in a pricing supplement or that are otherwise consistent
with the provisions of the indenture under which such note will be
issued.
As used in this prospectus supplement, business day means:
- for any note, any day that is not a Saturday or Sunday and that, in New
York City, is not a day on which banking institutions generally are
authorized or obligated by law or executive order to close;
- for LIBOR notes only, a London business day, which shall be any such day
on which dealings in deposits in U.S. dollars are transacted in the
London interbank market;
- for notes having a specified currency other than U.S. dollars only, other
than notes denominated in Euros, any day that, in the principal financial
center (as defined below) of the country of the specified currency, is
not a day on which banking institutions generally are authorized or
obligated by law to close; and
- for EURIBOR notes and notes denominated in Euros, a euro business day,
which shall be any day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer System is open.
As used above, a principal financial center means the capital city of the
country issuing the specified currency. However, for U.S. dollars, Australian
dollars, Canadian dollars, Deutsche marks, Dutch guilders, Italian lire and
Swiss francs, the principal financial center will be New York City, Sydney,
Toronto, Frankfurt, Amsterdam, Milan and Zurich, respectively.
PAYMENT OF PRINCIPAL AND INTEREST
Citigroup will pay the principal of, and any premium and interest on, each
note in the specified currency for such note. If the specified currency for a
note is other than U.S. dollars, Citigroup will, unless otherwise specified in
the applicable pricing supplement, arrange to convert all payments in respect of
such note into U.S. dollars in the manner described in the following paragraph.
The holder of a note having a specified currency other than U.S. dollars may, if
stated in the applicable pricing supplement and such note, elect to receive all
payments on such note in the specified currency by delivering a written notice
to the trustee for such note not later than fifteen calendar days prior to the
applicable payment date, except under the circumstances described under "Risk
Factors -- The Unavailability of Currencies Could Result in a Substantial Loss
to You" above. Such election will remain in effect until revoked by a written
notice to such trustee that is received not later than fifteen calendar days
prior to the applicable payment date. If an event of default has occurred or
Citigroup has given notice of redemption of a note, no such change of election
may be made.
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The amount of any U.S. dollar payment on a note having a specified currency
other than U.S. dollars will be determined by the exchange rate agent:
- based on the highest firm bid quotation expressed in U.S. dollars
received by the exchange rate agent at approximately 11:00 a.m., New York
City time, on the second business day preceding the applicable payment
date, or if no such rate is quoted on such date, the last date on which
such rate was quoted;
- from three, or if three are not available, then two, recognized foreign
exchange dealers in New York City, one or more of which may be the agent,
and another of which may be the exchange rate agent, that are selected by
the exchange rate agent; and
- by the quoting dealer for the purchase.
The exchange rate agent will also determine prior to settlement the
aggregate amount of the specified currency payable on a payment date for all
notes denominated in such specified currency. All currency exchange costs will
be deducted from payments to the holders of such notes. If no such bid
quotations are available, the payments will be made in the specified currency,
unless the specified currency is unavailable due to the imposition of exchange
controls or due to other circumstances beyond Citigroup's control. In that case,
such payments will be made as described under "Risk Factors -- The
Unavailability of Currencies Could Result in a Substantial Loss to You" above.
Unless otherwise specified in the applicable pricing supplement, U.S.
dollar payments of interest on notes, other than interest payable at stated
maturity, will be made, except as provided below, by check mailed to the
registered holders of such notes. In the case of global securities representing
book-entry notes, such payments of interest on notes will be made to a nominee
of the depositary. However, in the case of a note issued between a regular
record date and the related interest payment date, interest for the period
beginning on the original issue date for such note and ending on such interest
payment date generally will be paid to the holder on the next succeeding
interest payment date.
A holder of $10,000,000, or its equivalent in a specified currency other
than U.S. dollars, or more in aggregate principal amount of notes of like tenor
and term, will be entitled to receive such U.S. dollar payments by wire transfer
of immediately available funds. However, such a holder is entitled to receive
such payments only if the trustee receives written appropriate wire transfer
instructions for such notes not later than fifteen calendar days prior to the
applicable interest payment date. Unless otherwise specified in the applicable
pricing supplement, principal and any premium and interest payable at the stated
maturity of a note will be paid in immediately available funds upon surrender of
such note at the corporate trust office or agency of the trustee for such note
in New York City.
Unless otherwise specified in this prospectus supplement or the applicable
pricing supplement, any payment required to be made on a note on a date,
including the stated maturity date, that is not a business day for such note
need not be made on such date. A payment may be made on the next succeeding
business day with the same force and effect as if made on such date. No
additional interest will accrue as a result of such delayed payment.
Unless otherwise specified in the applicable pricing supplement, if the
principal of any OID note, other than an indexed note, is declared to be due and
payable immediately as a result of the acceleration of stated maturity, the
amount of principal due and payable relating to such note will be limited to the
aggregate principal amount of such note multiplied by the sum of (1) its issue
price, expressed as a percentage of the aggregate principal amount, plus (2) the
original issue discount amortized from the date of issue to the date of
declaration. Amortization will be calculated using the interest method, computed
in accordance with U.S. generally accepted accounting principles in effect on
the date of declaration.
The regular record date for any interest payment date for a floating rate
note, fixed rate note or an indexed rate note will be the date, whether or not a
business day, fifteen calendar days immediately preceding such interest payment
date.
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FIXED RATE NOTES
Each fixed rate note will bear interest from its original issue date, or
from the last interest payment date to which interest has been paid or duly
provided for, at the rate per annum stated in the applicable pricing supplement
until its principal amount is paid or made available for payment. However, as
described below under "Subsequent Interest Periods" and "Extension of Maturity,"
or as otherwise may be described in the applicable pricing supplement, the rate
of interest payable on fixed rate notes may be adjusted from time to time.
Unless otherwise set forth in the applicable pricing supplement, interest
on each fixed rate note will be payable semiannually in arrears on such dates as
set forth in the applicable pricing supplement, with each such day being an
interest payment date, and at stated maturity. Unless "accrue to pay" is
specified in the applicable pricing supplement or unless otherwise specified in
the applicable pricing supplement, if an interest payment date for any fixed
rate note would otherwise be a day that is not a business day, any payment
required to be made on such note on such date, including the stated maturity
date, may be made on the next succeeding business day with the same force and
effect as if made on such date. No additional interest will accrue as a result
of such delayed payment.
If in connection with any fixed rate note, "accrue to pay" is specified in
the applicable pricing supplement, and any interest payment date for such fixed
rate note would otherwise be a day that is not a business day, such interest
payment date will be postponed to the next succeeding business day. Any payment
of interest on such interest payment date will include interest accrued through
the day before such interest payment date. Unless otherwise specified in the
applicable pricing supplement, interest on fixed rate notes will be computed on
the basis of a 360-day year of twelve 30-day months or, in the case of an
incomplete month, the number of days elapsed.
FLOATING RATE NOTES
The initial interest period is the period from the original issue date to,
but not including, the first interest reset date. Each floating rate note will
bear interest at the initial interest rate set forth, or otherwise described, in
the applicable pricing supplement. The interest reset period is the period from
each interest reset date to, but not including, the following interest reset
date. The initial interest period and any interest reset period is an interest
period. The interest rate for each floating rate note will be determined based
on an interest rate basis, the base rate, plus or minus any spread, or
multiplied by any spread multiplier. A basis point or bp equals one-hundredth of
a percentage point. The spread is the number of basis points that may be
specified in the applicable pricing supplement as applicable to such note. The
spread multiplier is the percentage that may be specified in the applicable
pricing supplement as applicable to such note. As described below under
"Subsequent Interest Periods" and "Extension of Maturity," or as may otherwise
be specified in the applicable pricing supplement, the spread or spread
multiplier on floating rate notes may be adjusted from time to time.
The applicable pricing supplement will designate one of the following base
rates as applicable to a floating rate note:
- the CD Rate;
- the Commercial Paper Rate;
- the Federal Funds Rate;
- LIBOR;
- the Treasury Rate;
- the Prime Rate;
- the J.J. Kenny Rate;
- the Eleventh District Cost of Funds Rate;
- EURIBOR; or
- such other base rate as is set forth in the applicable pricing supplement
and in such note.
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The following terms are used in describing the various base rates.
The "index maturity" for any floating rate note is the period of maturity
of the instrument or obligation from which the base rate is calculated.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication, published by the Board
of Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of the Board of Governors of the
Federal Reserve System at http://www.bog.frb.fed.us/releases/H15/update or any
successor site or publication.
"Calculation date" means the date by which the calculation agent is to
calculate the interest rate for floating rate notes which will be the earlier of
(1) the tenth calendar day after the related rate determination date, or if any
such day is not a business day, the next succeeding business day or (2) the
business day preceding the applicable interest payment date or the stated
maturity.
As specified in the applicable pricing supplement, a floating rate note may
also have either or both of the following, which will be expressed as a rate per
annum on a simple interest basis:
- maximum interest rate, which will be a maximum limitation, or ceiling, on
the rate at which interest may accrue during any interest period; and/or
- minimum interest rate, which will be a minimum limitation, or floor, on
the rate at which interest may accrue during any interest period.
In addition to any maximum interest rate that may be applicable to any
floating rate note, the interest rate on a floating rate note will in no event
be higher than the maximum rate permitted by applicable law. The notes will be
governed by the law of New York State. As of the date of this prospectus
supplement, the maximum rate of interest under provisions of the New York penal
law, with a few exceptions, is 25% per annum on a simple interest basis. Such
maximum rate of interest only applies to obligations that are less than
$2,500,000.
Citigroup will appoint and enter into agreements with calculation agents to
calculate interest rates on floating rate notes. Unless otherwise specified in
the applicable pricing supplement, The Bank of New York will be the calculation
agent for each senior note that is a floating rate note. Bank One Trust Company,
N.A. (formerly the First National Bank of Chicago) will be the calculation agent
for each subordinated note that is a floating rate note. All determinations of
interest by the calculation agents will, in the absence of manifest error, be
conclusive for all purposes and binding on the holders of the floating rate
notes.
The interest rate on each floating rate note will be reset on an interest
reset date, which means that the interest rate is reset daily, weekly, monthly,
quarterly, semiannually or annually, as specified in the applicable pricing
supplement.
Unless otherwise specified in the applicable pricing supplement, the
interest reset dates will be as follows:
- in the case of floating rate notes that reset daily, each business day;
- in the case of floating rate notes that reset weekly, other than Treasury
Rate notes, the Wednesday of each week;
- in the case of Treasury Rate notes that reset weekly and except as
provided below under "Treasury Rate Notes," the Tuesday of each week;
- in the case of floating rate notes that reset monthly, other than
Eleventh District Cost of Funds Rate notes, the third Wednesday of each
month;
- in the case of floating rate notes that are Eleventh District Cost of
Funds Rate notes, the first calendar day of each month;
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- in the case of floating rate notes that reset quarterly, the third
Wednesday of March, June, September and December of each year;
- in the case of floating rate notes that reset semiannually, the third
Wednesday of each of two months of each year specified in the applicable
pricing supplement; and
- in the case of floating rate notes that reset annually, the third
Wednesday of one month of each year specified in the applicable pricing
supplement.
If an interest reset date for any floating rate note would fall on a day that is
not a business day, such interest reset date will be postponed to the next
succeeding business day. In the case of a LIBOR note or a EURIBOR note, if
postponement to the next business day would cause the interest reset date to be
in the next succeeding calendar month, the interest reset date will instead be
the immediately preceding business day. If an auction of direct obligations of
United States Treasury bills falls on a day that is an interest reset date for
Treasury Rate notes, the interest reset date will be the succeeding business
day.
Unless otherwise specified in the applicable pricing supplement and except
as set forth below, the rate of interest that goes into effect on any interest
reset date will be determined on a rate determination date preceding such
interest reset date, as further described below.
Unless otherwise specified in the applicable pricing supplement, interest
payable on floating rate notes will be the interest accrued from and including
the original issue date or the last date to which interest has been paid, as the
case may be, to but excluding the applicable interest payment date.
Accrued interest on a floating rate note with more than one interest reset
date will be calculated by multiplying the principal amount of the note by an
accrued interest factor. If the floating rate note is an indexed principal note,
the face amount of the note will be multiplied by the accrued interest factor.
The accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. Unless otherwise specified in the applicable pricing supplement, the
interest factor for each such day will be computed by dividing the interest rate
in effect on such day by 360, in the case of CD Rate notes, Commercial Paper
Rate notes, Federal Funds Rate notes, LIBOR notes, Prime Rate notes, J.J. Kenny
Rate notes, Eleventh District Cost of Funds Rate notes and EURIBOR notes. In the
case of Treasury Rate notes, the interest factor for each such day will be
computed by dividing such interest rate by the actual number of days in the
year. The interest factor will be expressed as a decimal calculated to seven
decimal places without rounding. For purposes of making the foregoing
calculation, the interest rate in effect on any interest reset date will be the
applicable rate as reset on such date.
For all other floating rate notes, accrued interest will be calculated by
multiplying the principal amount of the note by the interest rate in effect
during the period for which accrued interest is being calculated. That product
is then multiplied by the quotient obtained by dividing the number of days in
the period for which accrued interest is being calculated by 360, in the case of
CD Rate notes, Commercial Paper Rate notes, Federal Funds Rate notes, LIBOR
notes, Prime Rate notes, J.J. Kenny Rate notes, Eleventh District Cost of Funds
Rate notes and EURIBOR notes. In the case of Treasury Rate notes, such product
is multiplied by the quotient obtained by dividing the number of days in the
period for which accrued interest is being calculated by the actual number of
days in the year.
Unless otherwise specified in the applicable pricing supplement, all
percentages resulting from any calculation of the rate of interest on a floating
rate note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward. All
currency amounts used in, or resulting from, such calculation on floating rate
notes will be rounded to the nearest one-hundredth of a unit. For purposes of
such rounding, .005 of a unit shall be rounded upward.
Unless otherwise indicated in the applicable pricing supplement and except
as provided below, interest will be payable as follows.
- In the case of floating rate notes that reset daily, weekly or monthly,
other than Eleventh District Cost of Funds Rate notes, interest will be
payable on the third Wednesday of each month or on the
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third Wednesday of March, June, September and December of each year, as
specified in the applicable pricing supplement.
- In the case of Eleventh District Cost of Funds Rate notes, interest will
be payable on the first calendar day of each March, June, September and
December.
- In the case of floating rate notes that reset quarterly, interest will be
payable on the third Wednesday of March, June, September, and December of
each year.
- In the case of floating rate notes that reset semiannually, interest will
be payable on the third Wednesday of each of two months of each year
specified in the applicable pricing supplement.
- In the case of floating rate notes that reset annually, interest will be
payable on the third Wednesday of one month of each year specified in the
applicable pricing supplement.
In each of these cases, interest will also be payable at maturity.
If an interest payment date for any floating rate note would fall on a day
that is not a business day, such interest payment date will be postponed to the
next succeeding business day. In the case of a LIBOR note or a EURIBOR note, if
postponement to the next business day would cause the interest payment date to
be in the next succeeding calendar month, the interest payment date will instead
be the immediately preceding business day.
If for any floating rate note, the applicable pricing supplement provides
that the note does not accrue to pay, and if an interest payment date for such
floating rate note would otherwise be a day that is not a business day, such
interest payment date will not be postponed. Any payment required to be made on
such floating rate note, however, may be made on the next succeeding business
day with the same force and effect as if made on the due date. No additional
interest will accrue as a result of such delayed payment.
Upon the request of the holder of any floating rate note, the calculation
agent for such note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next interest
reset date for such floating rate note.
CD Rate Notes. Each CD Rate note will bear interest for each interest
reset period at an interest rate equal to the CD Rate and any spread or spread
multiplier specified in such note and in the applicable pricing supplement.
The calculation agent will determine the CD Rate on each CD Rate
determination date. The CD Rate determination date is the second business day
prior to the interest reset date for each interest reset period for negotiable
certificates of deposit having the index maturity designated in the applicable
pricing supplement as published in H.15(519) under the heading "CDs (Secondary
Market)."
The following procedures will be followed if the CD Rate cannot be
determined as described above.
- If the above rate is not published prior to 3:00 p.m., New York City
time, on the calculation date pertaining to the CD Rate determination
date, then the CD Rate for such interest reset period will be the rate on
that date for negotiable certificates of deposit of the index maturity
designated in the applicable pricing supplement as published in the H.15
Daily Update.
- If by 3:00 p.m., New York City time, on the calculation date, the above
rate is not yet published in either H.15(519) or in the H.15 Daily
Update, then the CD Rate will be the arithmetic mean of the secondary
market offered rates as of 10:00 a.m., New York City time, on that date
of three leading nonbank dealers in negotiable U.S. dollar certificates
of deposit in New York City selected by the calculation agent for
negotiable certificates of deposit of major United States money center
banks of the highest credit standing, in the market for negotiable
certificates of deposit, with a remaining maturity closest to the index
maturity designated in the pricing supplement in a denomination of
$5,000,000.
- If the dealers selected by the calculation agent, however, are not
quoting offered rates as mentioned in the preceding sentence, the CD Rate
for such interest reset period will be the same as the CD Rate for the
immediately preceding interest reset period. If there was no such
interest reset period, the CD Rate will be the initial interest rate.
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CD Rate notes, like other notes, are not deposit obligations of a bank and
are not insured by the Federal Deposit Insurance Corporation.
Commercial Paper Rate Notes. Each Commercial Paper Rate note will bear
interest for each interest reset period at an interest rate equal to the
Commercial Paper Rate and any spread or spread multiplier, specified in such
note and the applicable pricing supplement.
The calculation agent will determine the Commercial Paper Rate on each
Commercial Paper Rate determination date. The Commercial Paper Rate
determination date is the second business day prior to the interest reset date
for each interest reset period. The Commercial Paper Rate will be the money
market yield on that date of the rate for commercial paper having the index
maturity specified in the applicable pricing supplement, as such rate will be
published in H.15(519) under the heading "Commercial Paper -- Nonfinancial."
The following procedures will be followed if the Commercial Paper Rate
cannot be determined as described above.
- If such rate is not published prior to 3:00 p.m., New York City time, on
the calculation date pertaining to the Commercial Paper Rate
determination date, then the Commercial Paper Rate for such interest
reset period will be the money market yield on that date of the rate for
commercial paper of the specified index maturity as published in the H.15
Daily Update under the heading "Commercial Paper -- Nonfinancial."
- If by 3:00 p.m., New York City time, on such calculation date, the above
rate is not yet published in either H.15(519) or in the H.15 Daily
Update, then the Commercial Paper Rate for such interest reset period
will be the money market yield of the arithmetic mean of the offered
rates, as of 11:00 a.m., New York City time, on that date, of three
leading dealers of commercial paper in New York City selected by the
calculation agent for such Commercial Paper Rate note for commercial
paper of the specified index maturity placed for an industrial issuer
whose bonds are rated "AA" or the equivalent by a nationally recognized
rating agency.
- If the dealers selected by such calculation agent, however, are not
quoting offered rates as mentioned in the preceding sentence, the
Commercial Paper Rate for such interest reset period will be the same as
the Commercial Paper Rate for the immediately preceding interest reset
period. If there was no such interest reset period, the Commercial Paper
Rate will be the initial interest rate.
Money market yield will be calculated as follows:
<TABLE>
<S> <C> <C> <C>
D X 360
money market yield = ------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the specified index maturity.
Federal Funds Rate Notes. Each Federal Funds Rate note will bear interest
for each interest reset period at an interest rate equal to the Federal Funds
Rate and any spread or spread multiplier specified in such note and the
applicable pricing supplement.
The calculation agent will determine the Federal Funds Rate on each Federal
Funds Rate determination date. The Federal Funds Rate determination date is the
second business day prior to the interest reset date for such interest reset
period. The Federal Funds Rate will be the rate for Federal Funds as published
in H.15(519) under the heading "Federal Funds (Effective)."
The following procedures will be followed if the Federal Funds Rate cannot
be determined as described above.
- If the above rate is not published prior to 3:00 p.m., New York City
time, on the calculation date pertaining to the Federal Funds Rate
determination date, the Federal Funds Rate for such interest reset period
will be the rate on that date as published in the H.15 Daily Update under
the heading "Federal Funds/Effective Rate."
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- If by 3:00 p.m., New York City time, on such calculation date the above
rate is not yet published in either H.15(519) or in the H.15 Daily
Update, then the Federal Funds Rate for such interest reset period will
be the rate on that date which the Federal Reserve Bank of New York makes
publicly available that is equivalent to the rate which appears in
H.15(519) under the heading "Federal Funds (Effective)."
- If such rate, however, is not made publicly available by the Federal
Reserve Bank of New York by 3:00 p.m., New York City time, on such
calculation date, the Federal Funds Rate for such interest reset period
will be the same as the Federal Funds Rate in effect for the immediately
preceding interest reset period. If there was no such interest reset
period, the Federal Funds Rate will be the initial interest rate.
In the case of a Federal Funds Rate note that resets daily, the interest
rate on such note for the period from and including a Monday to but excluding
the succeeding Monday will be reset by the calculation agent for such note on
such second Monday, or, if not a business day, on the next succeeding business
day, to a rate equal to the average of the Federal Funds Rates in effect for
each such day in such week.
LIBOR Notes. Each LIBOR note will bear interest for each interest reset
period at an interest rate equal to LIBOR and any spread or spread multiplier
specified in such note and the applicable pricing supplement.
The calculation agent will determine LIBOR on each LIBOR determination
date. The LIBOR determination date is the second London banking day prior to the
interest reset date for each interest reset period.
On a LIBOR determination date, the calculation agent will determine LIBOR
for each interest reset period as follows.
The calculation agent will determine the offered rates for deposits in the
specified currency for the period of the index maturity specified in the
applicable pricing supplement, commencing on such interest reset date, which
appears on the "designated LIBOR page" at approximately 11:00 a.m., London time,
on that date.
- If "LIBOR Telerate" is designated in the applicable pricing supplement,
"designated LIBOR page" means the display designated as page "3750" on
the Bridge Telerate Service, and LIBOR will be the relevant offered rate
determined by the calculation agent. If page "3750" on the Bridge
Telerate Service is replaced by another page, or if the Bridge Telerate
Service is replaced by a nominee of the British Bankers' Association,
then "LIBOR Telerate" means the replacement page or service selected to
display the London interbank offered rates of major banks.
- If "LIBOR Reuters" is designated in the applicable pricing supplement,
"designated LIBOR page" means the arithmetic mean determined by the
calculation agent of the two or more offered rates on the display
designated as page "LIBO" on the Reuters Monitor Money Rates Service. If
the LIBO page on such service is replaced by another page, or if the
Reuters Monitor Money Rates Service is replaced by a nominee of the
British Bankers' Association, then "LIBOR Reuters" means the arithmetic
mean determined by the calculation agent of the two or more offered rates
on the replacement page or service selected to display the London
interbank offered rates of major banks.
If LIBOR cannot be determined on a LIBOR determination date as described
above, then the calculation agent will determine LIBOR as follows.
- The calculation agent for such LIBOR note will select four major banks
in the London interbank market.
- The calculation agent will request that the principal London offices
of those four selected banks provide their offered quotations to prime
banks in the London interbank market at approximately 11:00 a.m.,
London time, on the LIBOR determination date. These quotations
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<PAGE> 17
shall be for deposits in the specified currency for the period of the
specified index maturity, commencing on such interest reset date.
Offered quotations must be based on a principal amount equal to at
least $1,000,000 or the approximate equivalent in the specified
currency that is representative of a single transaction in such market
at such time.
(1) If two or more quotations are provided, LIBOR for such interest reset
period will be the arithmetic mean of such quotations.
(2) If less than two quotations are provided, the calculation agent will
select three major banks in New York City and follow the steps in the
two bullet points below.
- The calculation agent will then determine LIBOR for such interest
reset period as the arithmetic mean of rates quoted by those three
major banks in New York City to leading European banks at
approximately 11:00 a.m., New York City time, on such LIBOR
determination date. The rates quoted will be for loans in the
specified currency, for the period of the specified index maturity,
commencing on the interest reset date. Rates quoted must be based on a
principal amount of at least $1,000,000 or the approximate equivalent
in the specified currency that is representative of a single
transaction in such market at such time.
- If fewer than three New York City banks selected by the calculation
agent are quoting rates, LIBOR for such interest reset period will be
the same as for the immediately preceding interest reset period. If
there was no such interest reset period, the LIBOR Rate will be the
initial interest rate.
Treasury Rate Notes. Each Treasury Rate note will bear interest for each
interest reset period at an interest rate equal to the Treasury Rate and any
spread or spread multiplier, specified in such note and the applicable pricing
supplement.
Treasury Rate Notes other than Constant Maturity Treasury Rate Notes
Unless "Constant Maturity" is specified in the applicable pricing
supplement, the Treasury Rate for each interest reset period will be the rate
for the auction held on the Treasury Rate determination date for such interest
reset period of treasury securities as such rate appears on either Telerate page
56 or Telerate page 57 under the heading "AVGE INVEST YIELD." Treasury
securities are direct obligations of the United States that have the index
maturity specified in the applicable pricing supplement.
If the Treasury Rate cannot be determined as described above, the following
procedures will be followed in the order set forth below.
(1) If the Treasury rate is not published prior to 3:00 P.M., New York City
time on the calculation date pertaining to the Treasury Rate
determination date, then the Treasury Rate for the interest reset
period will be the auction average rate on the Treasury Rate
determination date as otherwise announced by the United States
Department of the Treasury. The auction average rate will be expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis.
(2) If the results of such auction are not published or reported as
provided in (1) above by 3:00 P.M., New York City time, on such
calculation date, or if no such auction is held on the Treasury Rate
determination date, then the Treasury Rate for such interest reset
period will be calculated by the calculation agent for such Treasury
Rate note. In this case, the Treasury Rate will be a yield to maturity
of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 P.M., New York City time, on the Treasury Rate
determination date, of three leading primary United States government
securities dealers selected by the calculation agent for the issue of
treasury securities with a remaining maturity closest to the specified
index maturity. The yield to maturity will be expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis.
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(3) If the dealers selected by the calculation agent are not quoting bid
rates as mentioned in (2) above, then the Treasury Rate for such
interest reset period will be the same as the Treasury Rate for the
immediately preceding interest reset period. If there was no preceding
interest reset period, the Treasury Rate will be the initial interest
rate.
The Treasury Rate determination date for each interest reset period will be
the day of the week in which the interest reset date for such interest reset
period falls on which treasury securities would normally be auctioned.
Treasury securities are normally sold at auction on Monday of each week
unless that day is a legal holiday. In that case the auction is normally held on
the following Tuesday, except that such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction is held on the
preceding Friday, such Friday will be the Treasury Rate determination date
pertaining to the interest reset period commencing in the next succeeding week.
If an auction date falls on any day that would otherwise be an interest reset
date for a Treasury Rate note, then that interest reset date will instead be the
business day immediately following the auction date.
Constant Maturity Treasury Rate Notes
If "Constant Maturity" is specified in the applicable pricing supplement,
the Treasury Rate for each interest reset period will be the rate displayed on
the designated CMT Telerate page under the caption ". . . Treasury Constant
Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately
3:45 P.M.," under the column for the designated CMT maturity index in the
following manner.
- If the designated CMT Telerate page is 7051, the Treasury Rate will be
the rate on the Constant Maturity Treasury Rate determination date.
- If the designated CMT Telerate page is 7052, the Treasury Rate will be
the average for the week or for the month, as specified in the applicable
pricing supplement, ended immediately preceding the week or month, as
applicable, in which the related Constant Maturity Treasury Rate
determination date occurs.
If such rate does not appear on such designated CMT Telerate page as
indicated above, the following procedures will be followed in the order set
forth below.
(1) If the rate is no longer displayed on the relevant page or is not
displayed by 3:00 P.M., New York City time on the related calculation
date, then the Treasury Rate for the Constant Maturity Treasury Rate
determination date will be such Treasury Constant Maturity Rate for the
designated CMT maturity index as published in the relevant H.15(519).
(2) If this rate is no longer published or is not published by 3:00 P.M.,
New York City time, on the related calculation date, then the Treasury
Rate on the Constant Maturity Treasury Rate determination date will be
the treasury constant maturity rate for the designated CMT maturity
index, or other United States Treasury rate for the designated CMT
maturity index, for the Constant Maturity Treasury Rate determination
date for such interest reset date as may then be published by either
the Board of Governors of the Federal Reserve System or the United
States Department of the Treasury. The calculation agent will make the
determination as to which of such rates is comparable to the rate
formerly displayed on the designated CMT Telerate page and published in
the relevant H.15(519).
(3) If this information is not provided by 3:00 P.M., New York City time,
on the related calculation date, then the calculation agent will
calculate the Treasury Rate on the Constant Maturity Treasury Rate
determination date as follows.
- The Treasury Rate will be a yield to maturity based on the arithmetic
mean of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on the Constant Maturity
Treasury Rate determination date reported, according to their written
records, by three leading U.S. government securities dealers in New
York City, for Treasury
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<PAGE> 19
notes. The Treasury notes will be the most recently issued direct
noncallable fixed rate obligations of the United States, with an
original maturity of approximately the designated CMT maturity index
and a remaining term to maturity of not less than such designated CMT
maturity index minus one year.
- The three government securities dealers referenced above will be
identified from five such dealers who are selected by the calculation
agent, one of which may be the agent, by eliminating the dealers with
the highest and lowest quotations, or in the event of equality, one of
the highest and/or lowest quotation, as the case may require.
- If three or four, but not five, of such dealers provide quotations as
described above, then the Constant Maturity Treasury Rate will be
based on the arithmetic mean of the offer prices obtained and neither
the highest nor the lowest of such quotes will be eliminated.
(4) If the calculation agent is unable to obtain three such Treasury note
quotations as described in (3) above, the Treasury Rate on such
Constant Maturity Treasury Rate determination date will be calculated
by the calculation agent as follows.
- The rate will be a yield to maturity based on the arithmetic mean of
the secondary market closing offer side prices as of approximately
3:30 P.M., New York City time, on the Constant Maturity Treasury Rate
determination date reported, according to their written records, by
three leading U.S. government securities dealers in New York City, for
Treasury notes with an original maturity of the number of years that
is the next highest to the designated CMT maturity index and a
remaining maturity closest to the index maturity specified in the
applicable pricing supplement, and in an amount that is representative
for a single transaction in that market at that time.
- If two Treasury notes with an original maturity, as described above,
have remaining terms to maturity equally close to the designated CMT
maturity index, the calculation agent will obtain quotations for the
Treasury note with the shorter remaining term to maturity and will use
such quotations to calculate the Treasury Rate as set forth above.
- The three government securities dealers referenced above will be
identified from five such dealers who are selected by the calculation
agent, one of which may be the agent, by eliminating the dealers with
the highest and lowest quotations, or in the event of equality, one of
the highest and/or lowest quotation, as the case may require.
- If three or four, but not five, of such dealers provide quotations as
described above, then the Treasury Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest
nor the lowest of such quotes will be eliminated.
(5) If fewer than three dealers selected by the calculation agent provide
quotations as described in (4) above, the Treasury Rate determined as
of the Constant Maturity Treasury Rate determination date will be the
Treasury Rate in effect on such Constant Maturity Treasury Rate
determination date.
"Designated CMT Telerate page" means the display on the Bridge Telerate
Service, or any successor service on the page specified in the applicable
pricing supplement, or any other page as may replace such page on that service,
or any successor service, for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519). If no such page is specified in the
applicable pricing supplement, the designated CMT Telerate page will be 7052,
for the most recent week.
"Designated CMT maturity index" means the original period to maturity of
the U.S. Treasury securities, either one, two, three, five, seven, ten, twenty
or thirty years, specified in the applicable pricing supplement for which the
Treasury Rate will be calculated. If no such maturity is specified in the
applicable pricing supplement, the designated CMT maturity index will be two
years.
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<PAGE> 20
The "Constant Maturity Treasury Rate determination date" will be the second
business day prior to the interest reset date for the applicable interest reset
period.
The CMT Rate for a Treasury security maturity as published as of any
business day is intended to be indicative of the yield of a U.S. Treasury
security having as of such business day a remaining term to maturity equivalent
to such maturity. The CMT Rate as of any business day is based upon an
interpolation by the U.S. Treasury of the daily yield curve of outstanding
Treasury securities. This yield curve, which relates the yield on a security to
its time to maturity, is based on the over-the-counter market bid yields on
actively traded Treasury securities. Such yields are calculated from composites
of quotations reported by leading U.S. government securities dealers, which may
include one or more of the calculation agents or other affiliates of Citigroup.
Certain constant maturity yield values are read from the yield curve. Such
interpolation from the yield curve provides a theoretical yield for a Treasury
security having ten years to maturity, for example, even if no outstanding
Treasury security has as of such date exactly ten years remaining to maturity.
Prime Rate Notes. Prime Rate notes will bear interest at a rate equal to
the Prime Rate and any spread or spread multiplier specified in the Prime Rate
notes and the applicable pricing supplement.
The calculation agent will determine the Prime Rate for each interest reset
period on each Prime Rate determination date. The Prime Rate determination date
is the second business day prior to the interest reset date for each interest
reset period. The Prime Rate will be the rate made available and subsequently
published on that date in H.15(519) under the heading "Bank Prime Loan."
The following procedures will be followed if the Prime Rate cannot be
determined as described above.
- If the rate is not published prior to 9:00 A.M., New York City time, on
the related calculation date, then the Prime Rate will be the rate on the
Prime Rate determination date that is published in the H.15 Daily Update
under the heading "Bank Prime Loan."
- If the rate is not published prior to 3:00 P.M., New York City time, on
the related calculation date, in either of those sources, then the Prime
Rate will be the arithmetic mean of the rates of interest that appear on
the Reuters Screen USPRIME1 Page as such bank's prime rate or base
lending rate for the Prime Rate determination date.
- If fewer than four such rates appear on the Reuters Screen USPRIME1 Page,
then the calculation agent will select four major banks in New York City.
The Prime Rate will be the arithmetic mean of the prime rates quoted by
those four banks on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on the Prime Rate
determination date.
- If all four of the banks selected by the calculation agent do not provide
quotations, then the Prime Rate will be the arithmetic mean of four prime
rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on the Prime Rate
determination date. These Prime Rate quotes will be provided by the
selected banks and by a reasonable number of substitute domestic banks or
trust companies that the calculation agent will select that have total
equity capital of at least $500,000,000.
- If the banks or trust companies that the calculation agent selects do not
provide quotations as described above, then the Prime Rate will remain
the same as the Prime Rate in effect on the Prime Rate determination
date.
"Reuters Screen USPRIME1 page" means the display designated as page
"USPRIME1" on the Reuters Monitor Money Rates Service, or any successor service
or page, for the purpose of displaying prime rates or base lending rates of
major United States banks.
J.J. Kenny Rate Notes. J.J. Kenny Rate notes will bear interest at the
interest rates, calculated based on the J.J. Kenny Rate and any spread and/or
spread multiplier specified in the J.J. Kenny Rate notes and the applicable
pricing supplement.
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The calculation agent will determine the J.J. Kenny Rate on each J.J. Kenny
Rate determination date. The J.J. Kenny Rate determination date is the second
business day prior to the interest reset date for each interest reset period.
The J.J. Kenny Rate will be the per annum rate on such date equal to the
index made available and subsequently published by Kenny Information Systems or
its successor. Such rate will be based upon 30-day yield evaluations at par of
bonds of not less than five "high grade" component issuers. The bonds evaluated
will be bonds on which the interest is excludable from gross income for federal
income tax purposes under the Internal Revenue Code of 1986. Kenny Information
Systems will select such issuers from time to time, including issuers of general
obligation bonds. However, the bonds on which the index is based will not
include any bonds the interest on which may trigger an "alternate minimum tax"
or similar tax under the Code, unless such tax may be imposed on all tax-exempt
bonds.
The following procedure will be followed if the J.J. Kenny Rate cannot be
determined as described above.
If such rate is not made available by 3:00 P.M., New York City time, on the
calculation date pertaining to such J.J. Kenny Rate determination date, the J.J.
Kenny Rate will be the rate quoted by a successor indexing agent selected by
Citigroup. This rate will be equal to the prevailing rate for bonds included in
the highest short-term rating category by Moody's Investors Service, Inc. and
Standard & Poor's Corporation for issuers selected by such successor indexing
agent most closely resembling the "high grade" component issuers selected by
Kenny Information Systems. The bonds for which rates are quoted will be bonds
that may be tendered by their holders for purchase on not more than seven days'
notice and the interest on which:
- is variable on a weekly basis;
- is excludable from gross income for federal income tax purposes under the
Code; and
- does not give rise to an "alternate minimum tax" or similar tax under the
Code, unless all tax-exempt bonds give rise to such a tax.
However, if a successor indexing agent is not available, the J.J. Kenny Rate on
the J.J. Kenny Rate determination date will be the J.J. Kenny Rate for the
immediately preceding interest reset period. If there was no such interest reset
period, the J.J. Kenny Rate will be the initial interest rate.
Eleventh District Cost of Funds Rate Notes. Eleventh District Cost of
Funds Rate notes will bear interest at the interest rates, calculated based on
the Eleventh District Cost of Funds Rate and any spread and/or spread
multiplier, specified in the Eleventh District Cost of Funds Rate notes and the
applicable pricing supplement.
The calculation agent will determine the Eleventh District Cost of Funds
Rate on each Eleventh District Cost of Funds Rate determination date. The
Eleventh District Cost of Funds Rate determination date is the last working day
of the month immediately prior to each interest reset date for each interest
reset period on which the Federal Home Loan Bank of San Francisco publishes the
Eleventh District Cost of Funds Index.
The Eleventh District Cost of Funds Rate will be the rate equal to the
monthly weighted average cost of funds for the calendar month preceding such
Eleventh District Cost of Funds Rate determination date as set forth under the
caption "Eleventh District" on the Telerate page 7058. Such page will be deemed
to include any successor page, determined by the calculation agent, as of 11:00
A.M., San Francisco time, on the Eleventh District Cost of Funds Rate
determination date.
The following procedures will be followed if the Eleventh District Cost of
Funds Rate cannot be determined as described above.
- If the rate does not appear on Telerate page 7058 on any related Eleventh
District Cost of Funds Rate determination date, the Eleventh District
Cost of Funds Rate for the Eleventh District Cost of Funds Rate
determination date will be the Eleventh District Cost of Funds Rate
Index.
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- If the FHLB of San Francisco fails to announce such rate for the calendar
month next preceding such Eleventh District Cost of Funds Rate
determination date, then the Eleventh District Cost of Funds Rate for
such date will be the Eleventh District Cost of Funds Rate in effect on
such Eleventh District Cost of Funds Rate determination date.
The "Eleventh District Cost of Funds Rate Index" will be the monthly
weighted average cost of funds paid by member institutions of the Eleventh
Federal Home Loan Bank District that the FHLB of San Francisco most recently
announced as the cost of funds for the calendar month preceding the date of such
announcement.
EURIBOR Notes. Each EURIBOR note will bear interest for each interest
reset period at an interest rate equal to EURIBOR and any spread or spread
multiplier specified in such note and the applicable pricing supplement.
The calculation agent will determine EURIBOR on each EURIBOR determination
date. The EURIBOR determination date is the second euro business day prior to
the interest reset date for each interest reset period.
On a EURIBOR determination date, the calculation agent will determine
EURIBOR for each interest reset period as follows.
The calculation agent will determine the offered rates for deposits in
euros as sponsored, calculated, and published jointly by the European Banking
Federation and ACI -- The Financial Market Association, or any company
established by the joint sponsors for purposes of compiling and publishing those
rates, for the period of the index maturity specified in the applicable pricing
supplement, commencing on such interest reset date, which appears on page 248 on
the Bridge Telerate Service or any successor service or any page that may
replace page 248 on that service which is commonly referred to as "Telerate Page
248" as of 11:00 a.m., Brussels time, on that date.
If EURIBOR cannot be determined on a EURIBOR determination date as
described above, then the calculation agent will determine EURIBOR as follows.
- The calculation agent for such EURIBOR note will select four major
banks in the Euro-zone interbank market.
- The calculation agent will request that the principal Euro-zone
offices of those four selected banks provide their offered quotations
to prime banks in the Euro-zone interbank market at approximately
11:00 a.m., Brussels time, on the EURIBOR determination date. These
quotations shall be for deposits in euros for the period of the
specified index maturity, commencing on such interest reset date.
Offered quotations must be based on a principal amount equal to at
least $1,000,000 or the approximate equivalent in euros that is
representative of a single transaction in such market at such time.
(1) If two or more quotations are provided, EURIBOR for such interest reset
period will be the arithmetic mean of such quotations.
(2) If less than two quotations are provided, the calculation agent will
select four major banks in the Euro-zone and follow the steps in the
two bullet points below.
- The calculation agent will then determine EURIBOR for such interest
reset period as the arithmetic mean of rates quoted by those four
major banks in the Euro-zone to leading European banks at
approximately 11:00 a.m., Brussels time, on such EURIBOR determination
date. The rates quoted will be for loans in euros, for the period of
the specified index maturity, commencing on the interest reset date.
Rates quoted must be based on a principal amount of at least
$1,000,000 or the approximate equivalent in the specified currency
that is representative of a single transaction in such market at such
time.
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- If the banks so selected by the calculation agent are not quoting
rates as described above, EURIBOR for such interest reset period will
be the same as for the immediately preceding interest reset period. If
there was no such interest reset period, EURIBOR will be the initial
interest rate.
"Euro-zone" means the region comprised of member states of the European
Union that adopt the single currency in accordance with the treaty establishing
the European Community, as amended by the treaty on European Union.
Inverse Floating Rate Notes. Any floating rate note may be designated in
the applicable pricing supplement as an inverse floating rate note. In such an
event, unless otherwise specified in the applicable pricing supplement, the
interest rate on such floating rate note will be equal to:
- in the case of the period, if any, commencing on the issue date, or the
date on which such note otherwise begins to accrue interest if different
from the issue date, up to the first interest reset date, a fixed rate of
interest established by Citigroup as described in the applicable pricing
supplement; and
- in the case of each period commencing on an interest reset date, a fixed
rate of interest specified in the pricing supplement minus the interest
rate determined based on the base rate as adjusted by any spread and/or
spread multiplier.
However, on any inverse floating rate note, (1) the interest rate will not be
less than zero and (2) the interest rate in effect for the ten days immediately
prior to the date of maturity of such inverse floating rate note will be that in
effect on the tenth day preceding such date.
Floating/Fixed Rate Notes. The applicable pricing supplement may provide
that a note will be a floating rate note for a specified portion of its term and
a fixed rate note for the remainder of its term. In such an event, the interest
rate on such note will be determined as if it were a floating rate note and a
fixed rate note for each such respective period, all as specified in such
applicable pricing supplement.
SUBSEQUENT INTEREST PERIODS
The pricing supplement relating to each note will indicate whether
Citigroup has the option to reset the interest rate, or the spread, spread
multiplier, or method of calculation, as the case may be, for such note. If
Citigroup has the option to reset, the pricing supplement will also indicate the
optional reset date or dates on which such interest rate or such spread, spread
multiplier, or method of calculation, as the case may be, may be reset.
Citigroup shall notify the trustee whether or not it intends to exercise
such option relating to such note at least 45 but not more than 60 days prior to
an optional reset date for such note. Not later than 40 days prior to such
optional reset date, the trustee will mail to the holder of such note a reset
notice first class, postage prepaid, indicating whether Citigroup has elected to
reset the interest rate, or the spread, spread multiplier or method of
calculation, as the case may be.
If Citigroup elects to reset the interest rate, or the spread, spread
multiplier or method of calculation, as the case may be, the trustee will mail
to the holder in a manner described above a notice indicating such new interest
rate or such new spread, spread multiplier, or method of calculation, as the
case may be. The notice will also indicate any provisions for redemption during
the subsequent interest period. The subsequent interest period is the period
from such optional reset date to the next optional reset date or, if there is no
such next optional reset date, to the stated maturity of such note, including
the date or dates on which or the period or periods during which and the price
or prices at which such redemption may occur during such subsequent interest
period.
Upon the transmittal by the trustee of a reset notice to the holder of a
note, such new interest rate or such new spread, spread multiplier, and/or
method of calculation as the case may be, will take effect automatically. Except
as modified by the reset notice and as described below, such note will have the
same terms as prior to the transmittal of such reset notice.
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Despite the foregoing, not later than 20 days prior to an optional reset
date for a note, Citigroup may, at its option, revoke the interest rate, or the
spread or spread multiplier, provided for in the reset notice relating to such
optional reset date and establish a higher interest rate, or a higher spread or
spread multiplier, as applicable, for the subsequent interest period commencing
on such optional reset date.
Citigroup can make such revocations by causing the trustee for such note to
mail notice of such higher interest rate or higher spread or spread multiplier,
as the case may be, first class, postage prepaid, to the holder of such note.
Such notice shall be irrevocable. All notes for which the interest rate or
spread or spread multiplier is reset on an optional reset date will bear such
higher interest rate, or higher spread or spread multiplier, as the case may be,
whether or not tendered for repayment.
The holder of a note will have the option to elect repayment of such note
by Citigroup on each optional reset date at a price equal to the principal
amount of such note plus interest accrued to such optional reset date. In order
for a note to be repaid on an optional reset date, the holder of such note must
follow the procedures set forth below under "Optional Redemption, Repayment and
Repurchase" for optional repayment. However, the period for delivery of such
note or notification to the trustee for such note will be at least 25 but not
more than 35 days prior to such optional reset date. Further, a holder who has
tendered a note for repayment pursuant to a reset notice may, by written notice
to the trustee for such note, revoke any such tender for repayment until the
close of business on the tenth day prior to such optional reset date.
AMORTIZING NOTES
Citigroup may from time to time offer amortizing notes on which a portion
or all the principal amount is payable prior to stated maturity
- in accordance with a schedule;
- by application of a formula; or
- based on an index.
Further information concerning additional terms and conditions of any amortizing
notes, including terms for repayment of such notes, will be set forth in the
applicable pricing supplement.
INDEXED NOTES
Citigroup may from time to time offer indexed notes on which some or all
interest payments, in the case of an indexed rate note, and/or the principal
amount payable at stated maturity or earlier redemption or retirement, in the
case of an indexed principal note, is determined based on:
- the principal amount of such notes or, in the case of an indexed
principal note, the amount designated in the applicable pricing
supplement as the "face amount" of such indexed note; and
- an index, which may be based on
(1) prices, changes in prices, or differences between prices, of
securities, currencies, intangibles, goods, articles or
commodities;
(2) the application of a formula; or
(3) an index which shall be such other objective price, economic or
other measures as are described in the applicable pricing
supplement.
A description of the index used in any determination of an interest or principal
payment, and the method or formula by which interest or principal payments will
be determined based on such index, will be set forth in the applicable pricing
supplement.
If a fixed rate note, floating rate note or indexed rate note is also an
indexed principal note, the amount of any interest payment will be determined
based on the face amount of such indexed note unless
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specified otherwise in the applicable pricing supplement. If an indexed note is
also an indexed principal note, the principal amount payable at stated maturity
or any earlier redemption or repayment of the indexed note may be different from
the face amount.
If a third party is appointed to calculate or announce the index for a
particular indexed note, and the third party either (1) suspends the calculation
or announcement of such index or (2) changes the basis upon which such index is
calculated in a manner that is inconsistent with the applicable pricing
supplement, then Citigroup will select another third party to calculate or
announce the index. The agent or another affiliate of Citigroup may be either
the original or successor third party selected by Citigroup.
If for any reason such index cannot be calculated on the same basis and
subject to the same conditions and controls as applied to the original third
party, then any indexed interest payments or any indexed principal amount of
such indexed note will be calculated in the manner set forth in the applicable
pricing supplement. Any determination by the selected third party will be
binding on all parties, except in the case of an obvious error.
Unless otherwise specified in the applicable pricing supplement, for the
purpose of determining whether holders of the requisite principal amount of
notes outstanding under the applicable indenture have made a demand or given a
notice or waiver or taken any other action, the outstanding principal amount of
indexed notes will be deemed to be the face amount stated on such notes. Unless
otherwise specified in the applicable pricing supplement, in the event of an
acceleration of the stated maturity of an indexed note, the principal amount
payable to the holder of such note upon acceleration will be the principal
amount determined based on the formula used to determine the principal amount of
such note on the stated maturity of such note, as if the date of acceleration
were the stated maturity.
An investment in indexed notes has significant risks, including wide
fluctuations in market value as well as in the amounts of payments due, that are
not associated with a similar investment in a conventional debt security. Such
risks depend on a number of factors including supply and demand for the
particular security, currency, commodity or other good or article to which the
note is indexed and economic and political events over which Citigroup has no
control.
Fluctuations in the price of any particular security or commodity, in the
rates of exchange between particular currencies or in particular indices that
have occurred in the past are not necessarily indicative, however, of
fluctuations in the price or rates of exchange that may occur during the term of
any indexed notes. Accordingly, prospective investors should consult their own
financial and legal advisors as to the risks of investment in indexed notes.
DUAL CURRENCY NOTES
Citigroup may from time to time offer dual currency notes on which
Citigroup has a one time option of making all payments of principal, any premium
and interest on such notes which are issued on the same day and have the same
terms, the payments on which would otherwise be made in the specified currency
of such notes, in the optional payment currency specified in the applicable
pricing supplement. Such option will be exercisable in whole but not in part on
an option election date, which will be any one of the dates specified in the
applicable pricing supplement. Information as to the relative value of the
specified currency compared to the optional payment currency will be set forth
in the applicable pricing supplement.
The pricing supplement for each issuance of dual currency notes will
specify, among other things,
- the specified currency;
- the optional payment currency; and
- the designated exchange rate.
Such designated exchange rate will be a fixed exchange rate used for
converting amounts denominated in the specified currency into amounts
denominated in the optional payment currency. The pricing supplement will also
specify the option election dates and interest payment dates for the related
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issuance of dual currency notes. Each option election date will be a particular
number of days before an interest payment date or stated maturity, as set forth
in the applicable pricing supplement. Each option election date will be the date
on which Citigroup may select whether to make all scheduled payments due
thereafter in the optional payment currency rather than in the specified
currency.
If Citigroup makes such an election, the amount payable in the optional
payment currency will be determined using the designated exchange rate specified
in the applicable pricing supplement. If such election is made, notice of such
election will be mailed in accordance with the terms of the applicable tranche
of dual currency notes within two business days of the option election date.
Such notice will state (1) the first date, whether an interest payment date
and/or stated maturity, on which scheduled payments in the optional payment
currency will be made and (2) the designated exchange rate. Any such notice by
Citigroup, once given, may not be withdrawn. The equivalent value in the
specified currency of payments made after such an election may be less, at the
then current exchange rate, than if Citigroup had made such payment in the
specified currency.
For United States federal income tax purposes, holders of dual currency
notes may need to comply with rules which differ from the general rules
applicable to holders of other types of notes offered by this prospectus
supplement. The United States federal income tax consequences of the purchase,
ownership and disposition of dual currency notes will be set forth in the
applicable pricing supplement.
RENEWABLE NOTES
Citigroup may from time to time offer renewable notes, which will mature on
an initial maturity date. Such initial maturity date will be an interest payment
date specified in the applicable pricing supplement occurring in, or prior to,
the twelfth month following the original issue date of such notes, unless the
term of all or any portion of any such notes is renewed in accordance with the
procedures described below.
The term of a renewable note may be extended to the interest payment date
occurring in the twelfth month, or, if a special election interval is specified
in the applicable pricing supplement, the last month in a period equal to twice
the special election interval elected by the holder after such renewal date.
Such an extension may be made on the initial renewal date. That date will be the
interest payment date occurring in the sixth month, unless a special election
interval is specified in the applicable pricing supplement, prior to the initial
maturity date of a renewable note and on the interest payment date occurring in
each sixth month, or in the last month of each special election interval, after
such initial renewal date which, together with the initial renewal date,
constitutes a renewal date.
If a holder does not elect to extend the term of any portion of the
principal amount of a renewable note during the specified period prior to any
renewal date, such portion will become due and payable on the new maturity date.
Such new maturity date will be the interest payment date occurring in the sixth
month, or the last month in the special election interval, after such renewal
date.
A holder of a renewable note may elect to renew the term of such renewable
note, or if so specified in the applicable pricing supplement, any portion of
such renewable note, by delivering a notice to such effect to the trustee or any
duly appointed paying agent at the corporate trust office of the trustee or
agency of the trustee in New York City. Such notice will be delivered not less
than 15 nor more than 30 days prior to such renewal date, unless another period
is specified in the applicable pricing supplement as the special election
period. Such election will be irrevocable and will be binding upon each
subsequent holder of such renewable note.
An election to renew the term of a renewable note may be exercised for less
than the entire principal amount of such renewable note only if so specified in
the applicable pricing supplement and only in such principal amount, or any
integral multiple in excess of such amount, that is specified in the applicable
pricing supplement. Despite the foregoing, the term of the renewable notes may
not be extended beyond the stated maturity specified for such renewable notes in
the applicable pricing supplement.
If the holder does not elect to renew the term, such renewable note must be
presented to the trustee, or any duly appointed paying agent. If such renewable
note is a certificate issued in definitive form, it must
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be presented to the trustee as soon as practicable following receipt of such
renewable note. The trustee, or any duly appointed paying agent, will issue in
exchange for such note, in the name of such holder, a note. The note will be in
a principal amount equal to the principal amount of such exchanged renewable
note for which no election to renew such term was exercised, with terms
identical to those specified on such renewable note. However, such note will
have a fixed, nonrenewable stated maturity on the new maturity date.
If an election to renew is made for less than the full principal amount of
a holder's renewable note, the trustee, or any duly appointed paying agent, will
issue in exchange for such note in the name of such holder, a replacement
renewable note. The replacement renewable note will be in a principal amount
equal to the principal amount elected to be renewed of such exchanged renewable
note, with terms otherwise identical to such exchanged renewable note.
EXTENSION OF MATURITY
The pricing supplement relating to each note will indicate whether
Citigroup has the option to extend the stated maturity of such note for an
extension period. Such an extension period is one or more periods of one to five
whole years, up to but not beyond the final maturity date set forth in such
pricing supplement.
Citigroup may exercise such option for a note by notifying the trustee for
such note at least 45 but not more than 60 days prior to the old stated maturity
of such note. Not later than 40 days prior to the old stated maturity of such
note, the trustee for such note will mail to the holder of such note an
extension notice, first class, postage prepaid. The extension notice will set
forth:
- the election of Citigroup to extend the stated maturity of such note;
- the new stated maturity;
- in the case of a fixed rate note, the interest rate applicable to the
extension period;
- in the case of a floating rate note, the spread, spread multiplier or
method of calculation applicable to the extension period; and
- any provisions for redemption during the extension period, including the
date or dates on which, or the period or periods during which, and the
price or prices at which, such redemption may occur during the extension
period.
Upon the mailing by such trustee of an extension notice to the holder of a
note, the stated maturity of such note will be extended automatically, and,
except as modified by the extension notice and as described in the next
paragraph, such note will have the same terms as prior to the mailing of such
extension notice. Despite the foregoing, not later than 20 days prior to the old
stated maturity of such note, Citigroup may, at its option, revoke the interest
rate, or the spread or spread multiplier, as the case may be, provided for in
the extension notice for such note and establish for the extension period a
higher interest rate, in the case of a fixed rate note, or a higher spread or
spread multiplier, in the case of a floating rate note.
Citigroup may so act by causing the trustee for such note to mail notice of
such higher interest rate or higher spread or spread multiplier, as the case may
be, first class, postage prepaid, to the holder of such note. Such notice will
be irrevocable. All notes for which the stated maturity is extended will bear
such higher interest rate, in the case of fixed rate notes, or higher spread or
spread multiplier, in the case of floating rate notes, for the extension period,
whether or not tendered for repayment.
If Citigroup extends the stated maturity of a note, the holder of such note
will have the option to elect repayment of such note by Citigroup on the old
stated maturity at a price equal to the principal amount of such note, plus
interest accrued to such date. In order for a note to be repaid on the old
stated maturity once Citigroup has extended its stated maturity, the holder of
such note must follow the procedures set forth below under "Optional Redemption,
Repayment and Repurchase" for optional repayment. The period for delivery of
such note or notification to the trustee for such note will be at
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least 25 but not more than 35 days prior to the old stated maturity. A holder
who has tendered a note for repayment pursuant to an extension notice may give
written notice to the trustee for such note to revoke any such tender for
repayment until the close of business on the tenth day before the old stated
maturity.
COMBINATION OF PROVISIONS
If so specified in the applicable pricing supplement, any note may be
required to comply with all of the provisions, or any combination of the
provisions, described above under "Subsequent Interest Periods," "Extension of
Maturity" and "Renewable Notes."
BOOK-ENTRY SYSTEM
Upon issuance, and unless the rules of DTC state otherwise, all book-entry
notes having the same original issue date and otherwise identical terms will be
represented by a single global security. Each global security representing
book-entry notes will be deposited with, or on behalf of, DTC and registered in
the name of a nominee of DTC. Book-entry notes will not be exchangeable for
certificated notes and, except under the circumstances described in the
prospectus under "Book-Entry Procedures and Settlement," will not otherwise be
issuable as certificated notes.
If an issue of notes is denominated in a currency other than the U.S.
dollar, Citigroup will make payments of principal and any interest in the
foreign currency in which the notes are denominated or in U.S. dollars. DTC has
elected to have all such payments of principal and interest in U.S. dollars
unless notified by any of its participants through which an interest in the
notes is held that it elects, in accordance with, and to the extent permitted
by, the applicable pricing supplement and the revelant note, to receive such
payment of principal or interest in the foreign currency. On or prior to the
third business day after the record date for payment of interest and twelve days
prior to the date for payment of principal, such participant will notify DTC of
(1) its election to receive all, or the specified portion, of such payment in
the foreign currency and (2) its instructions for wire transfer of such payment
to a foreign currency account.
A further description of DTC's procedures regarding global securities
representing book-entry notes is set forth in the prospectus under "Book-Entry
Procedures and Settlement." DTC has confirmed to Citigroup, the agent and the
trustee that it intends to follow such procedures.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The pricing supplement relating to each note will indicate either that (1)
such note cannot be redeemed prior to its stated maturity or (2) that such note
will be redeemable at the option of Citigroup, in whole or in part. The
applicable pricing supplement will also indicate (1) the optional redemption
date or dates on which such note may be redeemed and (2) the redemption price at
which, together with accrued interest to such optional redemption date, such
note may be redeemed on each such optional redemption date.
Unless otherwise specified in the applicable pricing supplement, at least
30 days prior to the date of redemption, such trustee will mail notice of such
redemption, first class, postage prepaid, to the holder of such note. Unless
otherwise specified in the applicable pricing supplement, Citigroup may exercise
such option relating to a redemption of a note in part only by notifying the
trustee for such note at least 45 days prior to any optional redemption date. In
the event of redemption of a note in part only, a new note or notes for the
unredeemed portion of such note or notes will be issued to the holder of such
note or notes upon the cancellation of such note or notes. The notes, other than
amortizing notes, may not be redeemed.
The pricing supplement relating to each note will also indicate whether the
holder of such note will have the option to elect repayment of such note by
Citigroup prior to its stated maturity. If so, such pricing supplement will
specify (1) the optional repayment date or dates on which such note may be
repaid and (2) the optional repayment price. Such optional repayment price is
the price at which, together
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with accrued interest to such optional repayment date, such note may be repaid
on each such optional repayment date.
In order for a note to be repaid, the trustee for such note must receive,
at least 30 but not more than 45 days prior to an optional repayment date:
(1) such note with the form entitled "Option to Elect Repayment" on the
reverse of such note duly completed; or
(2) a telegram, telex, facsimile transmission or letter from a member of a
national securities exchange or the National Association of Securities
Dealers, Inc. or a commercial bank or trust company in the United
States setting forth:
- the name of the holder of such note;
- the principal amount of such note to be repaid;
- the certificate number or a description of the tenor and terms of such
note;
- a statement that the option to elect repayment is being exercised; and
- a guarantee that the note to be repaid with the form entitled "Option
to Elect Repayment" on the reverse of the note duly completed will be
received by such trustee not later than five business days after the
date of such telegram, telex, facsimile transmission or letter.
If the guarantee procedure described in clause (2) above is followed, then
such note and form duly completed must be received by the trustee by such fifth
business day. Any tender of a note by the holder for repayment, except pursuant
to a reset notice or an extension notice, will be irrevocable. The repayment
option may be exercised by the holder of a note for less than the entire
principal amount of such note, provided, that the principal amount of such note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, such note will be canceled and a new note or notes for the
remaining principal amount will be issued in the name of the holder of such
repaid note.
If a note is represented by a global security, DTC's nominee will be the
holder of such note and, therefore, will be the only entity that can exercise a
right to repayment. In order to ensure that DTC's nominee will timely exercise a
right to repayment relating to a particular note, the beneficial owner of such
note must instruct the broker or other direct or indirect participant through
which it holds an interest in such note to notify DTC of its desire to exercise
a right to repayment. Different firms have different cut-off times for accepting
instructions from their customers. Accordingly, each beneficial owner should
consult the broker or other direct or indirect participant through which it
holds an interest in a note in order to ascertain the cut-off time by which such
an instruction must be given in order for timely notice to be delivered to DTC.
If Citigroup redeems or repays a note that is an OID note other than an
indexed note prior to its stated maturity, then Citigroup will pay the amortized
face amount of the note as of the date of redemption or repayment regardless of
anything else stated in this prospectus. The preceding sentence does not apply
if Citigroup chooses to redeem such notes.
The amortized face amount of a note on any date means the amount equal to:
- the issue price set forth on the face of the applicable pricing
supplement plus
- that portion of the difference between the issue price and the stated
principal amount of the note that has accrued by that date at
(1) the bond yield to maturity set forth on the face of the applicable
pricing supplement, or
(2) if so specified in the applicable pricing supplement, the bond yield
to call set forth on the face of the note.
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These computations will be made in accordance with generally accepted United
States bond yield computation principles. However, the amortized face amount of
a note will never exceed its stated principal amount. The bond yield to call
listed on the face of a pricing supplement will be computed on the basis of:
- the first occurring optional redemption date with respect to such note
and
- the amount payable on such optional redemption date.
In the event that any such note is not redeemed on such first occurring optional
redemption date, the bond yield to call that applies to such note will be
recomputed on such optional redemption date on the basis of (1) the next
occurring optional redemption date and (2) the amount payable on such optional
redemption date. The bond yield to call will continue to be so recomputed on
each succeeding optional redemption date until the note is so redeemed.
Citigroup may at any time purchase notes at any price in the open market or
otherwise. Notes so purchased by Citigroup may, at the discretion of Citigroup,
be held, resold or surrendered to the trustee for such notes for cancellation.
OTHER PROVISIONS
The terms in the applicable pricing supplement may modify any provisions
relating to:
- the determination of an interest rate basis;
- the specification of an interest rate basis;
- calculation of the interest rate applicable to, or the principal payable
at maturity on, any note;
- interest payment dates; or
- any other related matters.
DEFEASANCE
The defeasance provisions described in the prospectus will not be
applicable to the notes except as set forth in the applicable prospectus
supplement.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
INTRODUCTION
The following is a summary of the material United States federal income tax
considerations that may be relevant to a holder of a note. The summary is based
on:
- laws;
- regulations;
- rulings; and
- decisions now in effect,
all of which may change, possibly with retroactive effect. This summary deals
only with holders that will hold notes as capital assets. This summary does not
address tax considerations applicable to investors to whom special tax rules may
apply, including:
- banks;
- tax-exempt entities;
- insurance companies;
- regulated investment companies;
- common trust funds;
- dealers in securities or currencies;
- persons that will hold notes as a part of an integrated investment,
including a straddle or conversion transaction, comprised of a note and
one or more other positions; or
- United States holders (as defined below) that have a functional currency
other than the U.S. dollar.
Any special United States federal income tax considerations relevant to a
particular issue of notes, including any indexed notes, dual currency notes or
notes providing for contingent payments, will be provided in the applicable
pricing supplement. Purchasers of such notes should carefully examine the
applicable pricing supplement and should consult with their tax advisors with
respect to such notes.
Investors should consult their tax advisors in determining the tax
consequences to them of holding notes, including the application to their
particular situation of the United States federal income tax considerations
discussed below, as well as the application of state, local, foreign or other
tax laws.
As used in this prospectus supplement, the term United States holder means
a person who is
- a citizen or resident of the United States;
- a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision;
- an estate, if United States federal income taxation is applicable to the
income of such estate regardless of its source; or
- a trust if a U.S. court is able to exercise primary supervision over the
trust's administration and one or more United States persons have the
authority to control all of the trust's substantial decisions.
The term non-United States holder means a holder who is not a United States
holder. The term United States means the United States of America, including the
fifty states and the District of Columbia.
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UNITED STATES HOLDERS
Payments of Interest
Payments of qualified stated interest, as defined below under "Original
Issue Discount," on a note will be taxable to a United States holder as ordinary
interest income at the time that such payments are accrued or are received, in
accordance with the United States holder's method of tax accounting.
If such payments of interest are made relating to a note that is
denominated in a foreign currency, the amount of interest income realized by a
United States holder that uses the cash method of tax accounting will be the
U.S. dollar value of the specified currency payment based on the spot rate of
exchange on the date of receipt regardless of whether the payment in fact is
converted into U.S. dollars. A United States holder that uses the accrual method
of tax accounting will accrue interest income on the foreign currency note in
the relevant foreign currency and translate the amount accrued into U.S. dollars
based on:
- the average exchange rate in effect during the interest accrual period,
or portion thereof within such holder's taxable year; or
- at such holder's election, at the spot rate of exchange on (1) the last
day of the accrual period, or the last day of the taxable year within
such accrual period if the accrual period spans more than one taxable
year, or (2) the date of receipt, if such date is within five business
days of the last day of the accrual period.
Such election must be applied consistently by the United States holder to all
debt instruments from year to year and can be changed only with the consent of
the IRS. A United States holder that uses the accrual method of tax accounting
will recognize foreign currency gain or loss, which will be treated as ordinary
income or loss, on the receipt of an interest payment made relating to a foreign
currency note if the spot rate of exchange on the date the payment is received
differs from the rate applicable to a previous accrual of that interest income.
Purchase, Sale and Retirement of Notes
A United States holder's tax basis in a note generally will equal the cost
of such note to such holder
(1) increased by any amounts includible in income by the holder as OID and
market discount and
(2) reduced by any amortized premium and any payments other than payments
of qualified stated interest (each as described below) made on such
note.
In the case of a foreign currency note, the cost of such note to a United
States holder will generally be the U.S. dollar value of the foreign currency
purchase price on the date of purchase. In the case of a foreign currency note
that is traded on an established securities market, a United States holder that
uses the cash method of tax accounting, and, if it so elects, a United States
holder that uses the accrual method of tax accounting, will determine the U.S.
dollar value of the cost of such note by translating the amount paid at the spot
rate of exchange on the settlement date of the purchase. The amount of any
subsequent adjustments to a United States holder's tax basis in a foreign
currency note in respect of OID, market discount and premium denominated in a
specified currency other than the U.S. dollar will be determined in the manner
described under "Original Issue Discount," "Market Discount" and "Notes
Purchased at a Premium" below. The conversion of U.S. dollars to another
specified currency and the immediate use of such specified currency to purchase
a foreign currency note generally will not result in taxable gain or loss for a
United States holder.
Upon the sale, exchange, retirement or other taxable disposition of a note,
a United States holder generally will recognize gain or loss equal to the
difference between (1) the amount realized on the disposition, less any accrued
qualified stated interest, which will be taxable as ordinary income, and (2) the
United States holder's adjusted tax basis in such note. If a United States
holder receives a specified currency other than the U.S. dollar in respect of
such disposition of a note, the amount realized will be the U.S. dollar value of
the specified currency received calculated at the spot rate of exchange on the
date of disposition.
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In the case of a foreign currency note that is traded on an established
securities market, a United States holder that uses the cash method of tax
accounting, and if it so elects, a United States holder that uses the accrual
method of tax accounting, will determine the U.S. dollar value of the amount
realized by translating such amount at the spot rate of exchange on the
settlement date of the disposition. The election available to accrual basis
United States holders in respect of the purchase and sale of foreign currency
notes traded on an established securities market, discussed above, must be
applied consistently by the United States holder to all debt instruments from
year to year and can be changed only with the consent of the IRS.
Except as discussed below in connection with foreign currency gain or loss,
market discount and short-term notes, gain or loss recognized by a United States
holder on the sale, exchange, retirement or other taxable disposition of a note
will generally be long term capital gain or loss if the United States holder's
holding period for the note exceeded one year at the time of such disposition.
Gain or loss recognized by a United States holder on the sale, exchange,
retirement or other taxable disposition of a foreign currency note generally
will be treated as ordinary income or loss to the extent that the gain or loss
is attributable to changes in exchange rates during the period in which the
holder held such note.
Original Issue Discount
In General. Notes with a term greater than one year may be issued with OID
for United States federal income tax purposes. Such notes are called OID notes
in this prospectus supplement. United States holders generally must accrue OID
in gross income over the term of the OID notes on a constant yield basis,
regardless of their regular method of tax accounting. As a result, United States
holders generally will recognize taxable income in respect of an OID note in
advance of the receipt of cash attributable to such income.
OID generally will arise if the stated redemption price at maturity of the
note exceeds its issue price by more than a de minimis amount of 0.25% of the
note's stated redemption price at maturity multiplied by the number of complete
years to maturity. OID may also arise if a note has particular interest payment
characteristics, such as interest holidays, interest payable in additional
securities or stepped interest. For this purpose, the issue price of a note is
the first price at which a substantial amount of notes is sold for cash, other
than to bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers. The stated redemption
price at maturity of a note is the sum of all payments due under the note, other
than payments of qualified stated interest. The term qualified stated interest
generally means stated interest that is unconditionally payable in cash or
property, other than debt instruments of the issuer, at least annually during
the entire term of the OID note at a single fixed rate of interest or, under
particular conditions, based on one or more interest indices.
For each taxable year of a United States holder, the amount of OID that
must be included in gross income in respect of an OID note will be the sum of
the daily portions of OID for each day during such taxable year or any portion
of such taxable year in which such a United States holder held the OID note.
Such daily portions are determined by allocating to each day in an accrual
period a pro rata portion of the OID allocable to that accrual period. Accrual
periods may be of any length and may vary in length over the term of an OID
note. However, accrual periods may not be longer than one year and each
scheduled payment of principal or interest must occur on the first day or the
final day of a period.
The amount of OID allocable to any accrual period generally will equal (1)
the product of the OID note's adjusted issue price at the beginning of such
accrual period multiplied by its yield to maturity (as adjusted to take into
account the length of such accrual period), less (2) the amount, if any, of
qualified stated interest allocable to that accrual period. The adjusted issue
price of an OID note at the beginning of any accrual period will equal the issue
price of the OID note, as defined above, (1) increased by previously accrued OID
from prior accrual periods, and (2) reduced by any payment made on such note,
other than payments of qualified stated interest, on or before the first day of
the accrual period.
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Foreign Currency Notes. In the case of an OID note that is also a foreign
currency note, a United States holder should determine the U.S. dollar amount
includible in income as OID for each accrual period by
- calculating the amount of OID allocable to each accrual period in the
specified currency using the constant-yield method described above and
- translating the amount of the specified currency so derived at the
average exchange rate in effect during that accrual period, or portion of
such accrual period within a United States holder's taxable year, or, at
the United States holder's election (as described above under "Payments
of Interest"), at the spot rate of exchange on (1) the last day of the
accrual period, or the last day of the taxable year within such accrual
period if the accrual period spans more than one taxable year, or (2) on
the date of receipt, if such date is within five business days of the
last day of the accrual period.
All payments on an OID note, other than payments of qualified stated interest,
will generally be viewed first as payments of previously accrued OID, to the
extent thereof, with payments attributed first to the earliest accrued OID, and
then as payments of principal. Upon the receipt of an amount attributable to
OID, whether in connection with a payment of an amount that is not qualified
stated interest or the disposition of the OID note, a United States holder will
recognize ordinary income or loss measured by the difference between (1) the
amount received and (2) the amount accrued. The amount received will be
translated into U.S. dollars at the spot rate of exchange on the date of receipt
or on the date of disposition of the OID note. The amount accrued will be
determined by using the spot rate of exchange applicable to such previous
accrual.
Acquisition Premium. A United States holder that purchases an OID note for
an amount less than or equal to the remaining redemption amount, but in excess
of the OID note's adjusted issue price, generally is permitted to reduce the
daily portions of OID by a fraction. The numerator of such fraction is the
excess of the United States holder's adjusted tax basis in the OID note
immediately after its purchase over the OID note's adjusted issue price. The
denominator of such fraction is the excess of the remaining redemption amount
over the OID note's adjusted issue price. For purposes of this prospectus
supplement,
(1) "acquisition premium" means the excess of the purchase price paid by a
non-United States holder for an OID note over the OID note's adjusted
issue price; and
(2) "remaining redemption amount" means the sum of all amounts payable on
an OID note after the purchase date other than payments of qualified
stated interest.
The notes may have special redemption, repayment or interest rate reset
features, as indicated in the applicable pricing supplement. Notes containing
such features, in particular OID notes, may be subject to special rules that
differ from the general rules discussed above. Accordingly, purchasers of notes
with such features should carefully examine the applicable pricing supplement
and should consult their tax advisors relating to such notes.
Market Discount
If a United States holder purchases a note, other than a short-term note,
for an amount that is less than the note's stated redemption price at maturity
or, in the case of an OID note, for an amount that is less than the note's
revised issue price, i.e., the note's issue price increased by the amount of
accrued OID, the note will be considered to have market discount. The market
discount rules are subject to a de minimis rule similar to the rule relating to
de minimis OID, described above (in the second paragraph under "Original Issue
Discount"). Any gain recognized by the United States holder on the sale,
exchange, retirement or other taxable disposition of notes having market
discount generally will be treated as ordinary income to the extent of the
market discount that accrued on the note while held by such United States
holder.
Alternatively, the United States holder may elect to include market
discount in income currently over the life of the note. Such an election will
apply to market discount notes acquired by the United States
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<PAGE> 35
holder on or after the first day of the first taxable year to which such
election applies and is revocable only with the consent of the IRS. Market
discount will accrue on a straight-line basis unless the United States holder
elects to accrue the market discount on a constant-yield method. Such an
election will apply to the note to which it is made and is irrevocable. Unless
the United States holder elects to include market discount in income on a
current basis, as described above, the United States holder could be required to
defer the deduction of a portion of the interest paid on any indebtedness
incurred or maintained to purchase or carry the note.
Market discount on a foreign currency note will be accrued by a United
States holder in the specified currency. The amount includible in income by a
United States holder in respect of such accrued market discount will be the U.S.
dollar value of the amount accrued. This is generally calculated at the spot
rate of exchange on the date that the note is disposed of by the United States
holder. Any accrued market discount on a foreign currency note that is currently
includible in income will be translated into U.S. dollars at the average
exchange rate for the accrual period or portion of such accrual period within
the United States holder's taxable year.
Short-Term Notes
The rules set forth above also will generally apply to notes having
maturities of not more than one year from the date of issuance. Those notes are
called short-term notes in this prospectus supplement. Modifications apply to
these general rules.
First, none of the interest on a short-term note is treated as qualified
stated interest but instead is treated as part of the short-term note's stated
redemption price at maturity, thereby giving rise to OID. Thus, all short-term
notes will be OID notes. OID will be treated as accruing on a short-term note
ratably, or at the election of a United States holder, under a constant yield
method.
Second, a United States holder of a short-term note that uses the cash
method of tax accounting will generally not be required to include OID in
respect of the short-term note in income on a current basis. Such a United
States holder may not be allowed to deduct all of the interest paid or accrued
on any indebtedness incurred or maintained to purchase or carry such note until
the maturity of the note or its earlier disposition in a taxable transaction. In
addition, such a United States holder will be required to treat any gain
realized on a disposition of the note as ordinary income to the extent of the
holder's accrued OID on the note. A United States holder of a short-term note
using the cash method of tax accounting may, however, elect to accrue OID into
income on a current basis. In such case, the limitation on the deductibility of
interest described above will not apply. A United States holder using the
accrual method of tax accounting, generally will be required to include OID on a
short-term note in income on a current basis.
Third, any United States holder of a short-term note, whether using the
cash or accrual method of tax accounting can elect to accrue the acquisition
discount, if any, on the note on a current basis. If such an election is made,
the OID rules will not apply to the note. Acquisition discount is the excess of
the note's stated redemption price at maturity over the holder's purchase price
for the note. Acquisition discount will be treated as accruing ratably or, at
the election of the United States holder, under a constant-yield method based on
daily compounding.
As described above, the notes may have special redemption features. These
features may affect the determination of whether a note has a maturity of not
more than one year and thus is a short-term note. Purchasers of notes with such
features should carefully examine the applicable pricing supplement and should
consult their tax advisors in relation to such features.
Notes Purchased at a Premium
A United States holder that purchases a note for an amount in excess of the
remaining redemption amount will be considered to have purchased the note at a
premium and the OID rules will not apply to such holder. Such holder may elect
to amortize such premium, as an offset to interest income, using a
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constant-yield method, over the remaining term of the note. Such election, once
made, generally applies to all debt instruments held or subsequently acquired by
the United States holder on or after the first taxable year to which the
election applies. Such election may be revoked only with the consent of the IRS.
A United States holder that elects to amortize such premium must reduce its tax
basis in a note by the amount of the premium amortized during its holding
period. For a United States holder that does not elect to amortize bond premium,
the amount of such premium will be included in the United States holder's tax
basis when the note matures or is disposed of by the United States holder.
Therefore, a United States holder that does not elect to amortize premium and
holds the note to maturity will generally be required to treat the premium as
capital loss when the note matures.
Amortizable bond premium in respect of a foreign currency note will be
computed in the specified currency and will reduce interest income in the
specified currency. At the time amortized bond premium offsets interest income,
exchange gain or loss, which will be taxable as ordinary income or loss, will be
realized on the amortized bond premium on such note based on the difference
between (1) the spot rate of exchange on the date or dates such premium is
recovered through interest payments on the note and (2) the spot rate of
exchange on the date on which the United States holder acquired the note. See
"Original Issue Discount -- Acquisition Premium" above for a discussion of the
treatment of a note purchased for an amount less than or equal to the remaining
redemption amount but in excess of the note's adjusted issue price.
Information Reporting and Backup Withholding
The trustee will be required to file information returns with the IRS
relating to payments made to particular United States holders of notes. In
addition, United States holders may be subject to a 31 percent backup
withholding tax on such payments if they do not provide their taxpayer
identification numbers to the trustee in the manner required, fail to certify
that they are not subject to backup withholding tax, or otherwise fail to comply
with applicable backup withholding tax rules. United States holders may also be
subject to information reporting and backup withholding tax with respect to the
proceeds from a sale, exchange, retirement or other taxable disposition of the
notes.
NON-UNITED STATES HOLDERS
Under current United States federal income tax law:
- withholding of United States federal income tax will not apply to a
payment on a note to a non-United States holder, provided that,
(1) the holder does not actually or constructively own 10 percent or
more of the combined voting power of all classes of stock of
Citigroup and is not a controlled foreign corporation related to
Citigroup through stock ownership and
(2) the beneficial owner provides a statement signed under penalties of
perjury that includes its name and address and certifies that it is
a non-United States holder in compliance with applicable
requirements, or, with respect to payments made after December 31,
2000, satisfies documentary evidence requirements for establishing
that it is a non-United States holder; and
- a non-United States holder will not be subject to United States federal
income tax on gain realized on the sale, exchange, retirement or other
taxable disposition of a note, unless, in the case of an individual, such
holder is present in the United States for 183 days or more in the
taxable year of the retirement or disposition and certain other
conditions are met.
Despite the above, a non-United States holder that is subject to United States
federal income taxation on a net income basis generally will be taxable under
the same rules that govern the taxation of a United States holder receiving or
accruing interest on a note or realizing or recognizing gain or loss on the
sale, exchange, retirement or other taxable disposition of a note. Special rules
might also apply to a non-United
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<PAGE> 37
States holder that is a qualified resident of a country with which the United
States has an income tax treaty.
United States information reporting requirements and backup withholding tax
will not apply to payments on a note if the beneficial owner (1) certifies its
non-U.S. status under penalties of perjury and, for payments made after December
31, 2000, also satisfies documentary evidence requirements for establishing that
it is a non-United States person, or (2) otherwise establishes an exemption.
Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of a note effected outside the
United States by a foreign office of a foreign broker, provided that such broker
- derives less than 50% of its gross income for particular periods from the
conduct of a trade or business in the United States;
- is not a controlled foreign corporation for United States federal income
tax purposes; and
- for payments made after December 31, 2000, is not a foreign partnership
that, at any time during its taxable year is 50% or more, by income or
capital interest, owned by United States holders or is engaged in the
conduct of a U.S. trade or business.
Backup withholding tax will also not apply to the payment of the proceeds
of the sale of a note effected outside the United States by a foreign office of
any other foreign broker. However, information reporting requirements will be
applicable to such payment unless (1) such broker has documentary evidence in
its records that the beneficial owner is a non-United States person and other
conditions are met or (2) the beneficial owner otherwise establishes an
exemption.
Information reporting requirements and backup withholding tax will apply to
the payment of the proceeds of a sale of a note by the U.S. office of a broker,
unless the beneficial owner certifies its non-U.S. person status under penalties
of perjury or otherwise establishes an exemption.
The U.S. Treasury Department issued final Treasury regulations governing
information reporting and the certification procedures regarding withholding and
backup withholding on amounts paid to non-United States persons after December
31, 2000. Such regulations, among other things, may change the certification
procedures relating to the receipt by intermediaries of payments on behalf of a
beneficial owner of a note. Prospective investors should consult their tax
advisors regarding the effect, if any, of such new Treasury regulations on an
investment in the notes.
For payments made after December 31, 2000, for purposes of applying the
above rules for non-United States holders to an entity that is treated as
fiscally transparent, e.g., a partnership or trust, the beneficial owner means
each of the ultimate beneficial owners of the entity.
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PLAN OF DISTRIBUTION
The notes are being offered on a continuous basis by Citigroup through
Salomon Smith Barney Inc., as agent. The agent has agreed to use its reasonable
efforts to solicit orders to purchase notes. The agent and Citigroup will sign a
distribution agreement. A form of distribution agreement has been filed as an
exhibit to the registration statement of which this prospectus supplement forms
a part. Citigroup will have the sole right to accept orders to purchase notes
and may reject proposed purchases in whole or in part. The agent will have the
right to reject any proposed purchase in whole or in part. Citigroup reserves
the right to withdraw, cancel or modify the offer made by this prospectus
supplement, the accompanying prospectus or any pricing supplement without
notice.
The following table summarizes the aggregate commissions or discounts
payable in connection with offerings of the notes. Commissions and discounts
will vary depending upon the stated maturity of the notes.
<TABLE>
<CAPTION>
PUBLIC AGENT'S PROCEEDS, BEFORE
OFFERING DISCOUNTS EXPENSES, TO
PRICE AND COMMISSIONS CITIGROUP
-------- --------------- ----------------
<S> <C> <C> <C>
Principal Amount......... $8,050,000,000 $10,062,500-$80,500,000 $8,039,937,500-$7,969,500,000
Total.................... 100% .125%-1% 99.875%-99.000%
</TABLE>
Citigroup may also sell notes at a discount to the agent for its own
account or for resale to one or more purchasers at varying prices related to
prevailing market prices or at a fixed public offering price. After any initial
public offering of notes to be resold to purchasers at a fixed public offering
price, the public offering price and any concession or discount may be changed.
In addition, the agent may offer and sell notes purchased by it as principal to
other dealers. These notes may be sold at a discount which, unless otherwise
specified in the applicable pricing supplement, will not exceed the discount to
be received by the agent.
Notes sold by the agent to a dealer may be sold at a discount and, unless
otherwise specified in the applicable pricing supplement, the discount allowed
will not exceed the discount received by the agent from Citigroup. Unless
otherwise specified in the applicable pricing supplement, any note purchased by
the agent as principal will be purchased at 100% of the principal amount or face
amount less a percentage equal to the commission applicable to an agency sale of
a note of identical maturity. Citigroup reserves the right to sell notes
directly to investors on its own behalf and to enter into agreements similar to
the distribution agreement with other parties. No commission will be payable nor
will a discount be allowed on any sales made directly by Citigroup.
No note will have an established trading market when issued. Unless
otherwise specified in the applicable pricing supplement, the notes will not be
listed on any securities exchange. The agent may make a market in the notes, but
the agent is not obligated to do so. The agent may discontinue any market-making
at any time without notice, at its sole discretion. There can be no assurance of
the existence or liquidity of a secondary market for any notes, or that the
maximum amount of notes will be sold.
Citigroup estimates that its total expenses for the offering, excluding
underwriting commissions or discounts, will be approximately $5,180,000.
The agent, whether acting as agent or principal, may be deemed to be an
underwriter within the meaning of the Securities Act of 1933. Citigroup has
agreed to indemnify the agent against liabilities relating to material
misstatements and omissions, or to contribute to payments that the agent may be
required to make relating to these liabilities. Citigroup will reimburse the
agent for customary legal and other expenses, incurred by it in connection with
the offer and sale of the notes.
Unless otherwise specified in the applicable pricing supplement, payment of
the purchase price of the notes will be required to be made in immediately
available funds in New York City on the date of settlement.
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Concurrently with the offering of notes through the agent as described in
this prospectus supplement, Citigroup may issue other securities under the
indenture referred to in the prospectus.
The broker-dealer subsidiaries of Citigroup, including Salomon Smith
Barney, are members of the NASD and may participate in offerings of the notes.
Accordingly, offerings of the notes 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 supplement, the accompanying prospectus and the related
pricing supplement may be used by the agent or other affiliates of Citigroup in
connection with offers and sales of the notes offered by this prospectus
supplement in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. The agent or these other
affiliates may act as principal or agent in such transactions.
LEGAL MATTERS
Stephanie B. Mudick, Esq., Deputy General Counsel and an Assistant
Secretary of Citigroup, 153 East 53rd Street, New York, New York 10043, 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, will act
as legal counsel for the agent. Dewey Ballantine LLP has from time to time acted
as counsel for Citigroup and its subsidiaries and may do so in the future. 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.
S-39
<PAGE> 40
PROSPECTUS
[CITIGROUP LOGO]
May Offer --
$8,050,000,000
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. These securities are not insured by the Federal
Deposit Insurance Corporation or any other governmental agency or
instrumentality.
------------------------
June 19, 2000
<PAGE> 41
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 5 for information on Citigroup, including its financial statements.
CITIGROUP INC.
Citigroup is a diversified holding company whose businesses provide a broad
range of financial services to consumer and corporate customers in 101 countries
and territories. Citigroup's activities are conducted through Global Consumer,
Global Corporate and Investment Bank, Global Investment Management and Private
Banking, and Investment Activities.
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 $8,050,000,000 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 interest and principal 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. 333-37992,
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 5.
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<PAGE> 42
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 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. 333-37992. You can
receive copies of these documents by following the directions on page 5.
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<PAGE> 43
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, the Nasdaq Stock Market's
National Market 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. 333-37992.
You can receive copies of this document by following the directions on page 5.
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.
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<PAGE> 44
USE OF PROCEEDS
Citigroup will use the net proceeds it receives from any offering of these
securities for general corporate purposes, including the funding of its
operating units and subsidiaries. Citigroup may also use a portion of the
proceeds to finance possible acqusitions or business expansion and 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.
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<PAGE> 45
WHERE YOU CAN FIND MORE INFORMATION
As required by the Securities Act of 1933, Citigroup filed a registration
statement (No. 333-37992) 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, 1999;
(b) Quarterly Report on Form 10-Q for the quarter ended March 31, 2000;
(c) Current Reports on Form 8-K filed on January 19, 2000, February 16,
2000, February 28, 2000 and April 18, 2000; and
(d) 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.
5
<PAGE> 46
CITIGROUP INC.
Citigroup is a diversified holding company whose businesses provide a broad
range of financial services to consumer and corporate customers in 101 countries
and territories. Citigroup's activities are conducted through Global Consumer,
Global Corporate and Investment Bank, Global Investment Management and Private
Banking, and Investment Activities.
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 and state 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.
6
<PAGE> 47
USE OF PROCEEDS AND HEDGING
General. Citigroup will use the proceeds it receives from the sale of the
offered securities for general corporate purposes, which may include:
- funding the business of its operating units;
- funding investments in, or extensions of credit or capital contributions
to, its subsidiaries;
- financing of possible acquisitions or business expansion; and
- lengthening 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.
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<PAGE> 48
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 the most recently completed
fiscal quarter and each of the five most recent fiscal years.
<TABLE>
<CAPTION>
QUARTER
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------------------
2000 1999 1998 1997 1996 1995
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of income to fixed charges (excluding
interest on deposits)...................... 2.42 2.13 1.57 1.71 1.88 1.65
Ratio of income to fixed charges (including
interest on deposits)...................... 1.83 1.64 1.33 1.43 1.51 1.39
Ratio of income to combined fixed charges
including preferred stock dividends
(excluding interest on deposits)........... 2.39 2.09 1.54 1.66 1.80 1.56
Ratio of income to combined fixed charges
including preferred stock dividends
(including interest on deposits)........... 1.82 1.62 1.32 1.41 1.48 1.35
</TABLE>
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<PAGE> 49
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.
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<PAGE> 50
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. 333-37992)
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 statements in this prospectus are
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 Bank One Trust Company,
N.A. (formerly The First National Bank of Chicago). Citigroup may, at its
option, appoint Citibank, N.A. to act as paying agent.
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;
- if other than in United States dollars, the currency or currency unit in
which payment will be made;
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<PAGE> 51
- 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)
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
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<PAGE> 52
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;
(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;
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<PAGE> 53
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:
- 6 7/8% Junior Subordinated Deferrable Interest Debentures due March 15,
2029;
- 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 6 7/8% Capital Securities of Citigroup Capital VI;
- 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 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;
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<PAGE> 54
- 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.
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
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<PAGE> 55
- 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).
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
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<PAGE> 56
- 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.
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.
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<PAGE> 57
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.
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
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<PAGE> 58
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 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.
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<PAGE> 59
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.
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<PAGE> 60
DESCRIPTION OF CAPITAL STOCK
GENERAL
As of the date of this prospectus, Citigroup's authorized capital stock
consists of 10 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 March 31, 2000, Citigroup had outstanding approximately 3.4 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 K Preferred Stock, which is 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, and
the Pacific Exchange.
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 REDEMPTION DATE NEXT
OF SHARES DIVIDENDS PRICE PER REDEEMABLE GENERAL
TITLE OF SERIES OUTSTANDING PER 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
8.40% Cumulative Preferred
Stock, Series K........... 500,000 $42.00 500 March 31, 2001 Yes (6)
9.50% Cumulative Preferred
Stock, Series L........... --(1) 9.50% 500 June 30, 2001 Yes (6)
5.864% Cumulative Preferred
Stock, Series M........... 800,000 5.864% 250 October 8, 2007 No
Adjustable Rate Cumulative
Preferred Stock, Series
Q......................... 700,000 Variable Rate(2) 250 On any date No
Adjustable Rate Cumulative
Preferred Stock, Series
R......................... 400,000 Variable Rate(2) 250 On any date No
</TABLE>
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<PAGE> 61
<TABLE>
<CAPTION>
NUMBER REDEMPTION DATE NEXT
OF SHARES DIVIDENDS PRICE PER REDEEMABLE GENERAL
TITLE OF SERIES OUTSTANDING PER YEAR SHARE ($) BY CITIGROUP VOTING RIGHTS
--------------- ----------- ---------------- ---------- --------------------- -------------
<S> <C> <C> <C> <C> <C>
7 3/4% Cumulative Preferred
Stock, Series U........... 500,000 7.75% 250 On any date No
Fixed Adjustable Rate
Cumulative Preferred
Stock, Series V........... 250,000 Variable Rate(3) 500 February 15, 2006(5) No
Cumulative Adjustable Rate
Preferred Stock, Series
Y......................... 2,262 Variable Rate(4) 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) 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.
(2) 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.
(3) 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
specified changes in the Internal Revenue Code that would decrease the
dividends received deduction applicable to corporate stockholders.
(4) 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.
(5) Prior to February 15, 2006, in the event of specified changes in the
Internal Revenue Code that would decrease the dividends received deduction
applicable to corporate stockholders, 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.
(6) 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. In addition, holders of Series 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 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.
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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.
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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, as amended, 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."
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, 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. 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;
and
- any person other than a bank holding company may be required to obtain
the approval of the Federal Reserve Board under the Change in Bank
Control Act to acquire or retain 10% or more 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.
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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
- 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.
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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.
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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, 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.
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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.
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.
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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.
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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.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the New York
banking law, 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.
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.
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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 offered either to the public through
underwriting syndicates represented by one or more managing underwriters or by
one or more underwriters without a syndicate. Unless otherwise 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.
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.
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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 Citigroup's securities in market-making transactions,
including block positioning and block trades, at negotiated prices related to
prevailing market prices at the time of sale. Any of Citigroup'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.
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ERISA MATTERS
Citigroup has subsidiaries, including insurance company subsidiaries and
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 as 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 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., Deputy General Counsel 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,
1999 and 1998, and for each of the years in the three-year period ended December
31, 1999, 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, 1999, and
incorporated by reference in this prospectus. The report of KPMG LLP also is
incorporated by reference in this prospectus. The report of KPMG LLP covering
the December 31, 1999 consolidated financial statements refers to changes, in
1999, in Citigroup's methods of accounting for insurance-related assessments,
accounting for insurance and reinsurance contracts that do not transfer
insurance risk, and accounting for the costs of start-up activities. 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.
32
<PAGE> 73
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$8,050,000,000
[CITIGROUP LOGO]
MEDIUM-TERM SENIOR NOTES, SERIES C
MEDIUM-TERM SUBORDINATED NOTES, SERIES C
DUE NINE MONTHS OR MORE FROM THE DATE OF ISSUE
------------------------------
PROSPECTUS SUPPLEMENT
JUNE 19, 2000
(INCLUDING PROSPECTUS
DATED JUNE 19, 2000)
------------------------------
SALOMON SMITH BARNEY
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