As filed with the Securities and Exchange Commission on
May 4, 2007
Registration
No. 333-135163
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Post-Effective Amendment
No. 2 to
Form S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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Citigroup
Inc.
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Delaware
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52-1568099
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Citigroup Capital
XVIII
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Delaware
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20-5127853
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Citigroup Capital XIX
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Delaware
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Applied For
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Citigroup Capital XX
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Delaware
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Applied For
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Citigroup Capital XXI
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Delaware
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Applied For
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Citigroup Capital XXII
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Delaware
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Applied For
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(Exact name of registrant
as specified in its charter)
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification Numbers)
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399 Park Avenue
New York, NY 10043
(212) 559-1000
(Address, including zip code,
and telephone number,
including area code, of
registrants principal executive offices)
Michael S.
Zuckert, Esq.
General Counsel, Finance and
Capital Markets
Citigroup Inc.
425 Park Avenue
New York, NY 10043
(212) 559-1000
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
Copies to:
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Gregory A.
Fernicola, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York
10036-6522
(212) 735-3000
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Jeffrey D. Karpf, Esq.
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, New York 10006
(212) 225-2000
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Approximate date of commencement of proposed sale of the
securities to the public:
At such time (from time
to time) as agreed upon by Citigroup Inc. and the Underwriters
in light of market conditions.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box.
o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box.
þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering.
o
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following box.
þ
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed
to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following box.
o
CALCULATION
OF REGISTRATION FEE
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Amount to be Registered/
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Title of Each Class of
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Proposed Maximum Offering Price Per Unit/
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Amount of
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Securities to be Registered
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Proposed Maximum Offering Price(1)(2)
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Registration Fee(1)
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Enhanced Trust Preferred
Securities of the Trusts
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$0
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Junior Subordinated Debt Securities
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$0
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Guarantees of Capital Securities of
the Trusts and Certain
Back-Up
Obligations
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$0
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(1)
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An unspecified aggregate initial
offering price or number of the securities of each identified
class is being registered as may from time to time be offered at
unspecified prices. Separate consideration may or may not be
received for securities that are issuable on exercise,
conversion or exchange of other securities. In accordance with
Rules 456(b) and 457(r), the Registrants are deferring
payment of all the registration fee. In connection with the
securities offered hereby, the Registrants will pay
pay-as-you-go registration fees in accordance with
Rule 456(b).
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(2)
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Includes an unspecified number of
securities that may be offered or sold by affiliates of the
Registrants in market-making transactions.
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The
information in this preliminary prospectus is not complete and
may be changed. This preliminary prospectus is not an offer to
sell, nor does it seek an offer to buy securities in any
jurisdiction where the offer or sale is not permitted.
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SUBJECT TO COMPLETION, DATED
MAY 4, 2007
PROSPECTUS
000,000 Capital
Securities
Citigroup Capital
% Enhanced Trust Preferred
Securities (Enhanced
TRUPS
®
)
$ Liquidation Amount
Guaranteed to the extent set
forth herein by
Citigroup Inc.
(CITIGROUP LOGO)
A brief description of the % Enhanced
Trust Preferred Securities (Enhanced
TRUPS
®
or capital securities) can be found under
Summary Information Q&A in this
prospectus.
Application will be made to list the % capital
securities on the New York Stock Exchange. If approved for
listing, Citigroup expects the %
capital securities will begin trading on the New York Stock
Exchange within 30 days after they are first issued.
Some or all of the capital securities may be redeemed at any
time on or
after ,
20 . In addition, the capital securities may be
redeemed, in whole or in part, at any time if certain changes in
tax, investment company or bank regulatory law or interpretation
occur and certain other conditions are satisfied.
You are urged to carefully read the Risk Factors
section beginning on page 8, where specific risks
associated with these % capital securities are
described, along with the other information in this prospectus
before you make your investment decision.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
These securities are not deposits or savings accounts. These
securities are not insured by the Federal Deposit Insurance
Corporation or any other governmental agency or instrumentality.
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Per Capital
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Security
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Total
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Public offering price
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$
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$
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(1
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Underwriting commissions to be
paid by Citigroup Inc.
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$
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(2
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$
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(2
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Proceeds to Citigroup Capital
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$
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$
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(1)
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The underwriters also may purchase up to an
additional
capital securities at the public offering price within
30 days of the date of this prospectus in order to cover
over-allotments, if any.
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(2)
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Underwriting commissions of
$ per capital security will
be paid by Citigroup Inc.; provided, however, that for sales to
certain institutions, the commissions will be
$ per capital security.
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Citigroup expects that the % capital securities will
be ready for delivery in book-entry form only through The
Depository Trust Company on or
about ,
20 .
T
RU
PS
®
is a registered service mark of Citigroup Global Markets Inc.
Citigroup Global Markets Inc. has applied for patent protection
for the Enhanced
TRUPS
®
structure described in this prospectus.
,
20
SUMMARY
INFORMATION Q&A
This summary provides a brief overview of the key aspects of
Citigroup, Citigroup Capital and the % capital
securities. You should carefully read this prospectus to
understand fully the terms of the capital securities as well as
the tax and other considerations that are important to you in
making a decision about whether to invest in the capital
securities. You should pay special attention to the Risk
Factors section beginning on page 7 of this
prospectus to determine whether an investment in the capital
securities is appropriate for you.
What Are
the Capital Securities?
Each capital security represents an undivided beneficial
interest in the assets of Citigroup Capital. Each capital
security will entitle the holder to receive quarterly cash
distributions as described in this prospectus. Citigroup Capital
is
offering
capital securities at a price of $
for each capital security.
Who Is
Citigroup Capital?
Citigroup Capital (referred to in this prospectus as
Citigroup Capital or the trust) is a
Delaware statutory trust. Its principal place of business is
c/o Citigroup Inc., 399 Park Avenue, New York, NY 10043,
and its telephone number is
(212) 559-1000.
All of the common securities of Citigroup Capital will be owned
by Citigroup Inc. Citigroup Capital will use the proceeds from
the sale of the capital securities and the common securities to
buy a series of % junior subordinated deferrable
interest debentures
due ,
20 (referred to in this prospectus as the
junior subordinated debt securities) from Citigroup
with the same financial terms as the capital securities.
Who Is
Citigroup Inc.?
Citigroup is a diversified global financial services holding
company whose businesses provide a broad range of financial
services to consumer and corporate customers. Citigroup has more
than 200 million customer accounts and does business in
more than 100 countries. Citigroups activities are
conducted through the Global Consumer, Markets and Banking,
Global Wealth Management and Alternative Investments business
segments. Citigroups principal subsidiaries are Citibank,
N.A., Citigroup Global Markets Inc. and Grupo Financiero
Banamex, S.A. de C.V., each of which is a wholly-owned, indirect
subsidiary of Citigroup. Citigroup was incorporated in 1988
under the laws of the State of Delaware as a corporation with
perpetual duration. Citigroup is the issuer of the junior
subordinated debt securities.
Citigroups principal executive office is at 399 Park
Avenue, New York, NY 10043, and its telephone number is
(212) 559-1000.
When Will
You Receive Distributions on the Capital Securities?
Citigroup Capitals only source of cash to make payments on
the capital securities are payments on the junior subordinated
debt securities it purchases from Citigroup.
If you purchase the capital securities, you are entitled to
receive cumulative cash distributions at an annual rate
of % of the liquidation amount of
$ per capital security.
Distributions will accumulate from the date Citigroup Capital
issues the capital securities and will be paid quarterly in
arrears
on , , ,
and
of each year,
beginning ,
20 .
When Will
Payment of Your Distributions Be Deferred?
If Citigroup defers interest payments on the junior subordinated
debt securities, Citigroup Capital will defer distributions on
the capital securities. A deferral may extend for up to 40
consecutive quarterly periods (10 years) without causing an
event of default and acceleration on the junior subordinated
debt securities. A deferral of distributions cannot extend,
however, beyond the maturity date
of ,
20 .
1
What Are
the Consequences of an Extension Period?
During any period in which Citigroup defers interest on the
junior subordinated debt securities, which we refer to as an
extension period, except as described on page 34, Citigroup
will not, and will not permit its subsidiaries, to:
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pay a dividend or make any distributions on its capital stock or
redeem, purchase, acquire or make a liquidation payment on any
of its capital stock, or make any guarantee payments relating to
the foregoing; or
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make an interest, principal or premium payment on, or purchase
or redeem, any of its debt securities or guarantees that rank
equal with or junior to the junior subordinated debt securities.
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In addition, if any extension period lasts longer than one year,
unless required to do so by the Federal Reserve and subject to
certain exceptions, Citigroup will not, and will not permit its
subsidiaries, to purchase any of its common stock for a one-year
period following the payment of all deferred interest pursuant
to the alternative payment mechanism described in
Description of the Junior Subordinated Debt
Securities Alternative Payment Mechanism on
page 35.
What
Source of Funds May Citigroup Use to Pay Deferred
Interest?
Citigroup may only use the net proceeds from the sale by it or
by any of its subsidiaries of shares of its common stock
and/or
qualified warrants, which we refer to as the new equity amount,
to pay deferred interest on the junior subordinated debt
securities, provided that the use of other sources of funds to
pay interest payments would not, by itself, be an event of
default and acceleration under the indenture that would permit
the trust or the holders of capital securities to accelerate the
junior subordinated debt securities.
Notwithstanding the above, if a supervisory event (as defined
herein) has occurred and is continuing, Citigroup may pay
deferred interest with cash from any source, but Citigroup is
not obligated to do so. Additionally, on the maturity date of
the junior subordinated debt securities, or in the case of an
event of default and acceleration under the indenture, Citigroup
may pay accrued and unpaid interest without regard to the source
of funds. See Description of the Junior Subordinated Debt
Securities Alternative Payment Mechanism on
page 35 for further details, including the definition of
new equity amount, APM maximum
obligation, share cap amount and
supervisory event.
When Is
Citigroup Obligated to Sell Equity to Pay Deferred
Interest?
If an extension period continues beyond the fifth anniversary of
the commencement thereof, or if Citigroup pays current interest
earlier than the fifth anniversary of the commencement of such
extension period, Citigroup will thereafter be obligated to
continuously use its commercially reasonable efforts to sell
shares of its common stock and, as promptly as practicable after
such sale, to apply the net proceeds from such sale to pay
deferred interest on the junior subordinated debt securities
until all deferred interest is paid in full,
provided,
however
that a violation by Citigroup of its obligation to
do so would not, by itself, be an event of default and
acceleration under the indenture that would permit the trust or
the holders of capital securities to accelerate the junior
subordinated debt securities. Citigroup is not required to sell
shares in excess of the APM maximum obligation and is not
permitted to sell shares in an amount in excess of the then
current share cap amount.
The APM maximum obligation is the maximum amount of
proceeds from the sale of shares of common stock
and/or
qualified warrants that Citigroup is obligated to raise to pay
deferred interest prior to the fifth anniversary of the
commencement of an extension period. Once the APM maximum
obligation is reached, Citigroup is excused from using its
commercially reasonable efforts to sell its common stock and
apply the proceeds to pay deferred interest until the date which
is five years following the commencement of the extension
period, at which time the APM maximum obligation is no longer
applicable. The share cap amount will initially
equal million shares of Citigroups common stock. Citigroup
is obligated to increase the share cap amount if such increase
is necessary to allow Citigroup to sell sufficient shares to
satisfy Citigroups obligations to pay deferred interest;
provided that Citigroup will not be obligated under the
indenture to
2
increase the share cap amount
above million shares. See
Description of the Junior Subordinated Debt
Securities Alternative Payment Mechanism on
page 34.
Notwithstanding the above, Citigroup has no obligation to sell
shares of its common stock during a market disruption event and
has no obligation either to sell shares of its common stock or
to apply the net proceeds of such sale to pay deferred interest
during a supervisory event. During a supervisory event,
Citigroup may, at its option, choose to pay deferred interest
using cash from any source (including from the sale of preferred
stock), but Citigroup is not obligated to do so. See
Description of the Junior Subordinated Debt
Securities Alternative Payment Mechanism
on page 35.
Citigroup has no obligation, under any circumstances, to sell
qualified warrants or to apply the proceeds of such sale to pay
deferred interest, but may do so, at its option.
Does
Citigroup Need Regulatory Approval to Pay Deferred
Interest?
The indenture provides that Citigroup may only pay deferred
interest with the proceeds of the sale by it of shares of its
common stock
and/or
qualified warrants, except in limited circumstances. The
indenture further provides that Citigroup is obligated to notify
the Federal Reserve of its intention to sell shares of its
common stock or qualified warrants and apply the proceeds to pay
deferred interest, and that Citigroup may only sell such
securities and apply the proceeds to pay deferred interest if
the Federal Reserve does not disapprove of such actions within
10 business days (or such longer period as may be required by
Federal Reserve order or by other supervisory action) from the
date of such notice.
What Is a
Market Disruption Event?
A market disruption event is any one of a list of events the
occurrence and continuation of which excuses Citigroup from its
obligation to continuously use commercially reasonable efforts
to sell shares of its common stock. You can find a complete list
of market disruption events in Description of the Junior
Subordinated Debt Securities Alternative Payment
Mechanism on page 35.
What Is a
Supervisory Event?
A supervisory event shall occur if Citigroup notifies the
Federal Reserve of its intention to sell shares of its common
stock and use the proceeds of such sale to pay deferred interest
on the junior subordinated debt securities, and the Federal
Reserve disapproves of either of such actions. See
Description of the Junior Subordinated Debt
Securities Alternative Payment Mechanism on
page 35 for a complete description of a supervisory event.
The occurrence and continuation of a supervisory event will
excuse Citigroup from its obligation under the alternative
payment mechanism to continuously use commercially reasonable
efforts to sell shares of its common stock and to apply the net
proceeds of such sale to pay deferred interest on the junior
subordinated debt securities. During the occurrence and
continuation of a supervisory event, Citigroup will be permitted
to pay deferred interest using cash from any source (including
from the sale of preferred stock) without breaching its
obligations under the indenture, but is not obligated to do so.
When Will
the Junior Subordinated Debt Securities Mature?
The junior subordinated debt securities will mature
on ,
20 . See Description of the Junior Subordinated
Debt Securities General on page 30.
When Can
Citigroup Capital Redeem the Capital Securities?
Citigroup Capital will redeem the outstanding capital securities
on the dates and to the extent the junior subordinated debt
securities are redeemed. Thus, some or all of the capital
securities may be redeemed at the option of Citigroup on one or
more occasions any time on or
after ,
20 . See Risk Factors You Should
Not Rely on the Distributions From the Capital Securities
Through Their Maturity Date They May Be Redeemed at
the Option of Citigroup on page 9. The capital
securities also may be redeemed, in whole or in part, at any
time if certain changes in tax, investment company or bank
regulatory law or interpretations
3
occur and certain other conditions are satisfied. Under current
rules and regulations, Citigroup would need regulatory approval
to redeem the capital securities prior to the maturity date of
the junior subordinated debt securities. See Risk
Factors You Should Not Rely on the Distributions
From the Capital Securities Through Their Maturity
Date They May Be Redeemed at Any Time If Certain
Changes in Tax, Investment Company or Bank Regulatory Law
Occur on page 9 and Description of the Capital
Securities Special Event Redemption on
page 20. Any redemption of the junior subordinated debt
securities prior
to ,
20 will be subject to the terms of the capital
replacement covenant. See Risk Factors
Citigroups Right to Redeem the Junior Subordinated Debt
Securities Is Limited by the Capital Replacement Covenant
on page 9.
Citigroup Capital must redeem all of the outstanding capital
securities
on ,
20 .
What Is
the Capital Replacement Covenant?
Citigroup will covenant, for the benefit of certain holders of
long-term indebtedness that is senior to the junior subordinated
debt securities, that it will not repay, redeem or purchase, and
it will cause its subsidiaries, including Citigroup Capital, not
to repay, redeem or purchase the capital securities prior
to ,
20 , unless:
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during the 6 months prior to such repayment, redemption or
purchase it has received net proceeds in the amounts specified
in the capital replacement covenant from the sale of securities
that have equity-like characteristics that are the same as or
more equity-like than the applicable characteristics of the
capital securities at the time of such repayment, redemption or
purchase; and
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Citigroup has obtained the prior concurrence or approval of the
Federal Reserve prior to effecting such redemption, if such
concurrence or approval is required by the Federal Reserve.
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For a more detailed description of the capital replacement
covenant see Certain Terms of the Capital Replacement
Covenant on page 51.
Who Can
Enforce the Capital Replacement Covenant?
Only the holders of the designated long-term indebtedness will
have the right to enforce the capital replacement covenant. This
means that you, as a holder of the capital securities will have
no right to enforce it and this covenant will not be a part of
the indenture governing the junior subordinated debt securities
or the declaration of trust of Citigroup Capital.
What Is
Citigroups Guarantee of the Capital Securities?
Citigroups guarantee of the capital securities consists of:
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its obligations to make payments on the junior subordinated debt
securities;
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its obligations under the capital securities guarantee; and
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its obligations under the amended and restated
declaration of trust of Citigroup Capital, which sets forth the
terms of Citigroup Capital.
Citigroup has irrevocably guaranteed that if funds are available
to Citigroup Capital but, for any reason, Citigroup Capital does
not make the distribution or redemption payment to the holders
of the capital securities, then Citigroup will make the payments
directly to the holders of the capital securities. The guarantee
does not cover payments when Citigroup Capital does not have
sufficient available funds to make payments on the capital
securities.
Citigroups obligations under the guarantee are
subordinated as described under Description of the
Guarantee Status of the Guarantee on
page 48.
4
What Is
the Anticipated U.S. Federal Income Tax Treatment of the
Capital Securities?
In connection with the issuance of the capital securities,
Skadden, Arps, Slate, Meagher & Flom LLP, special tax
counsel to Citigroup, will render its opinion that, while there
is no authority directly on point and the issue is not free from
doubt, the junior subordinated debt securities will be treated
for United States federal income tax purposes as indebtedness of
Citigroup. This opinion is subject to certain customary
conditions. By investing in the capital securities, each
beneficial owner of capital securities agrees to treat the
subordinated debentures as debt for U.S. federal income tax
purposes.
Under that treatment, interest payments on the junior
subordinated debt securities will be taxable to
U.S. holders as ordinary interest income at the time that
such payments are accrued or are received (in accordance with
such holders method of tax accounting). If a deferral of
an interest payment occurs, holders will be required to accrue
income for U.S. federal income tax purposes in an amount
equal to the accumulated interest on the junior subordinated
debt securities, in the form of original issue discount, even
though cash distributions are deferred and even though such
holders may be cash basis taxpayers. See United States
Federal Income Tax Considerations.
When
Could the Junior Subordinated Debt Securities Be Distributed to
You?
Citigroup has the right to dissolve Citigroup Capital at any
time, subject to prior approval of the Federal Reserve, if
required. If Citigroup terminates Citigroup Capital and does not
cause the capital securities to be redeemed for cash (subject to
the prior approval of the Federal Reserve and pursuant to the
terms of the Capital Replacement Covenant), Citigroup Capital
will redeem the capital securities by distributing the junior
subordinated debt securities to holders of the capital
securities and the common securities on a ratable basis. If the
junior subordinated debt securities are distributed, Citigroup
will use its best efforts to list the junior subordinated debt
securities on the New York Stock Exchange (the NYSE)
or any other exchange on which the capital securities are then
listed.
Will the
Capital Securities Be Listed on a Stock Exchange?
Application will be made to list the capital securities on the
NYSE. If approved for listing, Citigroup Capital expects the
capital securities will begin trading on the NYSE within
30 days after they are first issued.
Will
Holders of the Capital Securities Have Any Voting
Rights?
Generally, the holders of the capital securities will not have
any voting rights. See Description of the Capital
Securities Voting Rights on page 24.
How Will
the Junior Subordinated Debt Securities Rank?
Citigroups obligations under the junior subordinated debt
securities and the guarantee will rank junior to all of
Citigroups senior indebtedness (as defined on
page 31), including junior subordinated debt securities
issued under the prior junior subordinated debt
indentures (as defined on page 31) in connection
with the issuance of trust preferred securities and
pari
passu
with Citigroups junior subordinated debt
securities issued in connection with other enhanced trust
preferred securities, trade accounts payable and other
liabilities as described in Description of the Junior
Subordinated Debt Securities Subordination on
page 30. This means that Citigroup cannot make any payments
on the junior subordinated debt securities or the guarantee if
it defaults on a payment of senior indebtedness and does not
cure the default within the applicable grace period or if the
senior indebtedness becomes immediately due because of a default
and has not yet been paid in full. In addition, Citigroups
obligations under the junior subordinated debt securities and
the guarantee will be structurally subordinated to all existing
and future liabilities of Citigroups subsidiaries.
Is the
Amount of Deferred Interest You May Claim in Bankruptcy
Limited?
If certain bankruptcy, liquidation or reorganization events
occur with respect to Citigroup, the holders of the junior
subordinated debt securities have no claim under the terms of
the indenture for payment of deferred
5
interest on the junior subordinated debt securities to the
extent such deferred interest (including compounded interest)
exceeds 25% of the then outstanding aggregate principal amount
of the junior subordinated debt securities. See
Description of the Junior Subordinated Debt
Securities Limitation on Claims with Respect to
Certain Deferred Interest Obligations on page 32.
In What
Form Will the Capital Securities Be Issued?
The capital securities will be represented by one or more global
securities that will be deposited with and registered in the
name of The Depository Trust Company or its nominee. This means
that you will not receive a certificate for your capital
securities and that your broker will maintain your position in
the capital securities. Citigroup Capital expects that the
capital securities will be ready for delivery through DTC on or
about ,
20 .
6
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, in each case for each of the five most
recent fiscal years.
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Year Ended December 31,
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2006
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2005
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2004
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2003
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2002
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Ratio of income to fixed charges
(excluding interest on deposits)
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1.82
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2.25
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2.65
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3.42
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2.52
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Ratio of income to fixed charges
(including interest on deposits)
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1.52
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1.79
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2.01
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2.43
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1.90
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Ratio of income to combined fixed
charges including preferred stock dividends (excluding interest
on deposits)
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1.81
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2.24
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2.63
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3.39
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2.50
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Ratio of income to combined fixed
charges including preferred stock dividends (including interest
on deposits)
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1.51
|
|
|
|
1.79
|
|
|
|
2.00
|
|
|
|
2.41
|
|
|
|
1.89
|
|
7
RISK
FACTORS
Your investment in the capital securities will involve several
risks. You should carefully consider the following discussion of
risks, and the other information in this prospectus, before
deciding whether an investment in the capital securities is
suitable for you.
Citigroup
Is Not Required to Pay You Under the Guarantee and the Junior
Subordinated Debt Securities Unless It First Makes Other
Required Payments.
Citigroups obligations under the junior subordinated debt
securities and the guarantee will rank junior to all of
Citigroups senior indebtedness as described on
page 31. This means that Citigroup cannot make any payments
on the junior subordinated debt securities or the guarantee if
it defaults on a payment of senior indebtedness and does not
cure the default within the applicable grace period or if the
senior indebtedness becomes immediately due because of a default
and has not yet been paid in full.
In the event of the bankruptcy, liquidation or dissolution of
Citigroup, its assets would be available to pay obligations
under the junior subordinated debt securities and the guarantee
only after Citigroup made all payments on its senior
indebtedness.
In addition, Citigroups obligations under the junior
subordinated debt securities and the guarantee will be
structurally subordinated to all existing and future
liabilities of Citigroups subsidiaries. This means that in
the event of an insolvency, liquidation, bankruptcy or other
reorganization of any subsidiary, holders of the junior
subordinated debt securities will be creditors of Citigroup only
and will have no direct claim against any such subsidiary but
may only recover by virtue of Citigroups equity interest.
As a result, all existing and future liabilities of
Citigroups subsidiaries, including claims of lessors under
capital and operating leases, trade creditors and holders of
preferred stock of such subsidiaries have the right to be
satisfied in full prior to receipt by Citigroup of any payment
as a stockholder of its subsidiaries.
Neither the capital securities, the junior subordinated debt
securities nor the guarantee limit the ability of Citigroup and
its subsidiaries to incur additional indebtedness, including
indebtedness that ranks senior in priority of payment to the
junior subordinated debt securities and the guarantee. See
Description of Guarantee Status of the
Guarantee and Description of the Junior Subordinated
Debt Securities Subordination on pages 48
and 31, respectively.
Citigroup
Is Not Required to Pay You Under the Guarantee If Citigroup
Capital Does Not Have Cash Available.
The ability of Citigroup Capital to make payments on the capital
securities is solely dependent upon Citigroup making the related
payments on the junior subordinated debt securities when due.
If Citigroup defaults on its obligations to make payments on the
junior subordinated debt securities, Citigroup Capital will not
have sufficient funds available to make payments on the capital
securities. In those circumstances, you will not be able to rely
upon the guarantee for payment of these amounts. Your options if
this happens are discussed on page 17.
Deferral
of Distributions Would Have Adverse Tax Consequences for You and
May Adversely Affect the Trading Price of the Capital
Securities.
If distributions on the capital securities are deferred, you
will be required to recognize interest income for United States
federal income tax purposes in respect of your ratable share of
the interest on the junior subordinated debt securities held by
Citigroup Capital before you receive any cash distributions
relating to this interest. In addition, you will not receive
this cash if you sold the capital securities before the end of
any extension period or before the record date relating to
distributions that are paid.
Citigroup has no current intention of deferring interest
payments on the junior subordinated debt securities and believes
that such deferral is a remote possibility. However, if
Citigroup exercises its right in the future, the capital
securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest on
8
the junior subordinated debt securities. If you sell the capital
securities during an extension period, you may not receive the
same return on investment as someone else who continues to hold
the capital securities. In addition, the existence of
Citigroups right to defer payments of interest on the
junior subordinated debt securities may mean that the market
price for the capital securities, which represent an undivided
beneficial interest in the junior subordinated debt securities,
may be more volatile than other securities that are not subject
to such a deferral right.
See United States Federal Income Tax Considerations
on page 52 for more information regarding the tax
consequences of purchasing, holding and selling the capital
securities.
You
Should Not Rely on the Distributions from the Capital Securities
Through Their Maturity Date They May Be Redeemed at
the Option of Citigroup.
The capital securities may be redeemed, in whole, at any time,
or in part, from time to time, on or
after ,
20 at a redemption price equal to
$ per capital security plus any
accrued and unpaid distributions to the redemption date. You
should assume that this redemption option will be exercised if
Citigroup is able to refinance at a lower interest rate or it is
otherwise in the interest of Citigroup to redeem the junior
subordinated debt securities. If the junior subordinated debt
securities are redeemed, Citigroup Capital must redeem the
capital securities and the common securities having an aggregate
liquidation amount equal to the aggregate principal amount of
junior subordinated debt securities to be redeemed. See
Description of the Capital Securities
Redemption of Trust Securities and Description
of the Junior Subordinated Debt Securities Optional
Redemption on pages 19 and 33, respectively.
You
Should Not Rely on the Distributions from the Capital Securities
Through Their Maturity Date They May Be Redeemed at
Any Time If Certain Changes in Tax, Investment Company or Bank
Regulatory Law Occur.
If certain changes, which are more fully described below, in
tax, investment company or bank regulatory law or
interpretations occur and are continuing, and certain other
conditions that are more fully described below are satisfied,
the capital securities could be redeemed by Citigroup Capital
within 90 days of the event at a redemption price equal to
$ per security plus any
accrued and unpaid distributions. See Description of the
Capital Securities Special Event Redemption
and Description of the Capital Securities
Distribution of the Junior Subordinated Debt Securities on
pages 19 and 20, respectively.
Citigroups
Right to Redeem the Junior Subordinated Debt Securities Before
the Maturity Date Is Limited by the Capital Replacement
Covenant.
By their terms, the junior subordinated debt securities may be
redeemed by Citigroup, in whole or in part, before the maturity
date, on one or more occasions, on or
after ,
20 or at any time if certain changes occur in tax or
investment company laws and regulations or in the treatment of
the capital securities as Tier 1 capital of Citigroup under
the capital guidelines of the Federal Reserve. However, the
capital replacement covenant, which is described under
Certain Terms of the Capital Replacement Covenant on
page 51, will limit Citigroups right to redeem the
junior subordinated debt securities. In the capital replacement
covenant, Citigroup will covenant, for the benefit of holders of
a designated series of its indebtedness that ranks senior to the
junior subordinated debt securities, that it will not redeem or
purchase, and it will cause its subsidiaries, including
Citigroup Capital, not to redeem or purchase junior subordinated
debt securities or capital securities on or
before ,
20 , unless during the
6-month
period prior to redemption date, it has received proceeds from
the sale of replacement capital securities.
Accordingly, there could be circumstances in which it would be
in the interest of both you and Citigroup that some or all of
the capital securities be redeemed, and sufficient cash is
available for that purpose, but Citigroup will be restricted
from doing so because it was not able to obtain proceeds from
the sale of replacement capital securities.
9
The
Indenture Limits Citigroups Source of Funds to Pay
Deferred Interest to Proceeds of Common Stock or Qualified
Warrant Sales, Except in Limited Circumstances.
The indenture provides that, except in limited circumstances, if
Citigroup elects to defer interest payments on the junior
subordinated debt securities, resulting in a corresponding
deferral of distributions on the capital securities, Citigroup
will be limited to paying deferred interest from the proceeds of
sales of its common stock and/or, at its option, its qualified
warrants unless the Federal Reserve has disapproved of such
issuance or disapproved of the use of proceeds of such issuance
to pay deferred interest. See Description of the Junior
Subordinated Debt Securities Alternative Payment
Mechanism on page 34. Citigroup may not be able to
sell sufficient shares of its common stock or warrants to
generate proceeds required to fund its deferred interest
obligations, either within any particular time period or at all.
Citigroups ability to market its common stock or warrants
will depend on a variety of factors both within and beyond its
control, including its financial performance, the strength of
the equity markets generally, the relative demand for stock of
companies within its industry and dilution caused by prior stock
offerings or issuances. Moreover, Citigroup may encounter
difficulties in successfully marketing its common stock and
qualified warrants, particularly during times when it is subject
to the restrictions on dividends as a result of the deferral of
interest. If Citigroup does not sell sufficient common stock or
qualified warrants to fund deferred interest payments in these
circumstances, it will not be permitted to pay deferred interest
to Citigroup Capital and, accordingly, no payment of
distributions may be made on the capital securities, even if
Citigroup has cash available from other sources.
The
Indenture Limits Citigroups Obligation to Raise Proceeds
from the Sale of Common Stock or Qualified Warrants to Pay
Deferred Interest During the First Five Years of an Extension
Period.
During the first five years of an extension period, Citigroup
has no obligation to pay deferred interest unless it pays
current interest. Additionally, the indenture limits
Citigroups obligation to raise proceeds from the sale of
shares of common stock or qualified warrants to pay deferred
interest prior to the fifth anniversary of the commencement of
an extension period in excess of an amount we refer to as the
APM maximum obligation. Once Citigroup reaches the
APM maximum obligation for an extension period, Citigroup will
no longer be obligated to sell common stock or qualified
warrants to pay deferred interest unless such deferral extends
beyond the date which is five years following the commencement
of the relevant extension period. Although Citigroup has the
right to sell shares of common stock or qualified warrants in
excess of the APM maximum obligation during an extension period,
Citigroup has no obligation to do so. See Description of
the Junior Subordinated Debt Securities Alternative
Payment Mechanism on page 34.
The
Indenture Limits the Number of Shares of Common Stock that
Citigroup May Sell to Pay Deferred Interest.
The indenture limits the amount of Citigroup common stock that
Citigroup is permitted to sell to pay deferred interest to the
then current share cap amount. See Description of the
Junior Subordinated Debt Securities Alternative
Payment Mechanism on page 34. If the then current
share cap amount equals million shares and the number of shares
of Citigroup common stock that Citigroup needs to sell in order
to pay deferred interest in full exceeds this share cap amount.
Citigroup may continue to defer interest in excess of the
proceeds of sales of Citigroup common stock up to the share cap
amount. Such deferral will not constitute an event of default
unless it extends beyond the date which is ten years following
the first interest payment date on which Citigroup deferred
interest.
Citigroup
Must Notify the Federal Reserve Before Paying Deferred Interest
with Proceeds of Common Stock or Qualified Warrant
Sales.
The indenture provides that Citigroup must notify the Federal
Reserve (1) of the commencement of any extension period,
(2) of the fifth anniversary of the commencement of an
extension period that is continuing or earlier payment of
current interest during an extension period, and (3) of its
intention to sell shares of its common stock
and/or
qualified warrants and to apply the net proceeds of such sale to
pay deferred interest at least 25 business days in advance
of the payment date (or such longer period as may be required by
Federal Reserve order or other supervisory action). In addition,
under the indenture, Citigroup may only sell its
10
common stock or qualified warrants and apply the net proceeds of
such sale to pay deferred interest on the junior subordinated
debt securities if the Federal Reserve has not disapproved of
either of these actions within 10 business days (or such
longer period as may be required by Federal Reserve order or by
other supervisory action) of the notice pursuant to
clause (3) above or has withdrawn its prior disapproval.
Moreover, if Citigroup has notified the Federal Reserve of its
intention to sell its common stock and apply the proceeds to pay
deferred interest and the Federal Reserve has disapproved of
either of these actions, such request and disapproval will
constitute a supervisory event that will excuse Citigroup from
its obligation to continuously use commercially reasonable
efforts to sell its common stock and to apply proceeds from such
sale to pay deferred interest on the junior subordinated debt
securities.
The
Federal Reserve May Permit Citigroup to Sell Stock While
Prohibiting Citigroup from Paying Deferred Interest.
The occurrence and continuation of a supervisory event will
excuse Citigroup from its obligation to continuously use
commercially reasonable efforts to sell shares of its common
stock and to apply the net proceeds of such sale to pay deferred
interest on the junior subordinated debt securities. A
supervisory event will exist at any time until the tenth
anniversary of the commencement of any extension period if
Citigroup has notified the Federal Reserve of its intention both
(1) to sell shares of its common stock and (2) to
apply the net proceeds of such sale to pay deferred interest on
the junior subordinated debt securities and the Federal Reserve
has disapproved of either of these actions. Because a
supervisory event will exist if the Federal Reserve disapproves
of either of these actions, the Federal Reserve will be able,
without triggering a default under the indenture, to permit
Citigroup to sell shares of its common stock but to prohibit
Citigroup from applying the proceeds to pay deferred interest on
the junior subordinated debt securities.
If You
Waive Citigroups Covenants to Pay Deferred Interest Only
with Proceeds from the Sale of Common Stock or Qualified
Warrants, Citigroups Credit Rating May Be Negatively
Affected.
The indenture contains covenants that permit Citigroup to pay
deferred interest only with proceeds from the sale of its common
stock or qualified warrants, except in limited circumstances.
These covenants may be amended, and compliance with these
covenants may be waived, solely by the holders of a majority of
the liquidation amount of outstanding capital securities, and no
holder of Citigroups senior indebtedness will have the
right to enforce these covenants. Although, in the short term,
you may have an economic incentive to waive these covenants in
order to receive deferred interest, if such covenants are waived
and Citigroup pays deferred interest with funds received from
any other source, its credit rating may be negatively affected.
A negative effect on Citigroups credit rating may have an
adverse effect on its business or financial condition, which in
turn could have an adverse effect on its ability to pay future
interest on the junior subordinated debt securities.
Upon the
Occurrence of Certain Bankruptcy, Liquidation and Reorganization
Events with Respect to Citigroup, Amounts Attributable to
Deferred and Unpaid Interest May Be Limited.
If certain bankruptcy, liquidation or reorganization events
occur with respect to Citigroup, the holders of the junior
subordinated debt securities have no claim under the terms of
the indenture for payment of deferred interest on the junior
subordinated debt securities to the extent such deferred
interest (including compounded interest) exceeds 25% of the then
outstanding aggregate principal amount of the junior
subordinated debt securities. See Description of the
Junior Subordinated Debt Securities Limitation on
Claims with Respect to Certain Deferred Interest
Obligations on page 32.
There
Could Be an Adverse Tax Consequence to You If Citigroup
Terminates Citigroup Capital and Distributes Junior Subordinated
Debt Securities to Holders.
Citigroup has the right to terminate Citigroup Capital at any
time, so long as it obtains any required regulatory approval. If
Citigroup decides to exercise its right to terminate Citigroup
Capital and does not cause the capital securities to be redeemed
for cash (subject to the prior approval of the Federal Reserve
and
11
pursuant to the terms of the Capital Replacement Covenant),
Citigroup Capital will redeem the capital securities and common
securities by distributing the junior subordinated debt
securities to holders of the capital securities and common
securities on a ratable basis.
Under current United States federal income tax law, a
distribution of junior subordinated debt securities to you on
the dissolution of Citigroup Capital would not be a taxable
event to you. However, if Citigroup Capital is characterized for
United States federal income tax purposes as an association
taxable as a corporation at the time it is dissolved or if there
is a change in law, the distribution of junior subordinated debt
securities may be a taxable event to you.
The
Federal Reserve May Be Able to Restrict the Ability of Citigroup
Capital to Make Distributions on or Redeem the Capital
Securities.
The Federal Reserve will have the right to supervise Citigroup
Capital and its activities because it is a subsidiary of
Citigroup. Under certain circumstances, including any
determination that Citigroups relationship to Citigroup
Capital would result in an unsafe and unsound banking practice,
the Federal Reserve has the authority to issue orders that could
restrict the ability of Citigroup Capital to make distributions
on or to redeem the capital securities.
There Can
Be No Assurance as to the Market Prices for the Capital
Securities or the Junior Subordinated Debt Securities;
Therefore, You May Suffer a Loss.
Citigroup Capital and Citigroup cannot give you any assurance as
to the market prices for the capital securities or the junior
subordinated debt securities that may be distributed in exchange
for capital securities. Accordingly, the capital securities that
an investor may purchase, whether pursuant to the offer made by
this prospectus or in the secondary market, or the junior
subordinated debt securities that a holder of capital securities
may receive in exchange for capital securities, may trade at a
discount to the price that the investor paid to purchase the
capital securities. As a result of the right to defer payments
on the capital securities, the market price of the capital
securities may be more volatile than the market prices of other
securities that are not subject to such a deferral right.
There May
Be No Trading Market for the Junior Subordinated Debt Securities
If Citigroup Capital Distributes Them to You.
Although Citigroup will use its best efforts to list the junior
subordinated debt securities on the NYSE, or any other exchange
on which the capital securities are then listed, if they are
distributed, Citigroup cannot assure you that the junior
subordinated debt securities will be approved for listing or
that a trading market will exist for those securities.
Because
You Have Limited Voting Rights, You Cannot Prevent the Citigroup
Capital Trustees from Taking Actions You May Not Agree
With.
You will have limited voting rights. In particular, except for
the limited exceptions described below, only Citigroup can elect
or remove any of the Citigroup Capital trustees. See
Description of the Capital Securities Voting
Rights on page 24.
You Have
Limited Remedies for Defaults Under the Indenture.
Although various events may constitute defaults under the
indenture, a default that is not an event of default and
acceleration will not trigger the acceleration of
principal and interest on the junior subordinated debt
securities. Such acceleration of principal and interest will
occur only upon Citigroups failure to pay in full all
interest accrued upon the conclusion of an extension period of
40 quarters (10 years) or as a result of specified events
of bankruptcy, insolvency, or reorganization of Citigroup. See
Description of the Junior Subordinated Debt
Securities Indenture Events of Default and
Acceleration on page 39.
12
WHERE YOU
CAN FIND MORE INFORMATION
As required by the Securities Act of 1933, Citigroup and
Citigroup Capital filed a registration statement
(No. 333-135163)
relating to the securities offered by this prospectus with the
Securities and Exchange Commission. This prospectus is a part of
that registration statement, which includes additional
information. Citigroup has filed the exhibits discussed in this
prospectus with the registration statement, and you should read
the exhibits carefully for provisions that may be important to
you.
Citigroup files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and
copy any document Citigroup files at the SECs public
reference room in Washington, D.C. You can also request
copies of these documents, upon payment of a duplicating fee, by
writing to the Public Reference Section of the SEC. Please call
the SEC at
1-800-SEC-0330
for further information on the public reference room. These SEC
filings are also available to the public from the SECs 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 with the SEC will automatically update the
information in this prospectus. In all cases, you should rely on
the later information over different information included in
this prospectus. Citigroup incorporates by reference the
documents listed below and any future filings made with the SEC
under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 (File
No. 1-09924):
(a) Annual Report on
Form 10-K
for the year ended December 31, 2006; and
(b) Current Reports on
Form 8-K
filed on January 9, 2007, January 19, 2007,
February 2, 2007, February 7, 2007, February 12,
2007, February 16, 2007, February 27, 2007,
March 1, 2007, March 6, 2007, March 7, 2007,
March 8, 2007, March 15, 2007, March 19, 2007,
April 11, 2007, April 16, 2007, April 17, 2007
and April 27, 2007.
All documents Citigroup files pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and before the later of (1) the completion of
the offering of the securities described in this prospectus and
(2) the date the broker-dealer subsidiaries of Citigroup
stop offering securities pursuant to this prospectus shall be
incorporated by reference in this prospectus from the date of
filing of such documents.
You may request a copy of these filings, at no cost, by writing
or telephoning Citigroup at the following address:
Citigroup Document Services
140 58th Street, Suite 7i
Brooklyn, NY 11220
(877) 936-2737
(toll free)
(718) 765-6514
(outside the U.S.)
You should only rely on the information provided in this
prospectus, as well as the information incorporated by
reference. Citigroup is not, and the underwriters are not,
making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should not assume
that the information in this prospectus or any documents
incorporated by reference is accurate as of any date other than
the date of the applicable document. Citigroups business,
financial condition, results of operations and prospects may
have changed since that date.
FORWARD-LOOKING
STATEMENTS
This prospectus and the information incorporated by reference in
this prospectus include forward-looking statements within the
meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. These forward-looking
statements are based on Citigroups managements
beliefs and assumptions and on information currently available
to Citigroups management. Forward-looking statements
include information concerning
13
Citigroups possible or assumed future results of
operations and statements preceded by, followed by or that
include the words believes, expects,
anticipates, intends, plans,
estimates or similar expressions.
Forward-looking statements involve risks, uncertainties and
assumptions. Actual results may differ materially from those
expressed in these forward-looking statements. Factors that
could cause actual results to differ materially from these
forward-looking statements include, but are not limited to,
those discussed elsewhere in this prospectus and the documents
incorporated by reference in this prospectus. You should not put
undue reliance on any forward-looking statements. Citigroup does
not have any intention or obligation to update forward-looking
statements after it distributes this prospectus.
CITIGROUP
INC.
Citigroup is a diversified global financial services holding
company whose businesses provide a broad range of financial
services to consumer and corporate customers. Citigroup has more
than 200 million customer accounts and does business in
more than 100 countries. Citigroups activities are
conducted through the Global Consumer, Markets and Banking,
Global Wealth Management and Alternative Investments business
segments. Citigroups principal subsidiaries are Citibank,
N.A., Citigroup Global Markets Inc. and Grupo Financiero
Banamex, S.A. de C.V., each of which is a wholly-owned, indirect
subsidiary of Citigroup. Citigroup was incorporated in 1988
under the laws of the State of Delaware as a corporation with
perpetual duration. Citigroup is the issuer of the junior
subordinated debt securities.
Citigroup is a holding company and services its obligations
primarily with dividends and advances that it receives from
subsidiaries. Citigroups subsidiaries that operate in the
banking 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
and securities regulators. Citigroups subsidiaries may be
party to credit agreements that also may restrict their ability
to pay dividends. Citigroup currently believes that none of
these regulatory or contractual restrictions on the ability of
its subsidiaries to pay dividends will affect Citigroups
ability to service its own debt. Citigroup must also maintain
the required capital levels of a bank holding company before it
may pay dividends on its stock. Each of Citigroups major
operating subsidiaries finances its operations on a stand-alone
basis consistent with its capitalization and ratings.
Under the regulations of the Federal Reserve, a bank holding
company is expected to act as a source of financial strength for
its subsidiary banks. As a result of this regulatory policy, the
Federal Reserve might require Citigroup to commit resources to
its subsidiary banks when doing so is not otherwise in the
interests of Citigroup or its shareholders or creditors.
Citigroups principal office is located at 399 Park Avenue,
New York, NY 10043, and its telephone number is
(212) 559-1000.
USE OF
PROCEEDS
All of the net proceeds from the sale of the capital securities
will be invested by Citigroup Capital in junior subordinated
debt securities of Citigroup. Citigroup will use the proceeds
from the sale of the junior subordinated debt securities to
Citigroup Capital for general corporate purposes, which may
include:
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funding the business of its operating units;
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funding investments in, or extensions of credit or capital
contributions to, its subsidiaries;
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financing of possible acquisitions or business
expansion, and
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lengthening the average maturity of liabilities, which means
that it could reduce its short-term liabilities or refund
maturing indebtedness.
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Citigroup expects to incur additional indebtedness in the future
to fund its business. Citigroup or one of its subsidiaries may
enter into a swap agreement in connection with the sale of the
junior subordinated debt securities and may earn additional
income from that transaction.
14
DESCRIPTION
OF THE CAPITAL SECURITIES
The capital securities will be issued pursuant to the terms of
the amended and restated declaration of trust of Citigroup
Capital. The declaration will be qualified as an indenture under
the Trust Indenture Act of 1939. The institutional trustee, The
Bank of New York, will act as indenture trustee under the
declaration for purposes of compliance with the provisions of
the Trust Indenture Act. The terms of the capital securities
will include those stated in the declaration and those made part
of the declaration by the Trust Indenture Act. The
following summary of the material terms and provisions of the
capital securities is not intended to be complete and is
qualified by the declaration, the Statutory Trust Act of
the State of Delaware and the Trust Indenture Act. A form
of the declaration is filed as an exhibit to the registration
statement of which this prospectus is a part.
General
The declaration authorizes the regular trustees to issue on
behalf of Citigroup Capital the common securities and the
capital securities. These trust securities represent undivided
beneficial interests in the assets of Citigroup Capital. All of
the common securities will be owned, directly or indirectly, by
Citigroup. The common securities rank equally, and payments will
be made on the common securities on a ratable basis, with the
capital securities. If a default under the declaration occurs
and continues, however, the rights of the holders of the common
securities to receive payment of periodic distributions and
payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the capital
securities. The declaration does not permit the issuance by
Citigroup Capital of any securities other than the trust
securities or the incurrence of any indebtedness by Citigroup
Capital.
Pursuant to the declaration, the institutional trustee will hold
title to the junior subordinated debt securities purchased by
Citigroup Capital for the benefit of the holders of the trust
securities. The payment of distributions out of money held by
Citigroup Capital, and payments upon redemption of the capital
securities or liquidation of Citigroup Capital out of money held
by Citigroup Capital, are guaranteed by Citigroup to the extent
described under Description of Guarantee. The
guarantee will be held by The Bank of New York, the guarantee
trustee, for the benefit of the holders of the capital
securities. The guarantee does not cover payment of
distributions when Citigroup Capital does not have sufficient
available funds to pay such distributions. In such event, the
remedy of a holder of capital securities is to:
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vote to direct the institutional trustee to enforce the
institutional trustees rights under the junior
subordinated debt securities; or
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if the failure of Citigroup Capital to pay distributions is
attributable to the failure of Citigroup to pay interest or
principal on the junior subordinated debt securities, sue
Citigroup, on or after the respective due dates specified in the
junior subordinated debt securities, for enforcement of payment
to such holder of the principal or interest on the junior
subordinated debt securities having a principal amount equal to
the aggregate liquidation amount of the capital securities of
such holder.
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Distributions
Distributions on the capital securities will be fixed at a rate
per annum of % of the stated liquidation amount of
$ per capital security.
Distributions not paid when due, or when they would be due if
not for any extension period or default by Citigroup on the
junior subordinated debt securities, will themselves accumulate
additional interest at the annual rate of % thereof
compounded quarterly. When this prospectus refers to any payment
of distributions, distributions include any such interest
payable unless otherwise stated. The amount of distributions
payable for any period will be computed on the basis of a
360-day
year
of twelve
30-day
months.
Distributions on the capital securities will be cumulative, will
accrue from and
including ,
20 and will be payable quarterly in arrears
on , , and
of each year,
beginning ,
20 . When, as and if available for payment,
distributions will be made by the institutional trustee, except
as otherwise described below.
15
The distribution rate and the distribution payment dates and
other payment dates for the capital securities will correspond
to the interest rate and interest payment dates and other
payment dates on the junior subordinated debt securities.
Deferral of Distributions.
Citigroup has the
right under the indenture to defer interest payments on the
junior subordinated debt securities for an extension period not
exceeding 40 consecutive quarterly interest periods, subject to
certain conditions, during which no interest shall be due and
payable. A deferral of interest payments cannot extend, however,
beyond the maturity date of the junior subordinated debt
securities. An extension period begins on the first interest
payment date on which interest has been deferred and terminates
on the first day thereafter on which all amounts deferred,
including accrued interest thereon, have been repaid in cash. As
a consequence of Citigroups extension of the interest
payment period, distributions on the capital securities would be
deferred during any such extended interest payment period.
During an extension period, the amount of distributions due to
you will continue to accumulate and such deferred distributions
will themselves accrue interest. In the event that Citigroup
exercises its right to extend an interest payment period, then:
(1) Citigroup and its subsidiaries shall not declare or pay
any dividend on, make any distributions relating to, or redeem,
purchase, acquire or make a liquidation payment relating to, any
of its capital stock or make any guarantee payment relating
thereto other than
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purchases, redemptions or other acquisitions of shares of
capital stock of Citigroup in connection with any employment
contract, benefit plan or other similar arrangement with or for
the benefit of employees, officers, directors or consultants;
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purchases of shares of common stock of Citigroup pursuant to a
contractually binding requirement to buy stock existing prior to
the commencement of the extension period, including under a
contractually binding stock repurchase plan;
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as a result of an exchange or conversion of any class or series
of Citigroups capital stock for any other class or series
of Citigroups capital stock;
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the purchase of fractional interests in shares of
Citigroups capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being
converted or exchanged; or
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purchase of Citigroups capital stock in connection with
the distribution thereof; and
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(2) Citigroup and its subsidiaries shall not make any
payment of interest, principal or premium on, or repay, purchase
or redeem, any debt securities or guarantees issued by Citigroup
that rank equally with or junior to the junior subordinated debt
securities, other than
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any payment of current or deferred interest on securities that
rank equally with the junior subordinated debt securities that
is made
pro rata
to the amounts due on such securities
(including the junior subordinated debt securities), provided
that any such payments of deferred interest are made in
accordance with the fifth full paragraph on page 37 under
Alternative Payment Mechanism; and
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any payments of deferred interest on securities that rank
equally with the junior subordinated debt securities that, if
not made, would give rise to an event of default permitting
acceleration of such securities.
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These restrictions, however, will not apply to any stock
dividends paid by Citigroup where the dividend stock is the same
stock as that on which the dividend is being paid. In addition,
Citigroup may pay current interest at any time with cash from
any source.
If any extension period lasts longer than one year, unless
required to do so by the Federal Reserve and subject to the
exceptions listed in the preceding paragraph, Citigroup will
covenant that it will not and will not permit its subsidiaries
to, purchase any of its common stock for a one-year period
following the payment of all deferred interest on the junior
subordinated debt securities pursuant to the alternative payment
mechanism
16
described in Description of the Junior Subordinated Debt
Securities Alternative Payment Mechanism below.
Prior to the termination of any extension period, Citigroup may
further extend such extension period, so long as such extension
period, together with all such previous extension periods, do
not exceed 40 consecutive quarterly interest periods. An
extension period cannot extend, however, beyond the maturity
date of the junior subordinated debt securities.
Upon the termination of any extension period and the payment of
all amounts then due, Citigroup may commence a new extension
period, which must comply with the above requirements.
Consequently, there could be several extension periods of
varying lengths throughout the term of the junior subordinated
debt securities. The regular trustees shall give the holders of
the capital securities notice of any extension period upon their
receipt of notice thereof from Citigroup. If distributions are
deferred, the deferred distributions and accrued interest on
such distributions will be paid to holders of record of the
capital securities as they appear on the securities register of
Citigroup Capital on the record date immediately preceding the
termination of the related extension period. See
Description of the Junior Subordinated Debt
Securities Interest and
Option to Extend Interest Payment Period.
Payment of Distributions.
Distributions
on the capital securities will be payable to the extent that
Citigroup Capital has funds available for the payment of such
distributions. Citigroup Capitals funds available for
distribution to the holders of the capital securities will be
limited to payments received from Citigroup on the junior
subordinated debt securities. The payment of distributions out
of monies held by Citigroup Capital is guaranteed by Citigroup
to the extent set forth under Description of
Guarantee. See Description of the Junior
Subordinated Debt Securities.
Distributions on the capital securities will be payable to the
holders named on the securities register of Citigroup Capital at
the close of business on the relevant record dates. As long as
the capital securities remain in book-entry only form, the
record date will be one business day before the distribution
dates. Such distributions will be paid through the institutional
trustee who will hold amounts received in respect of the junior
subordinated debt securities in the property account for the
benefit of the holders of the trust securities. Unless any
applicable laws and regulations and the provisions of the
declaration state otherwise, each such payment will be made as
described under Book-Entry Only Issuance
below.
In the event that the capital securities do not continue to
remain in book-entry only form, the relevant record dates will
conform to the rules of any securities exchange on which the
capital securities are listed and, if none, the regular trustees
will have the right to select relevant record dates, which will
be more than 14 days but less than 60 days prior to
the relevant payment dates. In the event that any date on which
distributions are to be made on the capital securities is not a
business day, then payment of the distributions payable on such
date will be made on the next succeeding day that is a business
day, and without any interest or other payment in respect of any
such delay. However, if such next business day is in the next
succeeding calendar year, such payment shall be made on the
immediately preceding business day, in each case with the same
force and effect as if made on such date. A business
day means any day other than Saturday, Sunday or any other
day on which banking institutions in New York City are permitted
or required by any applicable law to close.
Redemption
of Trust Securities
The capital securities have no stated maturity date but will be
redeemed upon the maturity date of the junior subordinated debt
securities, or earlier on the dates and to the extent the junior
subordinated debt securities are redeemed. See Description
of the Junior Subordinated Debt Securities Optional
Redemption. Some or all of the capital securities may be
redeemed at the option of Citigroup Capital on one or more
occasions at any time on or
after ,
20 . The capital securities may also be redeemed, in
whole or in part, at any time upon the occurrence of a Tax
Event, an Investment Company Event or a Regulatory Capital
Event. Citigroup must redeem all of the outstanding capital
securities
on ,
20 , the maturity date. See Description of the
Junior Subordinated Debt Securities General.
Any redemption of the junior subordinated debt securities prior
to the termination of the capital replacement covenant will be
subject to the terms of the capital replacement covenant.
17
If then required, Citigroup will obtain the concurrence or
approval of the Federal Reserve before exercising its redemption
rights described in the preceding paragraph.
Upon the maturity of the junior subordinated debt securities,
the proceeds of their repayment will simultaneously be applied
to redeem all outstanding trust securities at the redemption
price. Upon the redemption of the junior subordinated debt
securities, whether in whole or in part, either at the option of
Citigroup or pursuant to a Tax Event, an Investment Company
Event or a Regulatory Capital Event, Citigroup Capital will use
the cash it receives upon the redemption to redeem trust
securities having an aggregate liquidation amount equal to the
aggregate principal amount of the junior subordinated debt
securities so redeemed at the redemption price. Before such
redemption, holders of trust securities will be given not less
than 30 or more than 60 days notice. In the event
that fewer than all of the outstanding capital securities are to
be redeemed, the capital securities will be redeemed on a
ratable basis as described under Book-Entry
Only Issuance below. See Special Event
Redemption and Description of the Junior
Subordinated Debt Securities Optional
Redemption. If a partial redemption of the capital
securities resulting from a partial redemption of the junior
subordinated debt securities would result in a delisting of the
capital securities, Citigroup may only redeem the junior
subordinated debt securities in whole.
Special
Event Redemption
Tax Event means that the regular trustees will have
received an opinion of a nationally recognized independent tax
counsel experienced in such matters which states that, as a
result of any:
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amendment to, or change (including any announced prospective
change) in, the laws or associated regulations of the United
States or any political subdivision or taxing authority of the
United States; or
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amendment to, or change in, an interpretation or application of
such laws or regulations by any legislative body, court,
governmental agency or regulatory authority, including the
enactment of any legislation and the publication of any judicial
decision or regulatory determination on or after the date of
this prospectus,
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there is more than an insubstantial risk that:
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Citigroup Capital would be subject to United States federal
income tax relating to interest accrued or received on the
junior subordinated debt securities;
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interest payable to Citigroup Capital on the junior subordinated
debt securities would not be deductible, in whole or in part, by
Citigroup for United States federal income tax purposes; or
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Citigroup Capital would be subject to more than a minimal amount
of other taxes, duties or other governmental charges.
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Investment Company Event means that the regular
trustees will have received an opinion of a nationally
recognized independent counsel experienced in such matters which
states that, as a result of the occurrence of a change in law or
regulation or a written change in interpretation or application
of law or regulation by any legislative body, court,
governmental agency or regulatory authority, there is more than
an insubstantial risk that Citigroup Capital is or will be
considered an investment company which is required
to be registered under the Investment Company Act of 1940 (the
1940 Act).
Regulatory Capital Event means that if Citigroup
determines, based on an opinion of counsel experienced in such
matters, who may be an employee of Citigroup or any of its
affiliates, that, as a result of
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any amendment to, clarification of or change (including any
announced prospective change) in applicable laws or regulations
or official interpretations thereof or policies with respect
thereto or
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any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
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there is more than an insubstantial risk that the capital
securities, or a portion thereof, will no longer constitute
Tier 1 capital of Citigroup or any bank holding company of
which Citigroup is a subsidiary for purposes of
18
the capital adequacy guidelines or policies of the Federal
Reserve provided, however, that the distribution of the junior
subordinated debt securities in connection with the liquidation
of Citigroup Capital shall not in and of itself constitute a
Regulatory Capital Event unless such liquidation shall have
occurred in connection with a Tax Event or an Investment Company
Event.
This prospectus refers to a Tax Event, an Investment Company
Event or a Regulatory Capital Event as a Special
Event. Provided that Citigroup obtains any required
regulatory approval, if a Special Event occurs and continues,
Citigroup may, upon not less than 30 nor more than
60 days notice, redeem the junior subordinated debt
securities, in whole or in part, for cash within 90 days
following the occurrence of such Special Event, subject to the
capital replacement covenant. Following such redemption, trust
securities with an aggregate liquidation amount equal to the
aggregate principal amount of the junior subordinated debt
securities so redeemed shall be redeemed by Citigroup Capital at
the redemption price on a ratable basis. If, however, at the
time there is available to Citigroup or Citigroup Capital the
opportunity to eliminate, within such
90-day
period, the Special Event by taking some ministerial action,
such as filing a form or making an election or pursuing some
other similar reasonable measure that will have no adverse
effect on Citigroup Capital, Citigroup or the holders of the
trust securities, then Citigroup or Citigroup Capital will
pursue such measure instead of redemption and provided further
that in the case of a Regulatory Event, a result of which is
that only a portion of the capital securities will not qualify
as Tier 1 capital of Citigroup, Citigroup may redeem an
amount of junior subordinated debt securities up to the amount
that would no longer qualify as Tier 1 capital.
Distribution
of the Junior Subordinated Debt Securities
Citigroup has the right to dissolve Citigroup Capital at any
time, subject to prior approval of the Federal Reserve, if
required. If Citigroup terminates Citigroup Capital and does not
cause the capital securities to be redeemed for cash (subject to
the prior approval of the Federal Reserve and pursuant to the
terms of the Capital Replacement Covenant), Citigroup Capital
will redeem the capital securities, after satisfaction of the
liabilities of creditors of Citigroup Capital as provided by
applicable law, by distributing the junior subordinated debt
securities to holders of the capital securities and the common
securities in an aggregate stated principal amount equal to the
aggregate stated liquidation amount of such securities then
outstanding.
If the junior subordinated debt securities are distributed to
the holders of the capital securities, Citigroup will use its
best efforts to cause the junior subordinated debt securities to
be listed on the NYSE or on such other exchange as the capital
securities are then listed.
After the date for any distribution of junior subordinated debt
securities upon dissolution of Citigroup Capital:
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the capital securities will no longer be deemed to be
outstanding;
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the securities depositary or its nominee, as the record holder
of the capital securities, will receive a registered global
certificate or certificates representing the junior subordinated
debt securities to be delivered upon such distribution; and
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any certificates representing capital securities not held by the
depositary or its nominee will be deemed to represent junior
subordinated debt securities having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with
an interest rate identical to the distribution rate of, and with
accrued and unpaid interest equal to accrued and unpaid
distributions on, such capital securities until such
certificates are presented to Citigroup or its agent for
transfer or reissuance.
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Redemption Procedures
Citigroup Capital may not redeem fewer than all of the
outstanding capital securities unless all accrued and unpaid
distributions have been paid on all capital securities for all
quarterly distribution periods terminating on or prior to the
date of redemption.
If (1) Citigroup Capital gives an irrevocable notice of
redemption of the capital securities, and (2) if Citigroup
has paid to the institutional trustee a sufficient amount of
cash in connection with the related
19
redemption or maturity of the junior subordinated debt
securities, then, by 12:00 noon, New York City time, on the
redemption date, the institutional trustee will irrevocably
deposit with the depositary funds sufficient to pay the
applicable redemption price. Citigroup Capital will also give
the depositary irrevocable instructions and authority to pay the
redemption price to the holders of the capital securities.
Once notice of redemption is given and redemption funds are
deposited, distributions will cease to accrue and all rights of
holders of capital securities called for redemption will cease,
except the right of the holders to receive the redemption price
but without interest on such redemption price. If any redemption
date is not a business day, then payment of the redemption price
payable on such date will be made on the next succeeding day
that is a business day, without any interest or other payment in
respect of any such delay. However, if such business day falls
in the next calendar year, such payment will be made on the
immediately preceding business day.
If payment of the redemption price for any capital securities is
improperly withheld or refused and not paid either by Citigroup
Capital, or by Citigroup pursuant to the guarantee,
distributions on such capital securities will continue to accrue
at the then applicable rate from the original redemption date to
the date of payment. In this case, the actual payment date will
be the redemption date for purposes of calculating the
redemption price. See Book-Entry Only
Issuance.
In the event that fewer than all of the outstanding capital
securities are to be redeemed, the capital securities will be
redeemed in accordance with the depositarys standard
procedures. See Book-Entry Only Issuance.
Citigroup or its subsidiaries may, at any time, and from time to
time, purchase outstanding capital securities by tender, in the
open market or by private agreement or otherwise.
Liquidation
Distribution upon Dissolution
This prospectus refers to any voluntary or involuntary
liquidation, dissolution,
winding-up
or termination of Citigroup Capital as liquidation.
If a liquidation occurs, the holders of the capital securities
will be entitled to receive out of the assets of Citigroup
Capital, after satisfaction of liabilities to creditors,
distributions in an amount equal to the aggregate of the stated
liquidation amount of $ per
capital security plus accrued and unpaid distributions thereon
to the date of payment. However, such holders will not receive
such distribution if Citigroup instead distributes on a ratable
basis to the holders of the capital securities junior
subordinated debt securities in an aggregate stated principal
amount equal to the aggregate stated liquidation amount of, with
an interest rate identical to the distribution rate of, and with
accrued and unpaid interest equal to accrued and unpaid
distributions on, the capital securities outstanding at such
time. See Distribution of the Junior
Subordinated Debt Securities.
If this distribution can be paid only in part because Citigroup
Capital has insufficient assets available to pay in full the
aggregate distribution, then the amounts payable directly by
Citigroup Capital on the capital securities shall be paid on a
ratable basis. The holders of the common securities will be
entitled to receive distributions upon any such liquidation on a
ratable basis with the holders of the capital securities.
However, if a declaration default has occurred and is
continuing, the capital securities will have a preference over
the common securities with regard to such distributions.
Pursuant to the declaration, Citigroup Capital will terminate:
(1) on ,
20 , the expiration of the term of Citigroup Capital;
(2) upon the bankruptcy of Citigroup or the holder of the
common securities;
(3) upon (a) the filing of a certificate of
dissolution or its equivalent regarding the holder of the common
securities or Citigroup, the filing of a certificate of
cancellation regarding Citigroup Capital, or the revocation of
the charter of the holder of the common securities or Citigroup
and (b) the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(4) upon the distribution of junior subordinated debt
securities to holders of capital securities;
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(5) upon the entry of a decree of a judicial dissolution of
the holder of the common securities, Citigroup or Citigroup
Capital; or
(6) upon the redemption of all the trust securities.
Declaration
Defaults
As described in Description of the Junior Subordinated
Debt Securities Indenture Defaults, an
indenture default is a default under the indenture
and also constitutes a declaration default, which is
an event of default under the declaration relating to the trust
securities. A deferral of interest payments on the junior
subordinated debt securities made in accordance with the
provisions described under Description of the Junior
Subordinated Debt Securities Option to Extend
Interest Payment Period will not cause an indenture
default.
Pursuant to the declaration, the holder of the common securities
will be deemed to have waived any declaration defaults relating
to the common securities until all declaration defaults relating
to the capital securities have been cured, waived or otherwise
eliminated. Until such declaration defaults relating to the
capital securities have been so cured, waived, or otherwise
eliminated, the institutional trustee will be deemed to be
acting solely on behalf of the holders of the capital
securities. Only the holders of the capital securities will have
the right to direct the institutional trustee as to matters
under the declaration, and therefore the indenture. In the event
that any declaration default relating to the capital securities
is waived by the holders of the capital securities as provided
in the declaration, the holders of common securities pursuant to
the declaration have agreed that such waiver also constitutes a
waiver of such declaration default relating to the common
securities for all purposes under the declaration without any
further act, vote or consent of the holders of common
securities. See Voting Rights.
If the institutional trustee fails to enforce its rights under
the junior subordinated debt securities, any holder of capital
securities may directly institute a legal proceeding against
Citigroup to enforce these rights without first suing the
institutional trustee or any other person or entity. If a
declaration default has occurred and is continuing and such
event is attributable to the failure of Citigroup to pay
interest or principal on the junior subordinated debt securities
on the date such interest or principal is otherwise payable, or
in the case of redemption, the redemption date, then a holder of
capital securities may also bring a direct action. This means
that a holder may directly sue for enforcement of payment to
such holder of the principal of or interest on the junior
subordinated debt securities having a principal amount equal to
the aggregate liquidation amount of the capital securities of
such holder on or after the respective due date specified in the
junior subordinated debt securities (other than in connection
with a deferral of interest made in accordance with the
provisions described below in Description of the Junior
Subordinated Debt Securities Option to Extend
Interest Payment Period). Such holder need not first
(1) direct the institutional trustee to enforce the terms
of the junior subordinated debt securities or (2) sue
Citigroup to enforce the institutional trustees rights
under the junior subordinated debt securities.
In connection with such direct action, Citigroup will be
subrogated to the rights of such holder of capital securities
under the declaration to the extent of any payment made by
Citigroup to such holder of capital securities in such direct
action. This means that Citigroup will be entitled to payment of
amounts that a holder of capital securities receives in respect
of an unpaid distribution that resulted in the bringing of a
direct action to the extent that such holder receives or has
already received full payment relating to such unpaid
distribution from Citigroup Capital. The holders of capital
securities will not be able to exercise directly any other
remedy available to the holders of the junior subordinated debt
securities.
Upon the occurrence of an indenture event of default and
acceleration, the institutional trustee as the sole holder of
the junior subordinated debt securities will have the right
under the indenture to declare the principal of and interest on
the junior subordinated debt securities to be immediately due
and payable. Citigroup and Citigroup Capital are each required
to file annually with the institutional trustee an
officers certificate as to its compliance with all
conditions and covenants under the declaration.
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The declaration will provide that each holder of a capital
security, by such holders acceptance of the capital
security, will agree that, in the event of any payment or
distribution of assets to creditors of Citigroup upon any
liquidation, dissolution, winding up, reorganization or in
connection with any insolvency, receivership or proceeding under
any bankruptcy law with respect to Citigroup, the holders of
capital securities will not have a claim for deferred
distributions that exceed 25% of the then outstanding aggregate
principal amount of junior subordinated debt securities. See
Description of the Junior Subordinated Debt
Securities Limitation on Claims with Respect to
Certain Deferred Interest Obligations.
Voting
Rights
Except as described in this prospectus under Description
of Guarantee Modification of Guarantee;
Assignment, and except as provided under the Statutory
Trust Act, the Trust Indenture Act and as otherwise
required by law and the declaration, the holders of the capital
securities will have no voting rights.
The holders of a majority in aggregate liquidation amount of the
capital securities have the right to direct any proceeding for
any remedy available to the institutional trustee so long as the
institutional trustee receives the tax opinion discussed below.
The holders also have the right to direct the institutional
trustee under the declaration to:
(1) direct any proceeding for any remedy available to the
indenture trustee, or exercising any trust or power conferred on
the indenture trustee;
(2) waive any past indenture event of default and
acceleration that is waivable under Section 5.6 of the
indenture;
(3) exercise any right to rescind or annul an acceleration
of the maturity of the junior subordinated debt securities; or
(4) consent to any amendment, modification or termination
of the indenture where such consent is required.
Where a consent or action under the indenture would require the
consent or act of holders of more than a majority in principal
amount of the junior subordinated debt securities, or a
super majority, then only holders of that super
majority may direct the institutional trustee to give such
consent or take such action. If the institutional trustee fails
to enforce its rights under the junior subordinated debt
securities, any record holder of capital securities may directly
sue Citigroup to enforce the institutional trustees rights
under the junior subordinated debt securities. The record holder
does not have to sue the institutional trustee or any other
person or entity before enforcing his rights.
The institutional trustee is required to notify all holders of
the capital securities of any notice of default received from
the indenture trustee. The notice is required to state that the
default also constitutes a declaration default. Except for
directing the time, method and place of conducting a proceeding
for a remedy available to the institutional trustee, the
institutional trustee will not take any of the actions described
in clauses (1), (2), (3) or (4) above unless the
institutional trustee receives an opinion of a nationally
recognized independent tax counsel. The opinion must be to the
effect that, as a result of such action, Citigroup Capital will
not fail to be classified as a grantor trust for United States
federal income tax purposes.
If the consent of the institutional trustee is required under
the indenture for any amendment, modification or termination of
the indenture, the institutional trustee is required to request
the written direction of the holders of the trust securities.
Then, the institutional trustee will vote as directed by a
majority in liquidation amount of the trust securities voting
together as a single class. Where any amendment, modification or
termination under the indenture would require the consent of a
super majority, however, the institutional trustee may only give
such consent at the direction of the holders of the same super
majority of the holders of the trust securities. The
institutional trustee is not required to take any such action in
accordance with the directions of the holders of the trust
securities unless the institutional trustee has obtained a tax
opinion to the effect described above.
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A waiver of an indenture default by the institutional trustee at
the direction of the holders of the capital securities will
constitute a waiver of the corresponding declaration default.
Any required approval or direction of holders of capital
securities may be given at a separate meeting of holders of
capital securities convened for such purpose, at a meeting of
all of the holders of trust securities or by written consent.
The regular trustees will mail to each holder of record of
capital securities a notice of any meeting at which such holders
are entitled to vote, or of any matter upon which action by
written consent of such holders is to be taken. Each such notice
will include a statement setting forth the following information:
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the date of such meeting or the date by which such action is to
be taken;
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a description of any resolution proposed for adoption at such
meeting on which such holders are entitled to vote or of such
matter upon which written consent is sought; and
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instructions for the delivery of proxies or consents.
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No vote or consent of the holders of capital securities will be
required for Citigroup Capital to redeem and cancel capital
securities or distribute junior subordinated debt securities in
accordance with the declaration.
Despite the fact that holders of capital securities are entitled
to vote or consent under the circumstances described above, any
capital securities that are owned at the time by Citigroup or
any entity directly or indirectly controlling or controlled by,
or under direct or indirect common control with, Citigroup, will
not be entitled to vote or consent. Instead, these capital
securities will be treated as if they were not outstanding.
The procedures by which holders of capital securities may
exercise their voting rights are described below. See
Book-Entry Only Issuance.
Holders of the capital securities generally will have no rights
to appoint or remove the regular trustees. Instead, these
trustees may be appointed, removed or replaced solely by
Citigroup as the indirect or direct holder of all of the common
securities.
Modification
of the Declaration
The declaration may be modified and amended if approved by the
regular trustees, and in certain circumstances, the
institutional trustee and the Delaware trustee. If, however, any
proposed amendment provides for, or the regular trustees
otherwise propose to effect,
(1) any action that would adversely affect the powers,
preferences or special rights of the trust securities, whether
by way of amendment to the declaration or otherwise or
(2) the dissolution,
winding-up
or termination of Citigroup Capital other than pursuant to the
terms of the declaration,
then the holders of the trust securities voting together as a
single class will be entitled to vote on such amendment or
proposal. Such amendment or proposal shall not be effective
except with the approval of holders of at least a majority in
liquidation amount of the trust securities affected thereby. If,
however, any amendment or proposal referred to in
clause (1) above would adversely affect only the capital
securities or only the common securities, then only holders of
the affected class will be entitled to vote on such amendment or
proposal. Such amendment or proposal shall not be effective
except with the approval of holders of a majority in liquidation
amount of such class of trust securities.
Despite the foregoing, no amendment or modification may be made
to the declaration if such amendment or modification would
(1) cause Citigroup Capital to be classified for United
States federal income tax purposes as other than a grantor trust,
(2) reduce or otherwise adversely affect the powers of the
institutional trustee or
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(3) cause Citigroup Capital to be deemed an
investment company which is required to be
registered under the 1940 Act.
Mergers,
Consolidations or Amalgamations
Citigroup Capital may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety, to any
corporation or other body except as described below. Citigroup
Capital may, with the consent of the regular trustees and
without the consent of the holders of the trust securities,
consolidate, amalgamate, merge with or into, or be replaced by a
trust organized as such under the laws of any State, provided
that:
(1) such successor entity either
(a) expressly assumes all of the obligations of Citigroup
Capital under the trust securities or
(b) substitutes for the capital securities other successor
securities having substantially the same terms as the capital
securities, so long as the successor securities rank the same as
the capital securities rank regarding distributions and payments
upon liquidation, redemption and otherwise;
(2) Citigroup expressly acknowledges a trustee of such
successor entity possessing the same powers and duties as the
institutional trustee, in its capacity as the holder of the
junior subordinated debt securities;
(3) the capital securities or any successor securities are
listed, or any successor securities will be listed upon
notification of issuance, on any national securities exchange or
with another organization on which the capital securities are
then listed or quoted;
(4) such merger, consolidation, amalgamation or replacement
does not cause the capital securities, including any successor
securities, to be downgraded by any nationally recognized
statistical rating organization;
(5) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges
of the holders of the trust securities, including any successor
securities, in any material respect, other than in connection
with any dilution of the holders interest in the new
entity;
(6) such successor entity has a purpose identical to that
of Citigroup Capital;
(7) prior to such merger, consolidation, amalgamation or
replacement, Citigroup Capital has received an opinion of a
nationally recognized independent counsel to Citigroup Capital
experienced in such matters to the effect that
(a) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges
of the holders of the trust securities, including any successor
securities, in any material respect, other than in connection
with any dilution of the holders interest in the new
entity;
(b) following such merger, consolidation, amalgamation or
replacement, neither Citigroup Capital nor such successor entity
will be required to register as an investment
company under the 1940 Act; and
(c) following such merger, consolidation, amalgamation or
replacement, Citigroup Capital or such successor entity will
continue to be classified as a grantor trust for United States
federal income tax purposes; and
(8) Citigroup guarantees the obligations of such successor
entity under the successor securities at least to the extent
provided by the guarantee.
Despite the foregoing, Citigroup Capital will not, except with
the consent of holders of 100% in liquidation amount of the
trust securities, consolidate, amalgamate, merge with or into,
or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if
such
24
consolidation, amalgamation, merger or replacement would cause
Citigroup Capital or the successor entity to be classified as
other than a grantor trust for United States federal income tax
purposes.
If Citigroup is involved in a business combination where,
immediately after the consummation of such business combination,
more than 50% of the surviving entitys voting stock is
owned by the shareholders of the other party to the business
combination, then:
(1) any interest on the junior subordinated debt securities
that is deferred and unpaid as of the date of consummation of
the business combination shall not be subject to the alternative
payment mechanism described in Description of the Junior
Subordinated Debt Securities Alternative Payment
Mechanism below to the extent that the extension period is
terminated on the next interest payment date following the date
of consummation of the business combination (or, if later, at
any time within 90 days following the date of such
consummation); and
(2) Citigroups covenant that it will not, and will
not permit its subsidiaries to purchase any of its common stock
for a one year period following the end of an extension period
that lasts longer than one year described below under
Description of the Junior Subordinated Debt
Securities Option to Extend Interest Payment
Period will not apply to any extension period that is
terminated on the next interest payment date following the date
of consummation of the business combination (or, if later, at
any time within 90 days following the date of such
consummation).
Book-Entry
Only Issuance
The capital securities will be book-entry securities. Upon
issuance, all book-entry securities will be represented by one
or more fully registered global capital securities, without
distribution coupons. Each global capital security will be
deposited with, or on behalf of, The Depository Trust Company
(DTC), a securities depositary, and will be
registered in the name of DTC or a nominee of DTC. DTC will thus
be the only registered holder of these capital securities and
will be considered the sole owner of the capital securities for
purposes of the declaration.
Purchasers of capital securities may hold interests in the
global capital securities only 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 (participants). DTC will maintain
accounts showing the capital security holdings of its
participants, and these participants will in turn maintain
accounts showing the capital security holdings of their
customers. Some of these customers may themselves be securities
intermediaries holding capital securities for their customers.
Thus, each beneficial owner of a book-entry capital security
will hold that capital security indirectly through a hierarchy
of intermediaries, with DTC at the top and the
beneficial owners own securities intermediary at the
bottom.
The capital securities of each beneficial owner of a book-entry
security will be evidenced solely by entries on the books of the
beneficial owners securities intermediary. The actual
purchaser of the capital securities will generally not be
entitled to have the capital securities represented by the
global securities registered in its name and will not be
considered the owner under the declaration. In most cases, a
beneficial owner will also not be able to obtain a paper
certificate evidencing the holders ownership of capital
securities. The book-entry system for holding capital 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 or pledge book-entry
securities.
In this prospectus, for book-entry capital securities,
references to actions taken by capital security holders will
mean actions taken by DTC upon instructions from its
participants, and references to payments and notices of
redemption to capital security holders will mean payments and
notices of redemption to DTC as the registered holder of the
capital securities for distribution to participants in
accordance with DTCs procedures.
25
A beneficial owner of book-entry securities represented by a
global capital security may exchange the securities for
definitive (paper) capital securities only if:
(a) DTC is unwilling or unable to continue as depositary
for such global capital 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 Exchange Act; or
(c) Citigroup in its sole discretion decides to allow some
or all book-entry securities to be exchangeable for definitive
capital securities in registered form.
Any global capital security that is exchangeable will be
exchangeable in whole for definitive capital securities in
registered form, with the same terms and of an equal aggregate
liquidation amount, in denominations of
$ and whole multiples of
$ . Definitive capital securities
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.
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 Exchange Act. The rules applicable to DTC and its
participants are on file with the SEC.
Citigroup and the regular trustees will not have any
responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial
ownership interest in the book-entry securities or for
maintaining, supervising or reviewing any records relating to
the beneficial ownership interests.
DTC may discontinue providing its services as securities
depositary with respect to the capital securities at any time by
giving reasonable notice to Citigroup Capital. Under such
circumstances, in the event that a successor securities
depositary is not obtained, capital securities certificates are
required to be printed and delivered. Additionally, the regular
trustees, with the consent of Citigroup, may decide to
discontinue use of the system of book-entry transfers through
DTC or any successor depositary with respect to the capital
securities. In that event, certificates for the capital
securities will be printed and delivered.
The information in this section concerning DTC and DTCs
book-entry system has been obtained from sources that Citigroup
and Citigroup Capital believe to be reliable, but neither
Citigroup nor Citigroup Capital takes responsibility for the
accuracy thereof.
Information
Concerning the Institutional Trustee
Prior to the occurrence of a default relating to the trust
securities, the institutional trustee undertakes to perform only
such duties as are specifically set forth in the declaration.
After a default, the institutional trustee will exercise the
same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. The institutional trustee
is under no obligation to exercise any of the powers vested in
it by the declaration at the request of any holder of capital
securities unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities which might be
incurred thereby. Despite the foregoing, the holders of capital
securities will not be required to offer such indemnity in the
event such holders, by exercising their voting rights, direct
the institutional trustee to take any action following a
declaration default.
Paying
Agent
In the event that the capital securities do not remain in
book-entry only form, the following provisions will apply:
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the institutional trustee will act as paying agent and may
designate an additional or substitute paying agent at any time;
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registration of transfers of capital securities will be effected
without charge by or on behalf of Citigroup Capital, but upon
payment, with the giving of such indemnity as Citigroup Capital
or Citigroup may require, in respect of any tax or other
government charges that may be imposed in relation to
it; and
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Citigroup Capital will not be required to register or cause to
be registered the transfer of capital securities after such
capital securities have been called for redemption.
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Governing
Law
The declaration and the capital securities for all purposes will
be governed by and construed in accordance with the laws of the
State of Delaware.
Miscellaneous
The regular trustees are authorized and directed to operate
Citigroup Capital in such a way that Citigroup Capital will not
be required to register as an investment company
under the 1940 Act or be characterized as other than a grantor
trust for United States federal income tax purposes. Citigroup
is authorized and directed to conduct its affairs so that the
junior subordinated debt securities will be treated as
indebtedness of Citigroup for United States federal income tax
purposes. In this connection, Citigroup and the regular trustees
are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of Citigroup Capital or
the certificate of incorporation of Citigroup, that each of
Citigroup and the regular trustees determine in their discretion
to be necessary or desirable to achieve such ends, as long as
such action does not adversely affect the interests of the
holders of the capital securities or vary the terms of the
capital securities in any material way.
Holders of the capital securities have no preemptive rights.
27
DESCRIPTION
OF THE JUNIOR SUBORDINATED DEBT SECURITIES
Set forth below is a description of the specific terms of the
junior subordinated debt securities in which Citigroup Capital
will invest the proceeds from the issuance and sale of the trust
securities. The following description is not intended to be
complete and is qualified by the indenture, dated as of
September 15, 2006, between Citigroup and The Bank of New
York (as
successor-in-interest
to JPMorgan Chase Bank, National Association), as the indenture
trustee, the form of which is filed as an exhibit to the
registration statement of which this prospectus forms a part,
and by the Trust Indenture Act. Several capitalized terms used
herein are defined in the indenture. Wherever particular
sections or defined terms of the indenture are referred to, such
sections or defined terms are incorporated herein by reference
as part of the statement made, and the statement is qualified in
its entirety by such reference.
As discussed more fully below, upon the dissolution of Citigroup
Capital, provided that any required regulatory approval is
obtained, the junior subordinated debt securities may be
distributed to the holders of the trust securities in
liquidation of Citigroup Capital. See Description of the
Capital Securities Distribution of the Junior
Subordinated Debt Securities.
If the junior subordinated debt securities are distributed to
the holders of the capital securities, Citigroup will use its
best efforts to have the junior subordinated debt securities
listed on the NYSE or on such other exchange on which the
capital securities are then listed.
General
The junior subordinated debt securities will be issued as
unsecured debt under the indenture and will initially be limited
in aggregate principal amount to approximately
$ . This amount is the sum of the
aggregate stated liquidation amount of the capital securities
and the capital contributed by Citigroup to Citigroup Capital in
exchange for the common securities.
(Section 3.1)
The entire principal amount of the junior subordinated debt
securities will mature and become due and payable, together with
any accrued and unpaid interest thereon including compound
interest and any additional interest,
on ,
20 . Citigroup must pay this amount in full without
regard to the source of funds. Citigroups failure to do so
would trigger an indenture default.
Citigroup has the right to dissolve Citigroup Capital at any
time, subject to prior approval of the Federal Reserve, if
required. If Citigroup terminates Citigroup Capital and does not
cause the capital securities to be redeemed for cash (subject to
the prior approval of the Federal Reserve and pursuant to the
terms of the Capital Replacement Covenant), Citigroup Capital
will redeem the capital securities, after satisfaction of the
liabilities of creditors of Citigroup Capital as provided by
applicable law, by distributing the junior subordinated debt
securities to holders of the capital securities and the common
securities in an aggregate stated principal amount equal to the
aggregate stated liquidation amount of such securities then
outstanding.
If junior subordinated debt securities are distributed to
holders of capital securities in liquidation of such
holders interests in Citigroup Capital, such junior
subordinated debt securities will initially be issued in the
form of one or more global securities (as described below). As
described below under Discontinuance of the
Depositarys Services, junior subordinated debt
securities may be issued in certificated form in exchange for a
global security. In the event that junior subordinated debt
securities are issued in certificated form, such junior
subordinated debt securities will be in denominations of
$ and integral multiples thereof
and may be transferred or exchanged at the offices described
below. Payments on junior subordinated debt securities issued as
a global security will be made to DTC, to a successor depositary
or, in the event that no depositary is used, to a paying agent
for the junior subordinated debt securities. In the event junior
subordinated debt securities are issued in certificated form,
principal and interest will be payable, the transfer of the
junior subordinated debt securities will be registrable and
junior subordinated debt securities will be exchangeable for
junior subordinated debt securities of other denominations of a
like aggregate principal amount at the corporate trust office of
the indenture trustee in New York, New York. Payment of interest
on certificated junior subordinated debt securities may be made
at the option of Citigroup by check mailed to the address of the
persons entitled thereto.
28
Citigroup does not intend to issue the junior subordinated debt
securities to anyone other than Citigroup Capital.
There are no covenants or provisions in the indenture that would
afford the holders of the junior subordinated debt securities
protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction
involving Citigroup that may adversely affect such holders.
Subordination
The indenture provides that the junior subordinated debt
securities are subordinated and junior, both in liquidation and
in priority of payment of interest, to the extent specified in
the indenture, to all Senior Indebtedness (as defined below) of
Citigroup. This means that no payment of principal, including
redemption payments, premium, if any, or interest on the junior
subordinated debt securities may be made if:
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any Senior Indebtedness of Citigroup has not been paid when due
and any applicable grace period relating to such default has
ended and such default has not been cured or been waived or
ceased to exist; or
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the maturity of any Senior Indebtedness of Citigroup has been
accelerated because of a default.
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Upon any payment by Citigroup or distribution of assets of
Citigroup to creditors upon any dissolution,
winding-up,
liquidation or reorganization, whether voluntary or involuntary,
or in bankruptcy, insolvency, receivership or other proceedings,
all principal, premium, if any, and interest due or to become
due on all Senior Indebtedness of Citigroup must be paid in full
before the holders of junior subordinated debt securities are
entitled to receive or retain any payment. Upon satisfaction of
all claims related to all Senior Indebtedness of Citigroup then
outstanding, the rights of the holders of the junior
subordinated debt securities will be subrogated to the rights of
the holders of Senior Indebtedness of Citigroup to receive
payments or distributions applicable to Senior Indebtedness
until all amounts owing on the junior subordinated debt
securities are paid in full.
The term Senior Indebtedness means, with respect to
Citigroup:
(1) the principal, premium, if any, and interest in respect
of (a) indebtedness for money borrowed and
(b) indebtedness evidenced by securities, notes,
debentures, bonds or other similar instruments issued by
Citigroup including (i) all indebtedness (whether now or
hereafter outstanding) issued under the senior debt indenture,
dated as of March 15, 1987, between Citigroup and The Bank
of New York, as trustee, as the same has been or may be amended,
modified, or supplemented from time to time, (ii) all
indebtedness (whether now or hereafter outstanding) issued under
the subordinated debt indenture, dated as of April 12,
2001, between Citigroup and J.P. Morgan Trust Company,
National Association, as trustee, as the same has been or may be
amended, modified, or supplemented from time to time,
(iii) all indebtedness (whether now or hereafter
outstanding) issued to a Citigroup Trust under the junior
subordinated debt indenture dated as of July 23, 2004,
between Citigroup and JP Morgan Chase Bank, as trustee, as the
same has been or may be amended, modified or supplemented from
time to time, (iv) all indebtedness issued to a Citigroup
Trust under the indenture, dated as of October 7, 1996,
between Citigroup and JPMorgan Chase Bank, as trustee, as the
same has been or may be amended, modified, or supplemented from
time to time (the indentures referred to in (iii) and
(iv) above are collectively referred to as the prior
junior subordinated debt indentures), and (v) any
guarantee entered into by Citigroup in respect of any preferred
securities, capital securities or preference stock of a
Citigroup Trust to which Citigroup issued any indebtedness under
the prior junior subordinated debt indentures;
(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, contingent or otherwise, of Citigroup
in respect of any letters of credit, bankers acceptance,
security purchase facilities or similar credit transactions;
29
(5) all obligations of Citigroup in respect of interest
rate swap, cap or other agreements, interest rate future or
option contracts, currency swap agreements, currency future or
option contracts and other similar agreements;
(6) all obligations of the type referred to in
clauses (1) through (5) above of other persons for the
payment of which Citigroup is responsible or liable as obligor,
guarantor or otherwise; and
(7) all obligations of the type referred to in
clauses (1) through (6) above of other persons secured
by any lien on any property or asset of Citigroup, whether or
not such obligation is assumed by Citigroup
except that Senior Indebtedness will not include
(A) any other indebtedness issued under the indenture;
(B) the capital securities guarantee;
(C) any indebtedness or any guarantee that is by its terms
subordinated to, or ranks equally with, the junior subordinated
debt securities (including the junior subordinated debt
securities issued in connection with the offering of enhanced
trust preferred securities by Citigroup Capital XIV, Citigroup
Capital XV, Citigroup Capital XVI and Citigroup Capital
XVII) and the issuance of which does not at the time of
issuance prevent the junior subordinated debt securities from
qualifying for Tier 1 capital treatment (irrespective of
any limits on the amount of Citigroups Tier 1
capital) under applicable capital adequacy guidelines,
regulations, policies, published interpretations, or the
concurrence or approval of the Federal Reserve; and
(D) trade accounts payable and other accrued liabilities
arising in the ordinary course of business.
Citigroup Trust means each of Citigroup
Capital II, Citigroup Capital VI, Citigroup Capital VII,
Citigroup Capital VIII, Citigroup Capital IX, Citigroup Capital
X, Citigroup Capital XI, Capital XII and Capital XIII or any
other similar trust created for the purpose of issuing preferred
securities (other than enhanced trust preferred securities) in
connection with the issuances of junior subordinated debt
securities under the prior junior subordinated debt indentures.
Because the capital securities and similar enhanced trust
preferred securities cannot be issued in connection with the
issuance of junior subordinated debt securities under the prior
junior subordinated debt indentures, a Citigroup Trust does not
include any trust created for the purpose of issuing the capital
securities or similar enhanced trust preferred securities. Under
the above definitions, in addition to indebtedness issued to a
Citigroup Trust under the prior junior subordinated debt
indentures, Senior Indebtedness will also include any other
indebtedness issued to a trust created for the purpose of
issuing preferred securities, or any guarantee of such
indebtedness, unless such indebtedness or guarantee by its terms
is subordinated to, or ranks equally with, the junior
subordinated debt securities.
Such Senior Indebtedness shall continue to be Senior
Indebtedness and be entitled to the benefits of these
subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
The junior subordinated debt securities will rank senior to all
of Citigroups equity securities, including preferred stock.
The indenture does not limit the aggregate amount of Senior
Indebtedness that may be issued by Citigroup.
Notwithstanding the above and anything to the contrary in this
prospectus, holders of Senior Indebtedness will not have any
rights under the indenture to enforce any of the covenants in
the indenture, including those described in
Alternative Payment Mechanism.
Limitation
on Claims with Respect to Certain Deferred Interest
Obligations
The indenture provides that by a holder of a junior subordinated
debt security accepting the junior subordinated debt security,
such holder agrees that, upon any payment or distribution of
assets to creditors upon any liquidation, dissolution, winding
up, reorganization, or in connection with any insolvency,
30
receivership or bankruptcy proceeding with respect to Citigroup,
such holder does not have a claim for deferred interest accrued
and unpaid as of and after the time of such event (including any
compounded interest thereon) in an amount greater than 25% of
the then outstanding aggregate principal amount of the junior
subordinated debt securities.
Optional
Redemption
Citigroup will have the right to redeem the junior subordinated
debt securities, in whole or in part, from time to time, on or
after ,
20 , or at any time upon the occurrence of a Tax
Event, an Investment Company Event or a Regulatory Capital
Event, as described above, upon not less than 30 nor more than
60 days notice; provided that Citigroup may not
exercise its right of optional redemption in respect of less
than all of the outstanding junior subordinated debt securities
unless and until all deferred interest outstanding on all junior
subordinated debt securities has been paid in full; and provided
further that in the case of a Regulatory Event, the result of
which is that only a portion of the capital securities will not
qualify as Tier 1 capital of Citigroup, the maximum
principal amount of junior subordinated debt securities that may
be redeemed is the amount that corresponds to the capital
securities that would no longer qualify as Tier 1 capital
as a result of such Regulatory Event.
Citigroup may not redeem the junior subordinated debt securities
unless it receives the prior approval of the Federal Reserve to
do so, if such approval is then required by the Federal Reserve.
Any redemption of the junior subordinated debt securities prior
to ,
20 will also be subject to the terms of the capital
replacement covenant. See Certain Terms of the Capital
Replacement Covenant.
The redemption price will be equal to 100% of the principal
amount to be redeemed plus any accrued and unpaid interest,
including any additional interest (as described below), to the
redemption date. If a partial redemption of the capital
securities resulting from a partial redemption of the junior
subordinated debt securities would result in the delisting of
the capital securities, Citigroup may only redeem the junior
subordinated debt securities in whole. (Section 11.2)
Citigroup may need regulatory approval to redeem the junior
subordinated debt securities. See Description of the
Capital Securities Special Event Redemption.
Interest
The junior subordinated debt securities will bear interest at
the annual rate of %, from and including the original
date of issuance, payable quarterly in arrears
on , ,
and
of each year,
beginning ,
20 . Each date on which interest is payable is called
an interest payment date. Interest will be paid to
the person in whose name such junior subordinated debt security
is registered, with limited exceptions, at the close of business
on the business day preceding such interest payment date. In the
event the junior subordinated debt securities shall not continue
to remain in book-entry only form, Citigroup shall have the
right to select record dates, which shall be more than
14 days but less than 60 days prior to the interest
payment date.
The amount of interest payable for any period will be computed
on the basis of a
360-day
year
of twelve
30-day
months. The amount of interest payable for any period shorter
than a full quarterly period will be computed on the basis of
the actual number of days elapsed per
30-day
month. In the event that any date on which interest is payable
on the junior subordinated debt securities is not a business
day, then payment of the interest payable on such date will be
made on the next succeeding day that is a business day, and
without any interest or other payment in respect of any such
delay. However, if such business day is in the next succeeding
calendar year, then such payment shall be made on the
immediately preceding business day, in each case with the same
force and effect as if made on such date.
Option to
Extend Interest Payment Period
Citigroup has the right to defer interest payments by extending
the interest payment period for an extension period not
exceeding 40 consecutive quarterly interest periods. However, no
extension period may extend beyond the maturity of the junior
subordinated debt securities. At the end of any extension
period, Citigroup will pay all interest then accrued and unpaid,
including any additional interest as described under
31
Additional Interest below, together with
interest thereon compounded quarterly at the rate specified for
the junior subordinated debt securities to the extent permitted
by applicable law. An extension period begins on the first
interest payment date on which interest has been deferred and
terminates on the first day thereafter on which all amounts
deferred, including accrued interest thereon, have been repaid
pursuant to the alternative payment mechanism, subject to
limited exceptions. See Alternative Payment
Mechanism below. During any such extension period:
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Citigroup and its subsidiaries shall not declare or pay any
dividend on, make any distributions relating to, or redeem,
purchase, acquire or make a liquidation payment relating to, any
of its capital stock or make any guarantee payment with respect
thereto other than
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purchases, redemptions or other acquisitions of shares of
capital stock of Citigroup in connection with any employment
contract, benefit plan or other similar arrangement with or for
the benefit of employees, officers, directors or consultants;
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purchases of shares of common stock of Citigroup pursuant to a
contractually binding requirement to buy stock existing prior to
the commencement of the extension period, including under a
contractually binding stock repurchase plan;
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as a result of an exchange or conversion of any class or series
of Citigroups capital stock for any other class or series
of Citigroups capital stock;
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the purchase of fractional interests in shares of
Citigroups capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being
converted or exchanged; or
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purchase of Citigroups capital stock in connection with
the distribution thereof; and
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Citigroup and its subsidiaries shall not make any payment of
interest, principal or premium on, or repay, purchase or redeem,
any debt securities or guarantees issued by Citigroup that rank
equally with or junior to the junior subordinated debt
securities, other than
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any payment of current or deferred interest on securities that
rank equally with the junior subordinated debt securities that
is made
pro rata
to the amounts due on such securities
(including the junior subordinated debt securities), provided
that any such payments of deferred interest are made in
accordance with the fifth full paragraph on page 37 under
Alternative Payment Mechanism;
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any payments of deferred interest on securities that rank
equally with the junior subordinated debt securities that, if
not made, would give rise to an event of default permitting
acceleration of such securities; and
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any repayment or redemption of a security necessary to avoid a
breach of the instrument governing the same.
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The foregoing, however, will not apply to any stock dividends
paid by Citigroup where the dividend stock is the same stock as
that on which the dividend is being paid.
(Section 13.3)
Citigroup may pay current interest at any time with cash
from any source.
In addition, if any extension period lasts longer than one year,
unless required to do so by the Federal Reserve and subject to
the exceptions listed in the preceding paragraph, Citigroup will
covenant that it will not, and will not permit its subsidiaries
to, purchase any of its common stock for a one-year period
following the payment of all deferred interest pursuant to the
alternative payment mechanism described in
Alternative Payment Mechanism below.
Prior to the termination of any extension period, Citigroup may
further defer payments of interest by extending such extension
period. Such extension period, including all such previous and
further extensions, however, may not exceed 40 consecutive
quarterly interest periods, including the quarterly interest
period in which notice of such extension period is given. No
extension period, however, may extend beyond the maturity of the
junior subordinated debt securities. Upon the termination of any
extension period and the payment of all
32
amounts then due, Citigroup may commence a new extension period,
if consistent with the terms set forth in this section. No
interest during an extension period, except at the end of such
period, shall be due and payable. However, Citigroup has the
right to prepay accrued interest during an extension period.
Citigroup has no present intention of exercising its right to
defer payments of interest by extending the interest payment
period on the junior subordinated debt securities and it
currently believes that the likelihood of its exercising its
right to defer interest payments is remote. If the institutional
trustee is the sole holder of the junior subordinated debt
securities, Citigroup will give the regular trustees and the
institutional trustee notice of its selection of such extension
period at least one business day prior to the earlier of
(1) the date distributions on the capital securities would
be payable, if not for such extension period, or
(2) the date the regular trustees are required to give
notice to the NYSE or other applicable self-regulatory
organization or to holders of the capital securities of the
record date or the date such distributions would be payable, if
not for such extension period;
provided, that, in any event, Citigroup is required to give the
regular trustees or the institutional trustee notice of its
selection of such extension period no more than 15 business days
and no less than 5 business days before the next succeeding
interest payment date on the junior subordinated debt
securities. The regular trustees will give notice of
Citigroups selection of such extension period to the
holders of the capital securities. If the institutional trustee
is not the sole holder of the junior subordinated debt
securities, Citigroup will give the holders of the junior
subordinated debt securities notice of its selection of such
extension period at least ten business days before the earlier of
(1) the next succeeding interest payment date or
(2) the date upon which Citigroup is required to give
notice to the NYSE or other applicable self-regulatory
organization or to holders of the junior subordinated debt
securities of the record or payment date of such related
interest payment;
provided, that, in any event, Citigroup is required to give the
holders of the junior subordinated debt securities notice of its
selection of such extension period no more than 15 business days
and no less than 5 business days before the next succeeding
interest payment date. A notice of extension, once given, will
be irrevocable. The indenture also provides that Citigroup must
notify the Federal Reserve (1) of the commencement of any
extension period and (2) of the fifth anniversary of the
commencement of an extension period that is continuing or its
earlier payment of current interest during an extension period.
(
Sections 13.1 and 13.2
)
Alternative
Payment Mechanism
If Citigroup has exercised its right to defer payments on the
junior subordinated debt securities, Citigroup may not pay
deferred interest in an amount that exceeds the new equity
amount as of the date such payment is made.
Notwithstanding the above, at maturity of the junior
subordinated debt securities, or in the case of an indenture
event of default and acceleration, or upon the occurrence of a
supervisory event, Citigroup may pay accrued and unpaid interest
without regard to the source of funds.
The indenture defines new equity amount, as of any
date, as (i) the net cash proceeds plus (ii) the fair
market value of property, other than cash (based on the current
stock market price of common stock issued or delivered in
exchange for such property), received by Citigroup or any of its
subsidiaries during the
180-day
period immediately prior to such date in arms length
transactions from one or more sales to persons other than
subsidiaries of Citigroup of:
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shares of Citigroup common stock, including treasury stock and
shares of common stock sold pursuant to our dividend
reinvestment plan and employee benefit plans; and/or
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Citigroup qualified warrants that Citigroup sells at
its sole discretion.
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Qualified warrants means any common stock warrants
that (1) have an exercise price greater than the
current stock market price of Citigroups
common stock on their date of issuance, and (2) Citigroup
is not
33
entitled to redeem for cash and the holders are not entitled to
require Citigroup to repurchase for cash in any circumstances.
Citigroup intends that any qualified warrants issued in
accordance with the alternative payment mechanism will have
exercise prices at least 10% above the current stock market
price of its common stock on the date of issuance. The
current stock market price of Citigroups
common stock on any date shall be the closing sale price per
share (or if no closing sale price is reported, the average of
the bid and ask prices or, if more than one in either case, the
average of the average bid and the average ask prices) on that
date as reported in composite transactions by the NYSE or, if
Citigroups common stock is not then listed on the NYSE, as
reported by the principal U.S. securities exchange or The
Nasdaq Global Market on which Citigroups common stock is
traded or quoted. If Citigroups common stock is not either
listed on any U.S. securities exchange or quoted on The
Nasdaq Global Market on the relevant date, the current
stock market price shall be the last quoted bid price for
its common stock in the
over-the-counter
market on the relevant date as reported by the National
Quotation Bureau or similar organization. If Citigroups
common stock is not so quoted, the current stock market
price shall be the average of the mid-point of the last
bid and ask prices for its common stock on the relevant date
from each of at least three nationally recognized independent
investment banking firms selected by Citigroup for this purpose.
Obligations
After Five Years of Deferral or Earlier Payment of Current
Interest During Extension Period
The indenture will provide that commencing on the earlier of
(i) the fifth anniversary of the commencement of an
extension period, if on such date such extension period has not
ended, and (ii) the date of any payment of current interest
on the junior subordinated debt securities during an extension
period, Citigroup shall be subject to the alternative
payment mechanism, pursuant to which it will continuously
use its commercially reasonable efforts to effect
sales of its common stock, in an amount that will generate
sufficient net proceeds to enable Citigroup to pay in full all
deferred interest on the junior subordinated debt securities
(subject to the APM maximum obligation, if
applicable, and the share cap amount, as each of
those terms is defined below); provided that Citigroup shall not
be obligated to make offers of or to effect sales of its common
stock during the occurrence and continuation of a market
disruption event or a supervisory event and
will be permitted to pay deferred interest using cash from any
source upon the occurrence of a supervisory event. In addition,
Citigroup will not be permitted to pay interest on the junior
subordinated debt securities at a time when such payment would
violate a specific prohibition against making an interest
payment contained in the terms of any securities ranking
pari
passu
with or senior to the junior subordinated debt
securities.
The indenture defines commercially reasonable
efforts in this context to mean commercially reasonable
efforts on the part of Citigroup to complete the sale of shares
of its common stock, including treasury shares, to third parties
that are not subsidiaries of Citigroup. Citigroup will not be
considered to have used its commercially reasonable efforts to
effect a sale of stock if it determines not to pursue or
complete such sale solely due to pricing or dilution
considerations.
The sale of qualified warrants to pay deferred interest, subject
to the restrictions and requirements set forth above, is an
option that may be exercised at Citigroups sole
discretion, subject to the APM maximum obligation and the share
cap amount, and Citigroup will under no circumstances be
obligated to sell qualified warrants or to apply the proceeds of
any such sale to pay deferred interest on the junior
subordinated debt securities. No class of investors of
Citigroups securities, or any other party, may require
Citigroup to issue qualified warrants.
Citigroup will not be required to apply the proceeds of stock
sales to the payment of its deferred interest obligations on the
junior subordinated debt securities prior to the fifth
anniversary of the commencement of an extension period or the
earlier payment of current interest during an extension period,
but may elect to do so. Following such fifth anniversary or
earlier payment of current interest, Citigroup will be required
to apply the net proceeds received by it from sales of shares of
its common stock, as promptly as practicable following receipt
of such proceeds, to the payment of all amounts owing in respect
of deferred interest, until all deferred interest has been paid
in full; provided, that Citigroup shall not be obligated to sell
its common stock or apply
34
the proceeds from sales of its common stock, as applicable, to
the payment of deferred interest on the junior subordinated debt
securities if a market disruption event or supervisory event has
occurred and is continuing. The application of proceeds from the
sale of qualified warrants to pay deferred interest shall be
within the sole discretion of Citigroup.
When subject to the alternative payment mechanism, Citigroup
will not be obligated to issue common stock prior to the fifth
anniversary of the commencement of an extension period if the
gross proceeds of any issuance of common stock and qualified
warrants applied to pay deferred interest on the junior
subordinated debt securities pursuant to the alternative payment
mechanism, together with the gross proceeds of all prior
issuances of common stock and qualified warrants so applied
since the commencement of that extension period, would exceed an
amount equal to 2% of the product of (1) the average of the
current stock market prices of our common stock on the 10
consecutive trading days ending on the fourth trading day
immediately preceding the date of issuance and (2) the
total number of issued and outstanding shares of our common
stock as of the date of our then most recent publicly available
consolidated financial statements (the APM maximum
obligation). Once Citigroup reaches the APM maximum
obligation for an extension period, Citigroup will not be
obligated to issue more common stock or qualified warrants under
the alternative payment mechanism prior to the fifth anniversary
of the commencement of an extension period even if the current
stock market price of Citigroups common stock or the
number of outstanding shares of its common stock subsequently
increase. The APM maximum obligation will cease to apply
following the fifth anniversary of the commencement of an
extension period, at which point Citigroup must repay any
deferred interest, regardless of the time at which it was
deferred, using the alternative payment mechanism, subject to
any market disruption event, supervisory event, and the share
cap amount. In addition, if the APM maximum obligation has been
reached during an extension period and Citigroup subsequently
repays all deferred interest, the APM maximum obligation will
cease to apply at the termination of such extension period and
will not apply again unless and until Citigroup starts a new
extension period.
Citigroup is not permitted to sell shares of its common stock in
an amount in excess of the share cap amount for the
purpose of paying deferred interest on the junior subordinated
debt securities. The share cap amount will initially
equal million shares of Citigroups common stock, including
treasury stock and shares of common stock sold pursuant to
Citigroups dividend reinvestment plan and employee benefit
plans. The share cap amount applies to payments of deferred
interest on the junior subordinated debt securities only, and
not to any payments that may be made on other securities using
proceeds from the sale of common stock under terms similar to
those of the alternative payment mechanism. If the issued and
outstanding shares of Citigroup common stock shall have been
changed into a different number of shares or a different class
by reason of any stock split, reverse stock split, stock
dividend, reclassification, recapitalization,
split-up,
combination, exchange of shares or other similar transaction,
then the share cap amount shall be correspondingly adjusted.
Under the indenture, Citigroup will be required to increase the
share cap amount to an amount that would allow Citigroup to
raise sufficient proceeds to satisfy its obligations to pay
deferred interest in full at the end of the first year of an
extension period (and on each subsequent anniversary of the end
of the first year of an extension period to the extent that an
extension period would last more than one year), if the
then-current share cap amount would not allow Citigroup to raise
sufficient proceeds to satisfy its obligations to pay deferred
interest (including compounded interest to that date) assuming a
price per share equal to the average trading price of
Citigroups common shares over the ten-trading-day period
preceding such date; provided that Citigroup will not be
obligated under the indenture to increase the share cap amount
above million shares.
If the million share cap has
been reached and is not sufficient to allow Citigroup to raise
sufficient proceeds to pay deferred interest (including
compounded interest) in full, then Citigroup intends (but is not
obligated) to further increase the share cap amount only to the
extent that (i) Citigroup can do so and simultaneously
satisfy its future fixed or contingent obligations under other
securities and derivative instruments that provide for
settlement or payment in Citigroups common shares, or
(ii) Citigroup cannot increase the share cap amount as
contemplated in the preceding clause, but can do so by
requesting Citigroups board of directors to adopt a
resolution for shareholder vote at the next annual shareholders
meeting occurring
35
at least 4 months after the date on which the share cap
amount has been reached to increase the number of
Citigroups authorized common shares for purposes of
satisfying its obligations to pay deferred interest.
Until the 10th anniversary of the first extension period, a
covenant default will occur if Citigroup does not increase the
share cap amount to an amount that is greater
than million shares when
required to do so as described above; provided that no covenant
default will occur if Citigroup has increased the share cap
amount to million shares.
Although a covenant default will not constitute an event of
default, it will constitute a default under the indenture and
would give rise to a claim against Citigroup relating to the
specific breached covenant; however, the remedy of holders of
the capital securities may be limited to direct monetary damages
(if any) or specific performance.
If, after Citigroup becomes subject to the alternative payment
mechanism and a supervisory event has occurred and is
continuing, Citigroup may choose to pay deferred interest using
cash from any source (including from the sale of preferred
stock), but is not obligated to do so.
Citigroups use of funds in an amount in excess of the new
equity amount to pay deferred interest will not, by itself,
constitute an event of default and acceleration under the
indenture that would permit the indenture trustee or the holders
of the junior subordinated debt securities to accelerate the
junior subordinated debt securities.
In the event that net proceeds received by Citigroup from one or
more sales of shares of its common stock
and/or
qualified warrants are not sufficient to satisfy the full amount
of deferred interest, such net proceeds will be paid to the
holders of the junior subordinated debt securities in
chronological order; provided, however, that if Citigroup has
outstanding securities in addition to the junior subordinated
debt securities that rank equally in priority to the junior
subordinated debt securities and under which it is obligated to
sell shares of common stock and apply the net proceeds to
payment of deferred interest, then on any date and for any
period the amount of net proceeds received by Citigroup from
such sales and available for payment of such deferred interest
shall be applied on a pro rata basis to the amounts due on each
series of securities up to any APM maximum obligation, share cap
amount or other similar limit then applicable to that series.
A market disruption event means the occurrence or
continuation of any of the following events or circumstances:
(1) Citigroup would be required to obtain the consent or
approval of its shareholders or a regulatory body (including,
without limitation, any securities exchange but excluding the
Federal Reserve) or governmental authority to issue or sell such
shares of its common stock and such consent or approval has not
yet been obtained even though Citigroup has used commercially
reasonable efforts to obtain the required consent or approval;
(2) trading in securities generally on the principal
exchange on which Citigroups securities are listed and
traded (currently the NYSE) shall have been suspended or
materially disrupted or minimum prices shall have been
established on any such exchange or market by the SEC, by the
relevant exchange or any other regulatory body or governmental
authority having jurisdiction;
(3) an event occurs and is continuing as a result of which
the offering document for such offer and sale of securities
would, in the reasonable judgment of Citigroup, contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading and either (i) the
disclosure of that event at such time, in the reasonable
judgment of Citigroup, would have a material adverse affect on
Citigroups business or (ii) the disclosure relates to
a previously undisclosed proposed or pending material
development or business transaction, and Citigroup has a bona
fide business reason for keeping the same confidential or the
disclosure of which would impede Citigroups ability to
consummate such transaction, provided that no single suspension
period contemplated by this paragraph (3) may exceed
90 consecutive days and multiple suspension periods contemplated
by this paragraph (3) may not exceed an aggregate of
90 days in any
180-day
period;
36
(4) Citigroup reasonably believes that the offering
document for such offer and sale of securities would not be in
compliance with a rule or regulation of the SEC (for reasons
other than those referred to in paragraph (3) above)
and Citigroup is unable to comply with such rule or regulation
or such compliance is impracticable, provided that no single
suspension contemplated by this paragraph (4) may
exceed 90 consecutive days and multiple suspension periods
contemplated by this paragraph (4) may not exceed an
aggregate of 90 days in any
180-day
period;
(5) there is an adverse change in general domestic or
international economic, political or financial conditions,
including without limitation as a result of terrorist
activities, or the effect of international conditions on the
financial markets in the United States and such adverse change
materially disrupts or otherwise has a material adverse effect
on the issuance, sale or trading of Citigroup common stock;
(6) a material disruption shall have occurred in commercial
banking or securities settlement or clearing services in the
United States; or
(7) a banking moratorium shall have been declared by
federal or state authorities of the United States.
As promptly as possible after Citigroup becomes aware of the
occurrence of a market disruption event or a supervisory event
during the continuation of an extension period, it shall give a
written notice to the trustee. Such notice shall identify which
type of market disruption event, or that a supervisory event,
has occurred and the date(s) on which that event occurred or
existed. Citigroups obligation to continuously use its
commercially reasonable efforts to sell its common stock to pay
all deferred interest on the junior subordinated debt securities
shall resume at such time as no market disruption event or
supervisory event exists or is continuing.
A supervisory event shall commence upon the date
Citigroup has notified the Federal Reserve of its intention both
(1) to sell shares of its common stock and (2) to
apply the net proceeds of such sale to pay deferred interest on
the junior subordinated debt securities. A supervisory event
shall cease on the business day following the earlier to occur
of (A) the tenth business day after Citigroup gives notice
to the Federal Reserve as described above (or such longer period
as may be required by Federal Reserve order or by other
supervisory action), so long as the Federal Reserve does not
disapprove of either action mentioned in such notice,
(B) the tenth anniversary of the commencement of any
extension period, or (C) the day on which the Federal
Reserve notifies Citigroup in writing that it no longer
disapproves of Citigroups intention to both (1) issue
or sell common stock and (2) apply the net proceeds from
such sale to pay deferred interest on the junior subordinated
debt securities. The occurrence and continuation of a
supervisory event will excuse Citigroup from its obligation to
continuously use commercially reasonable efforts to sell shares
of its common stock and to apply the net proceeds of such sale
to pay deferred interest on the junior subordinated debt
securities and will permit Citigroup to pay deferred interest
using cash from any other source (including from the sale of
preferred stock) without breaching its obligations under the
indenture. Because a supervisory event will exist if the Federal
Reserve disapproves of either of these requests, the Federal
Reserve will be able, without triggering a default under the
indenture, to permit Citigroup to sell shares of its common
stock but to prohibit Citigroup from applying the proceeds to
pay deferred interest on the junior subordinated debt securities.
Requirement
for Regulatory Approval Relating to the Payment of Deferred
Interest
The indenture provides that Citigroup must notify the Federal
Reserve (1) of the commencement of any extension period
(2) of the fifth anniversary of the commencement of an
extension period that is continuing or earlier payment of
current interest during an extension period, and (3) of its
intention to sell shares of its common stock
and/or
qualified warrants and to apply the net proceeds from such sale
to pay deferred interest at least 25 business days in advance of
the payment date (or such longer period as may be required by
Federal Reserve order or by other supervisory action). In
addition, under the indenture, Citigroup may only sell its
common stock or qualified warrants at any time and apply the net
proceeds of such sale to pay deferred interest on the junior
subordinated debt securities if the Federal Reserve has not
disapproved of either of these actions within 10 business days
(or such longer period as may be required by Federal Reserve
order or by other supervisory action) of the notice described in
clause (3) above or has withdrawn its prior disapproval.
37
Additional
Interest
If at any time Citigroup Capital is required to pay any taxes,
duties, assessments or governmental charges of whatever nature,
other than withholding taxes, imposed by the United States or
any other taxing authority, then Citigroup will be required to
pay additional interest on the junior subordinated debt
securities. The amount of any additional interest will be an
amount sufficient so that the net amounts received and retained
by Citigroup Capital after paying any such taxes, duties,
assessments or other governmental charges will be not less than
the amounts Citigroup Capital would have received had no such
taxes, duties, assessments or other governmental charges been
imposed. This means that Citigroup Capital will be in the same
position it would have been if it did not have to pay such
taxes, duties, assessments or other charges.
(
Section 3.10(c)
).
Indenture
Events of Default and Acceleration
The indenture provides that the following are indenture events
of default and acceleration relating to the junior subordinated
debt securities:
(1) failure to pay in full interest accrued on any junior
subordinated debt security upon the conclusion of a period
consisting of 40 consecutive quarters commencing with the
earliest quarter for which interest (including interest accrued
on deferred payments) has not been paid in full and continuance
of such failure to pay for a period of 30 days; or
(2) specified events of bankruptcy, insolvency or
reorganization, or court appointment of a receiver, liquidator
or trustee of Citigroup.
If any indenture event of default and acceleration shall occur
and be continuing, the institutional trustee, as the holder of
the junior subordinated debt securities, will have the right to
declare the principal of and the interest on the junior
subordinated debt securities, including any compound interest
and any additional interest, and any other amounts payable under
the indenture to be immediately due and payable. The
institutional trustee may also enforce its other rights as a
creditor relating to the junior subordinated debt securities.
(
Section 5.2
)
Indenture
Defaults
The indenture provides that the following are indenture defaults
relating to the junior subordinated debt securities:
(1) an indenture event of default and acceleration;
(2) a default in the payment of the principal of, or
premium, if any, on, any junior subordinated debt security at
its maturity;
(3) a default for 30 days in the payment of any
installment of interest on any junior subordinated debt security
when such is due (taking into account any extension period);
(4) a default for 90 days after written notice in the
performance of any other covenant in respect of the junior
subordinated debt securities; and
(5) Citigroup Capital shall have voluntarily or
involuntarily dissolved,
wound-up
its
business or otherwise terminated its existence, except in
connection with (i) the distribution of the junior
subordinated debt securities to holders of the capital
securities in liquidation or redemption of their interests in
Citigroup Capital upon a Special Event, (ii) the redemption
of all of the outstanding capital securities or
(iii) certain mergers, consolidations or amalgamations of
Citigroup Capital.
Any deferral of interest on the junior subordinated debt
securities made in accordance with the provisions described
above in Option to Extend Interest Payment
Period will not constitute a default under the indenture
for the junior subordinated debt securities.
(
Section 5.7
)
There is no right of acceleration with respect to indenture
defaults, except for indenture defaults that are indenture
events of default and acceleration. An indenture default also
constitutes a declaration default. The
38
holders of capital securities in limited circumstances have the
right to direct the institutional trustee to exercise its rights
as the holder of the junior subordinated debt securities. See
Description of the Capital Securities
Declaration Defaults and Voting
Rights.
If a declaration default has occurred and is continuing and such
event is attributable to the failure of Citigroup to pay
interest or principal on the junior subordinated debt securities
when such interest or principal is payable (other than in
connection with a deferral of interest made in accordance with
the provisions described above in Option to
Extend Interest Payment Period), Citigroup acknowledges
that, in such event, a holder of capital securities may sue for
payment on or after the respective due date specified in the
junior subordinated debt securities. Citigroup may not amend the
declaration to remove this right to bring a direct action
without the prior written consent of all of the holders of
capital securities of Citigroup Capital. Despite any payment
made to such holder of capital securities by Citigroup in
connection with a direct action, Citigroup shall remain
obligated to pay the principal of or interest on the junior
subordinated debt securities held by Citigroup Capital or the
institutional trustee of Citigroup Capital. Citigroup shall be
subrogated to the rights of the holder of such capital
securities relating to payments on the capital securities to the
extent of any payments made by Citigroup to such holder in any
direct action. The holders of capital securities will not be
able to exercise directly any other remedy available to the
holders of the junior subordinated debt securities.
The indenture trustee may withhold notice to the holders of the
junior subordinated debt securities of any default with respect
thereto, except in the payment of principal, premium or
interest, if it considers such withholding to be in the
interests of such holders. (
Section 6.2
)
Modifications
and Amendments
Modifications and amendments to the indenture through a
supplemental indenture may be made by Citigroup and the
indenture trustee with the consent of the holders of a majority
in principal amount of the junior subordinated debt securities
at the time outstanding. The indenture may also be modified,
without the consent of holders, to increase the share cap
amount. However, no such modification or amendment may, without
the consent of the holder of each junior subordinated debt
security affected thereby:
(1) modify the terms of payment of principal, premium, if
any, or interest on such junior subordinated debt
securities; or
(2) reduce the percentage of holders of junior subordinated
debt securities necessary to modify or amend the indenture or
waive compliance by Citigroup with any covenant or past default.
If the junior subordinated debt securities are held by Citigroup
Capital or a trustee of Citigroup Capital, such supplemental
indenture shall not be effective until the holders of a majority
in liquidation preference of trust securities of Citigroup
Capital shall have consented to such supplemental indenture. If
the consent of the holder of each outstanding junior
subordinated debt security is required, such supplemental
indenture shall not be effective until each holder of the trust
securities of Citigroup Capital shall have consented to such
supplemental indenture.
(Section 9.2)
Discharge
and Defeasance
Citigroup may discharge most of its obligations under the
indenture to holders of the junior subordinated debt securities
if such junior subordinated debt securities have not already
been delivered to the indenture trustee for cancellation and
either have become due and payable or are by their terms due and
payable within one year, or are to be called for redemption
within one year, subject to the capital replacement covenant.
Citigroup discharges its obligations by depositing with the
indenture trustee an amount certified to be sufficient to pay
when due the principal of and premium, if any, and interest on
all outstanding junior subordinated debt securities and to make
any mandatory scheduled installment payments thereon when due.
(Section 4.1)
39
Unless otherwise specified in this prospectus relating to the
junior subordinated debt securities, Citigroup, at its option:
(1) will be released from any and all obligations in
respect of the junior subordinated debt securities, which is
known as defeasance and discharge; or
(2) need not comply with certain covenants specified herein
regarding the junior subordinated debt securities, which is
known as covenant defeasance.
If Citigroup exercises its covenant defeasance option, the
failure to comply with any defeased covenant and any default in
the applicable resolution of the board of directors or
supplemental indenture will no longer be a default under the
indenture.
To exercise either its defeasance and discharge or covenant
defeasance option, Citigroup must
(1) deposit with the indenture trustee, in trust, cash or
U.S. government obligations in an amount sufficient to pay
all the principal of and premium, if any, and any interest on
the junior subordinated debt securities when such payments are
due; and
(2) deliver an opinion of counsel, which, in the case of a
defeasance and discharge, must be based upon a ruling or
administrative pronouncement of the Internal Revenue Service
(the IRS), to the effect that the holders of the
junior subordinated debt securities will not recognize income,
gain or loss for U.S. federal income tax purposes as a
result of such deposit or defeasance and will be required to pay
U.S. federal income tax in the same manner as if such
defeasance had not occurred. (
Sections 4.2, 4.3 and
4.4
).
When there is a defeasance and discharge, the indenture will no
longer govern the junior subordinated debt securities, Citigroup
will no longer be liable for payment and the holders of such
junior subordinated debt securities will be entitled only to the
deposited funds. When there is a covenant defeasance, however,
Citigroup will continue to be obligated for payments when due if
the deposited funds are not sufficient to pay the holders.
The obligations under the indenture to pay all expenses of
Citigroup Capital, to register the transfer or exchange of
junior subordinated debt securities, to replace mutilated,
defaced, destroyed, lost or stolen junior subordinated debt
securities, and to maintain paying agents and hold monies for
payment in trust will continue even if Citigroup exercises its
defeasance and discharge or covenant defeasance option.
Concerning
the Indenture Trustee
The indenture trustee has extended substantial credit
facilities, the borrowings under which constitute Senior
Indebtedness, to Citigroup. Citigroup and certain of its
subsidiaries also maintain bank accounts, borrow money and have
other customary commercial banking or investment banking
relationships with the indenture trustee in the ordinary course
of business.
Consolidation,
Merger and Sale of Assets
The indenture provides that Citigroup will not consolidate or
merge with another corporation or convey, transfer or lease its
assets substantially as an entirety unless:
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the successor is a corporation organized in the United States
and expressly assumes the due and punctual payment of the
principal of, and premium, if any, and interest on all junior
subordinated debt securities issued thereunder and the
performance of every other covenant of the indenture on the part
of Citigroup; and
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immediately thereafter no default and no event which, after
notice or lapse of time, or both, would become a default, shall
have happened and be continuing.
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Upon any such consolidation, merger, conveyance or transfer, the
successor corporation shall succeed to and be substituted for
Citigroup under the indenture. Thereafter the predecessor
corporation shall be relieved of all obligations and covenants
under the indenture and the junior subordinated debt securities.
(Sections 8.1 and 8.2)
40
Book-Entry
and Settlement
If distributed to holders of capital securities in connection
with the involuntary or voluntary dissolution,
winding-up
or liquidation of Citigroup Capital, the junior subordinated
debt securities will be issued in the form of one or more global
certificates registered in the name of the depositary or its
nominee. Each global certificate is referred to as a
global security. Except under the limited
circumstances described below under
Discontinuance of the Depositarys
Services, junior subordinated debt securities represented
by a global security will not be exchangeable for, and will not
otherwise be issuable as, junior subordinated debt securities in
definitive form. The global securities may not be transferred
except by the depositary to a nominee of the depositary or by a
nominee of the depositary to the depositary or another nominee
of the depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in
definitive form. These laws may impair the ability to transfer
or pledge beneficial interests in a global security.
Except as provided below, owners of beneficial interests in a
global security will not be entitled to receive physical
delivery of junior subordinated debt securities in definitive
form and will not be considered the holders, as defined in the
indenture, of the global security for any purpose under the
indenture. A global security representing junior subordinated
debt securities is only exchangeable for another global security
of like denomination and tenor to be registered in the name of
the depositary or its nominee or to a successor depositary or
its nominee. This means that each beneficial owner must rely on
the procedures of the depositary, or if such person is not a
participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a
holder under the indenture.
The
Depositary
If junior subordinated debt securities are distributed to
holders of capital securities in liquidation of such
holders interests in Citigroup Capital, DTC will act as
securities depositary for the junior subordinated debt
securities. As of the date of this prospectus, the description
in this prospectus of DTCs book-entry system and
DTCs practices as they relate to purchases, transfers,
notices and payments relating to the capital securities apply in
all material respects to any debt obligations represented by one
or more global securities held by DTC. Citigroup may appoint a
successor to DTC or any successor depositary in the event DTC or
such successor depositary is unable or unwilling to continue as
a depositary for the global securities. For a description of DTC
and the specific terms of the depositary arrangements, see
Description of the Capital Securities
Book-Entry Only Issuance.
None of Citigroup, Citigroup Capital, the indenture trustee, any
paying agent and any other agent of Citigroup or the indenture
trustee will have any responsibility or liability for any aspect
of the records relating to or payments made on account of
beneficial ownership interests in a global security for such
junior subordinated debt securities or for maintaining,
supervising or reviewing any records relating to such beneficial
ownership interests.
Discontinuance
of the Depositarys Services
A global security shall be exchangeable for junior subordinated
debt securities registered in the names of persons other than
the depositary or its nominee only if:
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the depositary notifies Citigroup that it is unwilling or unable
to continue as a depositary for such global security and no
successor depositary shall have been appointed;
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the depositary, at any time, ceases to be a clearing agency
registered under the Exchange Act at which time the depositary
is required to be so registered to act as such depositary and no
successor depositary shall have been appointed; or
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Citigroup, in its sole discretion, determines that such global
security shall be so exchangeable.
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41
Any global security that is exchangeable pursuant to the
preceding sentence shall be exchangeable for junior subordinated
debt securities registered in such names as the depositary shall
direct. It is expected that such instructions will be based upon
directions received by the depositary from its participants
relating to ownership of beneficial interests in such global
security.
Certain
Covenants
If the junior subordinated debt securities are issued to
Citigroup Capital or a trustee of such trust in connection with
the issuance of trust securities by Citigroup Capital and
(1) there shall have occurred and be continuing a default
under the indenture;
(2) Citigroup shall be in default relating to its payment
or other obligations under the guarantee; or
(3) Citigroup shall have given notice of its election to
defer payments of interest on the junior subordinated debt
securities by extending the interest payment period and such
period, or any extension of such period, shall be continuing;
then
(a) Citigroup and its subsidiaries shall not declare or pay
any dividend on, make any distributions relating to, or redeem,
purchase, acquire or make a liquidation payment relating to, any
of its capital stock or make any guarantee payment with respect
thereto other than
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purchases, redemptions or other acquisitions of shares of
capital stock of Citigroup in connection with any employment
contract, benefit plan or other similar arrangement with or for
the benefit of employees, officers, directors or consultants;
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purchases of shares of common stock of Citigroup pursuant to a
contractually binding requirement to buy stock existing prior to
the commencement of the extension period, including under a
contractually binding stock repurchase plan;
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as a result of an exchange or conversion of any class or series
of Citigroups capital stock for any other class or series
of Citigroups capital stock;
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the purchase of fractional interests in shares of
Citigroups capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being
converted or exchanged; or
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purchase of Citigroups capital stock in connection with
the distribution thereof; and
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(b) Citigroup and its subsidiaries shall not make any
payment of interest, principal or premium on, or repay, purchase
or redeem, any debt securities or guarantees issued by Citigroup
that rank equally with or junior to the junior subordinated debt
securities, other than
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any payment of current or deferred interest on securities that
rank equally with the junior subordinated debt securities that
is made
pro rata
to the amounts due on such securities
(including the junior subordinated debt securities), provided
that any such payments of deferred interest are made in
accordance with the fifth full paragraph on page 37 under
Alternative Payment Mechanism; and
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any payments of deferred interest on securities that rank
equally with the junior subordinated debt securities that, if
not made, would give rise to an event of default permitting
acceleration of such securities.
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These restrictions, however, will not apply to any stock
dividends paid by Citigroup where the dividend stock is the same
stock as that on which the dividend is being paid.
(
Section 13.3)
So long as the trust securities remain outstanding, Citigroup
will covenant to:
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directly or indirectly maintain 100% ownership of the common
securities of Citigroup Capital, unless a permitted successor of
Citigroup succeeds to its ownership of the common securities;
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42
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not voluntarily dissolve,
wind-up
or
terminate Citigroup Capital, except in connection with
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(a) a distribution of junior subordinated debt
securities or
(b) mergers, consolidations or amalgamations permitted by
the declaration;
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timely perform its duties as sponsor of Citigroup
Capital; and
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use its reasonable efforts to cause Citigroup Capital to
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(a) remain a statutory trust, except in connection with the
distribution of junior subordinated debt securities to the
holders of trust securities in liquidation of Citigroup Capital,
the redemption of all of the trust securities of Citigroup
Capital, or mergers, consolidations or amalgamations, each as
permitted by the declaration of Citigroup Capital, and
(b) otherwise continue to be classified as a grantor trust
for United States federal income tax purposes.
(Section 10.5)
Miscellaneous
The indenture provides that Citigroup will pay all fees and
expenses related to:
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the offering of the trust securities and the junior subordinated
debt securities;
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the organization, maintenance and dissolution of Citigroup
Capital;
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the retention of the regular trustees; and
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the enforcement by the institutional trustee of the rights of
the holders of the capital securities.
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43
DESCRIPTION
OF GUARANTEE
Set forth below is a summary of information concerning the
guarantee that will be executed and delivered by Citigroup for
the benefit of the holders of capital securities. The guarantee
will be qualified as an indenture under the Trust Indenture Act.
The Bank of New York will act as the guarantee trustee. The
terms of the guarantee will be those set forth in the guarantee
and those made part of the guarantee by the Trust Indenture Act.
The summary is not intended to be complete and is qualified in
all respects by the provisions of the form of guarantee, which
is filed as an exhibit to the registration statement of which
this prospectus forms a part, and the Trust Indenture Act. The
guarantee will be held by the guarantee trustee for the benefit
of the holders of the capital securities.
General
Pursuant to, and to the extent set forth in the guarantee,
Citigroup will irrevocably and unconditionally agree to pay in
full to the holders of the capital securities, except to the
extent paid by Citigroup Capital, as and when due, regardless of
any defense, right of set-off or counterclaim that Citigroup
Capital may have or assert, the following payments, which are
referred to as guarantee payments, without
duplication:
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any accrued and unpaid distributions that are required to be
paid on the capital securities, to the extent Citigroup Capital
has funds available for such distributions;
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the redemption price of $ per
capital security, plus all accrued and unpaid distributions, to
the extent Citigroup Capital has funds available for such
redemptions, relating to any capital securities called for
redemption by Citigroup Capital; and
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upon a voluntary or involuntary dissolution,
winding-up
or termination of Citigroup Capital, other than in connection
with the distribution of junior subordinated debt securities to
the holders of capital securities or the redemption of all of
the capital securities, the lesser of
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the aggregate of the liquidation amount and all accrued and
unpaid distributions on the capital securities to the date of
payment, or
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the amount of assets of Citigroup Capital remaining for
distribution to holders of the capital securities in liquidation
of Citigroup Capital.
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Citigroups obligation to make a guarantee payment may be
satisfied by direct payment of the required amounts by Citigroup
to the holders of capital securities or by causing Citigroup
Capital to pay such amounts to such holders.
The guarantee will not apply to any payment of distributions or
redemption price, or to payments upon the dissolution,
winding-up
or termination of Citigroup Capital, except to the extent
Citigroup Capital has funds available for such payments. If
Citigroup does not make interest payments on the junior
subordinated debt securities, Citigroup Capital will not pay
distributions on the capital securities and will not have funds
available for such payments. The guarantee, when taken together
with Citigroups obligations under the junior subordinated
debt securities, the indenture and the declaration, including
its obligations to pay costs, expenses, debts and liabilities of
Citigroup Capital, other than those relating to trust
securities, will provide a full and unconditional guarantee on a
subordinated basis by Citigroup of payments due on the capital
securities. Citigroups obligations in respect of the
guarantee will be subordinated, both in liquidation and in
priority of payment, to Senior Indebtedness of Citigroup to the
same extent that the junior subordinated debt securities are
subordinated to Senior Indebtedness of Citigroup. See
Description of the Junior Subordinated Debt
Securities.
44
Important
Covenants of Citigroup
In the guarantee, Citigroup will covenant that, so long as any
capital securities remain outstanding, if there shall have
occurred any event that would constitute an event of default
under such guarantee or a default under the declaration, then:
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Citigroup and its subsidiaries shall not declare or pay any
dividend on, make any distributions relating to, or redeem,
purchase, acquire or make a liquidation payment relating to, any
of its capital stock or make any guarantee payment with respect
thereto other than
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(1) purchases, redemptions or other acquisitions of shares
of capital stock of Citigroup in connection with any employment
contract, benefit plan or other similar arrangement with or for
the benefit of employees, officers, directors or consultants;
(2) purchases of shares of common stock of Citigroup
pursuant to a contractually binding requirement to buy stock
existing prior to the commencement of the extension period,
including under a contractually binding stock repurchase plan;
(3) as a result of an exchange or conversion of any class
or series of Citigroups capital stock for any other class
or series of Citigroups capital stock;
(4) the purchase of fractional interests in shares of
Citigroups capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being
converted or exchanged; or
(5) purchase of Citigroups capital stock in
connection with the distribution thereof; and
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Citigroup and its subsidiaries shall not make any payment of
interest, principal or premium on, or repay, purchase or redeem,
any debt securities or guarantees issued by Citigroup that rank
equally with or junior to the junior subordinated debt
securities, other than
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any payment of current or deferred interest on securities that
rank equally with the junior subordinated debt securities that
is made
pro rata
to the amounts due on such securities
(including the junior subordinated debt securities), provided
that any such payments of deferred interest are made in
accordance with the fifth full paragraph on page 37 under
Description of the Junior Subordinated Debt
Securities Alternative Payment
Mechanism; and
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any payments of deferred interest on securities that rank
equally with the junior subordinated debt securities that, if
not made, would give rise to an event of default permitting
acceleration of such securities.
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The above restrictions, however, will not apply to any stock
dividends paid by Citigroup where the dividend stock is the same
stock as that on which the dividend is being paid.
In addition, if any extension period lasts longer than one year,
unless required to do so by the Federal Reserve and subject to
the exceptions listed in the preceding paragraph, Citigroup will
not, and it will not permit its subsidiaries to, purchase any of
its common stock for a one-year period following the payment of
all deferred interest pursuant to the alternative payment
mechanism.
Modification
of Guarantee; Assignment
The guarantee may be amended only with the prior approval of the
holders of not less than a majority in aggregate liquidation
amount of the outstanding capital securities. No vote will be
required, however, for any changes that do not adversely affect
the rights of holders of capital securities. All guarantees and
agreements contained in the guarantee shall bind the successors,
assignees, receivers, trustees and representatives of Citigroup
and shall inure to the benefit of the holders of the capital
securities then outstanding.
Events of
Default
An event of default under the guarantee will occur upon the
failure of Citigroup to perform any of its payment or other
obligations required by the guarantee. The holders of a majority
in aggregate liquidation
45
amount of the capital securities have the right to direct the
time, method and place of conducting any proceeding for any
remedy available to the guarantee trustee in respect of the
guarantee or to direct the exercise of any trust or power
conferred upon the guarantee trustee under the guarantee.
If the guarantee trustee fails to enforce its rights under the
guarantee, any holder of related capital securities may directly
sue Citigroup to enforce the guarantee trustees rights
under the guarantee without first suing Citigroup Capital, the
guarantee trustee or any other person or entity. A holder of
capital securities may also directly sue Citigroup to enforce
such holders right to receive payment under the guarantee
without first (1) directing the guarantee trustee to
enforce the terms of the guarantee or (2) suing Citigroup
Capital or any other person or entity.
Citigroup will be required to provide to the guarantee trustee
such documents, reports and information as required by the Trust
Indenture Act.
Information
Concerning the Guarantee Trustee
Prior to the occurrence of a default relating to the guarantee,
the guarantee trustee undertakes to perform only such duties as
are specifically set forth in the guarantee. After such default,
the guarantee trustee will exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her
own affairs. Provided that the foregoing requirements have been
met, the guarantee trustee is under no obligation to exercise
any of the powers vested in it by the guarantee at the request
of any holder of capital securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities
that might be incurred thereby.
Termination
of the Guarantee
The guarantee will terminate as to the capital securities upon
full payment of the redemption price of all capital securities,
upon distribution of the junior subordinated debt securities to
the holders of the capital securities or upon full payment of
the amounts payable in accordance with the declaration upon
liquidation of Citigroup Capital. The guarantee will continue to
be effective or will be reinstated, as the case may be, if at
any time any holder of capital securities must restore payment
of any sums paid under the capital securities or the guarantee.
Status of
the Guarantee
The guarantee will constitute an unsecured obligation of
Citigroup and will rank:
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junior in liquidation and in priority of payment to all Senior
Indebtedness of Citigroup to the extent provided in the
indenture; and
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equally with all other enhanced trust preferred security
guarantees that Citigroup issues in the future.
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The terms of the capital securities provide that each holder of
capital securities by acceptance of such securities agrees to
the subordination provisions and other terms of the guarantee.
The guarantee will constitute a guarantee of payment and not of
collection. This means that the guaranteed party may directly
sue the guarantor to enforce its rights under the guarantee
without suing any other person or entity.
Governing
Law
The guarantee for all purposes will be governed by and construed
in accordance with the laws of the State of New York.
46
EFFECT OF
OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
As set forth in the declaration, the sole purpose of Citigroup
Capital is to issue the trust securities and to invest the
proceeds from such issuance in the junior subordinated debt
securities.
As long as payments of interest and other payments are made when
due on the junior subordinated debt securities, such payments
will be sufficient to cover the distributions and payments due
on the trust securities. This is due to the following factors:
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the aggregate principal amount of junior subordinated debt
securities will be equal to the aggregate stated liquidation
amount of the trust securities;
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the interest rate and the interest and other payment dates on
the junior subordinated debt securities will match the
distribution rate and distribution and other payment dates for
the capital securities;
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under the indenture, Citigroup will pay, and Citigroup Capital
will not be obligated to pay, directly or indirectly, all costs,
expenses, debts and obligations of Citigroup Capital other than
those relating to the trust securities; and
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the declaration further provides that the regular trustees may
not cause or permit Citigroup Capital to engage in any activity
that is not consistent with the purposes of Citigroup Capital.
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Payments of distributions, to the extent there are available
funds, and other payments due on the capital securities, to the
extent there are available funds, are guaranteed by Citigroup to
the extent described in this prospectus. If Citigroup does not
make interest payments on the junior subordinated debt
securities, Citigroup Capital will not have sufficient funds to
pay distributions on the capital securities. The guarantee is a
subordinated guarantee in relation to the capital securities.
The guarantee does not apply to any payment of distributions
unless and until Citigroup Capital has sufficient funds for the
payment of such distributions. See Description of
Guarantee.
The guarantee covers the payment of distributions and other
payments on the capital securities only if and to the extent
that Citigroup has made a payment of interest or principal or
other payments on the junior subordinated debt securities. The
guarantee, when taken together with Citigroups obligations
under the junior subordinated debt securities and the indenture
and its obligations under the declaration, will provide a full
and unconditional guarantee of distributions, redemption
payments and liquidation payments on the capital securities.
If Citigroup fails to make interest or other payments on the
junior subordinated debt securities when due, taking account of
any extension period, the declaration allows the holders of the
capital securities to direct the institutional trustee to
enforce its rights under the junior subordinated debt
securities. If the institutional trustee fails to enforce these
rights, any holder of capital securities may directly sue
Citigroup to enforce such rights without first suing the
institutional trustee or any other person or entity. See
Description of the Capital Securities
Declaration Defaults and Voting
Rights. Although various events may constitute defaults
under the indenture, a default that is not an event of
default and acceleration will not trigger the acceleration
of principal and interest on the junior subordinated debt
securities. Such acceleration of principal and interest will
occur only upon Citigroups failure to pay in full all
interest accrued upon the conclusion of an extension period of
40 quarters (10 years) or as a result of specified
events of bankruptcy, insolvency, or reorganization of
Citigroup. See Description of the Junior Subordinated Debt
Securities Indenture Events of Default and
Acceleration.
A holder of capital securities may institute a direct action if
a declaration default has occurred and is continuing and such
event is attributable to the failure of Citigroup to pay
interest or principal on the junior subordinated debt securities
on the date such interest or principal is otherwise payable. A
direct action may be brought without first (1) directing
the institutional trustee to enforce the terms of the junior
subordinated debt securities or (2) suing Citigroup to
enforce the institutional trustees rights under the junior
subordinated debt securities. In connection with such direct
action, Citigroup will be subrogated to the rights of such
holder of capital securities under the declaration to the extent
of any payment made by Citigroup to such holder of
47
capital securities. Consequently, Citigroup will be entitled to
payment of amounts that a holder of capital securities receives
in respect of an unpaid distribution to the extent that such
holder receives or has already received full payment relating to
such unpaid distribution from Citigroup Capital.
Citigroup acknowledges that the guarantee trustee will enforce
the guarantee on behalf of the holders of the capital
securities. If Citigroup fails to make payments under the
guarantee, the guarantee allows the holders of the capital
securities to direct the guarantee trustee to enforce its rights
thereunder. If the guarantee trustee fails to enforce the
guarantee, any holder of capital securities may directly sue
Citigroup to enforce the guarantee trustees rights under
the guarantee. Such holder need not first sue Citigroup Capital,
the guarantee trustee, or any other person or entity. A holder
of capital securities may also directly sue Citigroup to enforce
such holders right to receive payment under the guarantee.
Such holder need not first (1) direct the guarantee trustee
to enforce the terms of the guarantee or (2) sue Citigroup
Capital or any other person or entity.
Citigroup and Citigroup Capital believe that the above
mechanisms and obligations, taken together, are equivalent to a
full and unconditional guarantee by Citigroup of payments due on
the capital securities. See Description of
Guarantee General.
48
CERTAIN
TERMS OF THE CAPITAL REPLACEMENT COVENANT
The following is a summary of certain terms of the capital
replacement covenant. This summary is not a complete description
of the capital replacement covenant and is qualified in its
entirety by the terms and provisions of the full document, which
will be filed by Citigroup on a Current Report on
Form 8-K
and incorporated by reference into the registration statement of
which this prospectus is a part.
Citigroup will covenant in the capital replacement covenant for
the benefit of persons that buy or hold a specified series of
its long-term indebtedness that ranks senior to the junior
subordinated debt securities that it will not repay, redeem or
purchase, and it will cause its subsidiaries, including
Citigroup Capital, not to repay, redeem or purchase, the junior
subordinated debt securities or the capital securities
before ,
20 , unless:
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Citigroup has obtained the prior approval of the Federal
Reserve, if such approval is then required by the Federal
Reserve; and
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subject to certain limitations, during the six (6) months
prior to the date of that repayment, redemption or purchase
Citigroup has received proceeds from the sale of replacement
capital securities in the amounts specified in the capital
replacement covenant (which amounts will vary based on the
redemption date and the type of securities sold). Replacement
capital securities are securities that have equity-like
characteristics that are the same as, or more equity-like than,
the applicable characteristics of the capital securities at the
time of repayment, redemption or purchase.
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The term repay in this paragraph includes the
defeasance by Citigroup of the junior subordinated debt
securities, as well as the satisfaction and discharge of its
obligations under the indenture.
Citigroups covenants in the capital replacement covenant
run only to the benefit of holders of the specified series of
its long-term indebtedness (the covered debt). The
capital replacement covenant is not intended for the benefit of
holders of the capital securities and may not be enforced by
them, and the capital replacement covenant is not a term of the
indenture, the declaration or the capital securities.
Citigroups ability to raise proceeds from replacement
capital securities during the six months prior to a proposed
redemption or purchase will depend on, among other things,
market conditions at that time as well as the acceptability to
prospective investors of the terms of those replacement capital
securities.
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Citigroup may amend or supplement the capital replacement
covenant with the consent of the holders of a majority by
principal amount of the debt that at the time of the amendment
or supplement is the covered debt. Citigroup may, acting alone
and without the consent of the holders of the covered debt,
amend or supplement the capital replacement covenant (i) to
eliminate common stock, debt exchangeable for common stock,
rights to acquire common stock,
and/or
mandatorily convertible preferred stock as replacement capital
securities if, after the date of the capital replacement
covenant, an accounting standard or interpretive guidance of an
existing accounting standard issued by an organization or
regulator that has responsibility for establishing or
interpreting accounting standards in the United States becomes
effective such that there is more than an insubstantial risk
that failure to do so would result in a reduction in
Citigroups earnings per share as calculated in accordance
with generally accepted accounting principles in the United
States; (ii) if the amendment or supplement is not adverse
to the holders of the then-effective series of covered debt and
an officer of Citigroup has delivered a written certificate to
the holders of the covered debt to this effect; or (iii) if
the effect of such amendment or supplement is solely to impose
additional restrictions on, or eliminate certain of, the types
of securities qualifying as replacement capital securities
(other than the securities covered by the (i) clause
above), and an officer of Citigroup has delivered a written
certificate to the holders of the then-effective covered debt
stating that, in his or her determination, such amendment or
supplement would not adversely affect them.
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The capital replacement covenant will terminate upon the earlier
to occur of
(i) ,
20 ; (ii) the date on which the holders of a
majority of the principal amount of the then outstanding
specified series of long term indebtedness agree to terminate
the capital replacement covenant; (iii) the date on which
Citigroup no longer has outstanding any indebtedness eligible to
qualify as covered debt as defined in the capital replacement
covenant; or (iv) the occurrence of an event of default and
acceleration under the indenture.
49
UNITED
STATES FEDERAL INCOME TAX CONSIDERATIONS
General
The following is a summary of certain United States federal
income tax consequences of the purchase, ownership and
disposition of capital securities. The summary is based on:
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laws;
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regulations;
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rulings; and
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decisions now in effect,
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all of which may change, possibly with retroactive effect. This
summary deals only with a beneficial owner of capital securities
that purchases the capital securities upon original issuance at
the initial issue price and who will hold the capital securities
as capital assets. This summary does not address all of the
United States federal income tax considerations that may be
relevant to a beneficial owner of capital securities. For
example, this summary does not address tax considerations
applicable to investors to whom special tax rules may apply,
including:
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banks or other financial institutions;
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tax-exempt entities;
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insurance companies;
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regulated investment companies;
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common trust funds;
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entities that are treated for United States federal income tax
purposes as partnerships or other pass-through entities;
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controlled foreign corporations;
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dealers in securities or currencies;
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persons that will hold the capital securities as a hedge or in
order to hedge against currency risk or as a part of an
integrated investment, including a straddle or conversion
transaction, comprised of a capital security and one or more
other positions; or
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United States holders (as defined below) that have a functional
currency other than the U.S. dollar.
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As used in this summary, a United States holder is a
beneficial owner of capital securities who is:
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a citizen or resident of the United States;
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a corporation or other entity taxable as a corporation created
or organized in or under the laws of the United States or any
political subdivision thereof;
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an estate, if United States federal income taxation is
applicable to the income of such estate regardless of the
incomes source; or
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a trust if a United States court is able to exercise primary
supervision over the trusts administration and one or more
United States persons have the authority to control all of the
trusts substantial decisions.
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As used in this summary, the term
non-United
States holder means a beneficial owner of capital
securities who is not a United States holder and the term
United States means the United States of America,
including the fifty states and the District of Columbia, but
excluding its territories and possessions.
50
Prospective investors should consult their tax advisors in
determining the tax consequences to them of purchasing, holding
and disposing of the capital securities, including the
application to their particular situation of the United States
federal income tax considerations discussed below, as well as
the application of state, local, foreign or other tax laws.
Classification
of the Junior Subordinated Debt Securities
In connection with the issuance of the junior subordinated debt
securities, Skadden, Arps, Slate, Meagher & Flom LLP,
special tax counsel to Citigroup and Citigroup Capital, will
render its opinion generally to the effect that, although the
matter is not free from doubt, under then current law and
assuming full compliance with the terms of the indenture and
other relevant documents, and based on the facts and assumptions
contained in such opinion, the junior subordinated debt
securities held by Citigroup Capital will be classified for
United States federal income tax purposes as indebtedness of
Citigroup. The remainder of this discussion assumes that the
classification of the junior subordinated debt securities as
indebtedness will be respected for United States federal income
tax purposes.
Classification
of Citigroup Capital
In connection with the issuance of the capital securities,
Skadden, Arps, Slate, Meagher & Flom LLP will render
its opinion generally to the effect that, under then current law
and assuming full compliance with the terms of the declaration,
the indenture and other relevant documents, and based on the
facts and assumptions contained in such opinion, Citigroup
Capital will be classified for United States federal income tax
purposes as a grantor trust and not as an association taxable as
a corporation. Accordingly, for United States federal income tax
purposes, each holder of capital securities generally will be
considered the owner of an undivided interest in the junior
subordinated debt securities. Each United States holder will be
required to include in its gross income all interest or original
issue discount (OID) and any gain recognized
relating to its allocable share of those junior subordinated
debt securities.
United
States Holders
Interest
Income and Original Issue Discount
Under applicable Treasury regulations, a remote
contingency that stated interest will not be timely paid will be
ignored in determining whether a debt instrument is issued with
OID. Citigroup believes that the likelihood of its exercising
its option to defer payments is remote within the meaning of the
Treasury regulations. Based on the foregoing, Citigroup believes
that, although the matter is not free from doubt, the junior
subordinated debt securities will not be considered to be issued
with OID at the time of their original issuance. Accordingly,
each United States holder of capital securities should include
in gross income such United States holders allocable share
of interest on the junior subordinated debt securities in
accordance with such United States holders method of tax
accounting.
Under the regulations, if the option to defer any payment of
interest was determined not to be remote, or if
Citigroup exercised such option, the junior subordinated debt
securities would be treated as issued with OID at the time of
issuance or at the time of such exercise, as the case may be.
Then, all stated interest on the junior subordinated debt
securities would thereafter be treated as OID as long as the
junior subordinated debt securities remained outstanding. In
such event, all of a United States holders taxable
interest income relating to the junior subordinated debt
securities would constitute OID that would have to be included
in income on an economic accrual basis before the receipt of the
cash attributable to the interest, regardless of such United
States holders method of tax accounting, and actual
distributions of stated interest would not be reported as
taxable income. Consequently, a United States holder of capital
securities would be required to include in gross income OID even
though Citigroup would not make any actual cash payments during
an extension period.
No rulings or other interpretations have been issued by the IRS
which have addressed the meaning of the term remote
as used in the applicable Treasury regulations, and it is
possible that the IRS could take a position contrary to the
interpretation in this prospectus.
51
Because income on the capital securities will constitute
interest or OID, corporate holders of capital securities will
not be entitled to a dividends-received deduction relating to
any income recognized relating to the capital securities, and
individual holders will not be entitled to a lower income tax
rate in respect of certain dividends, relating to any income
recognized relating to the capital securities.
Receipt
of Junior Subordinated Debt Securities or Cash upon Liquidation
of Citigroup Capital
Under the circumstances described in this prospectus, junior
subordinated debt securities may be distributed to holders in
exchange for capital securities upon the liquidation of
Citigroup Capital. Under current law, such a distribution, for
United States federal income tax purposes, would be treated as a
non-taxable event to each United States holder. Each United
States holder would continue to be taxed with respect to the
junior subordinated debt securities received in the liquidation
as described herein with respect to the capital securities.
Accordingly, each United States holder would have an aggregate
tax basis in the junior subordinated debt securities equal to
the holders aggregate tax basis in its capital securities,
and the United States holders holding period in the junior
subordinated debt securities would include the period during
which the capital securities were held by such holder. See
Description of the Capital Securities
Distribution of the Junior Subordinated Debt Securities.
Under the circumstances described in this prospectus, the junior
subordinated debt securities may be redeemed by Citigroup for
cash and the proceeds of such redemption distributed by
Citigroup Capital to holders in redemption of their capital
securities. Under current law, such a redemption would, for
United States federal income tax purposes, constitute a taxable
disposition of the redeemed capital securities. Accordingly, a
United States holder could recognize gain or loss as if it had
sold such redeemed capital securities for cash. See
Description of the Capital Securities Special
Event Redemption and Sale, Exchange, or
Other Disposition of Capital Securities below.
Sale,
Exchange, or Other Disposition of Capital Securities
Upon the sale, exchange, retirement or other taxable disposition
(collectively, a disposition) of a capital security,
a United States holder will be considered to have disposed of
all or part of its ratable share of the junior subordinated debt
securities. Such United States holder will recognize gain or
loss equal to the difference between its adjusted tax basis in
the capital securities and the amount realized on the
disposition of such capital securities. Assuming that Citigroup
does not exercise its option to defer payment of interest on the
junior subordinated debt securities and that the junior
subordinated debt securities are not deemed to be issued with
OID, a United States holders adjusted tax basis in the
capital securities generally will be its initial purchase price.
If the junior subordinated debt securities are deemed to be
issued with OID, a United States holders tax basis in the
capital securities generally will be its initial purchase price,
increased by OID previously includible in such United States
holders gross income to the date of disposition and
decreased by distributions or other payments received on the
capital securities since and including the date that the junior
subordinated debt securities were deemed to be issued with OID.
Such gain or loss generally will be a capital gain or loss,
except to the extent of any accrued interest relating to such
United States holders ratable share of the junior
subordinated debt securities required to be included in income,
and generally will be a long-term capital gain or loss if the
capital securities have been held for more than one year.
Should Citigroup exercise its option to defer payment of
interest on the junior subordinated debt securities, the capital
securities may trade at a price that does not fully reflect the
accrued but unpaid interest relating to the underlying junior
subordinated debt securities. In the event of such a deferral, a
United States holder who disposes of its capital securities
between record dates for payments of distributions will be
required to include in income as ordinary income accrued but
unpaid interest on the junior subordinated debt securities to
the date of disposition and to add such amount to its adjusted
tax basis in its ratable share of the underlying junior
subordinated debt securities deemed disposed of. To the extent
the selling price is less than the holders adjusted tax
basis, such holder will recognize a capital loss. Capital losses
generally cannot be applied to offset ordinary income for United
States federal income tax purposes.
52
Information
Reporting and Backup Withholding
Generally, income on the capital securities will be reported to
the IRS and to holders on
Forms 1099-INT,
which forms should be mailed to holders of capital securities by
January 31 following each calendar year of payment. In
addition, United States holders may be subject to a backup
withholding tax on such payments if they do not provide their
taxpayer identification numbers to the trustee in the manner
required, fail to certify that they are not subject to backup
withholding tax, or otherwise fail to comply with applicable
backup withholding tax rules. United States holders may also be
subject to information reporting and backup withholding tax with
respect to the proceeds from a disposition of the capital
securities. Any amounts withheld under the backup withholding
rules will be allowed as a credit against the United States
holders United States federal income tax liability
provided the required information is timely furnished to the IRS.
Non-United
States Holders
Under current United States federal income tax law, although not
free from doubt:
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withholding of United States federal income tax will not apply
to a payment on a capital security to a
non-United
States holder, provided that,
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(1) the holder does not actually or constructively own
10 percent or more of the total combined voting power of
all classes of stock of Citigroup entitled to vote and is not a
controlled foreign corporation related to Citigroup through
stock ownership;
(2) the beneficial owner provides a statement signed under
penalties of perjury that includes its name and address and
certifies that it is a
non-United
States holder in compliance with applicable
requirements; and
(3) neither Citigroup nor its paying agent has actual
knowledge or reason to know that the beneficial owner of the
note is a United States holder.
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withholding of United States federal income tax will generally
not apply to any gain realized on the disposition of a capital
security.
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Despite the above, if a
non-United
States holder is engaged in a trade or business in the United
States (or, if certain tax treaties apply, if the
non-United
States holder maintains a permanent establishment within the
United States) and the interest on the capital securities is
effectively connected with the conduct of that trade or business
(or, if certain tax treaties apply, attributable to that
permanent establishment), such
non-United
States holder will be subject to United States federal income
tax on the interest on a net income basis in the same manner as
if such
non-United
States holder were a United States holder. In addition, a
non-United
States holder that is a foreign corporation engaged in a trade
or business in the United States may be subject to a 30% (or, if
certain tax treaties apply, such lower rates as provided) branch
profits tax.
Any gain realized on the disposition of a capital security
generally will not be subject to United States federal income
tax unless:
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that gain is effectively connected with the
non-United
States holders conduct of a trade or business in the
United States (or, if certain tax treaties apply, is
attributable to a permanent establishment maintained by the
non-United
States holder within the United States); or
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the
non-United
States holder is an individual who is present in the United
States for 183 days or more in the taxable year of the
disposition and certain other conditions are met.
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In general, backup withholding and information reporting will
not apply to a payment of interest on a capital security to a
non-United
States holder, or to proceeds from the disposition of a capital
security by a
non-United
States holder, in each case, if the holder certifies under
penalties of perjury that it is a
non-United
States holder and neither Citigroup nor its paying agent has
actual knowledge to the contrary. Any amounts withheld under the
backup withholding rules will be refunded or credited against
the
non-United
States holders United States federal income tax liability
provided the required information is timely furnished to the
IRS. In certain circumstances, if a capital security is not held
through a qualified intermediary, the amount of
53
payments made on such capital security, the name and address of
the beneficial owner and the amount, if any, of tax withheld may
be reported to the IRS.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE
IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE
APPLICABLE DEPENDING UPON A HOLDERS PARTICULAR SITUATION.
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS IN DETERMINING THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE CAPITAL SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
ERISA
CONSIDERATIONS
A fiduciary of a pension, profit-sharing or other employee
benefit plan governed by the Employee Retirement Income Security
Act of 1974, as amended (ERISA), should consider the
fiduciary standards of ERISA in the context of the ERISA
plans particular circumstances before authorizing an
investment in the capital securities of Citigroup Capital. Among
other factors, the fiduciary should consider whether such an
investment is in accordance with the documents governing the
ERISA plan and whether the investment is appropriate for the
ERISA plan in view of its overall investment policy and
diversification of its portfolio.
Certain provisions of ERISA and the Internal Revenue Code of
1986, as amended (the Code), prohibit employee
benefit plans (as defined in Section 3(3) of ERISA) that
are subject to Title I of ERISA, plans described in
Section 4975(e)(1) of the Code (including, without
limitation, retirement accounts and Keogh Plans), and entities
whose underlying assets include plan assets by reason of a
plans investment in such entities (including, without
limitation, as applicable, insurance company general accounts),
from engaging in certain transactions involving plan
assets with parties that are parties in
interest under ERISA or disqualified persons
under the Code with respect to the plan or entity. Governmental
and other plans that are not subject to ERISA or to the Code may
be subject to similar restrictions under state, federal or local
law. Any employee benefit plan or other entity, to which such
provisions of ERISA, the Code or similar law apply, proposing to
acquire the capital securities should consult with its legal
counsel.
The U.S. Department of Labor has issued a regulation with
regard to whether the underlying assets of an entity in which
employee benefit plans acquire equity interests are deemed to be
plan assets (the Plan Asset Regulation). Under such
regulation, for purposes of ERISA and section 4975 of the
Code, the assets of Citigroup Capital would be deemed to be
plan assets of a plan whose assets were used to
purchase capital securities of Citigroup Capital if the capital
securities of Citigroup Capital were considered to be equity
interests in Citigroup Capital and no exception to plan asset
status were applicable under such regulation.
The Plan Asset Regulation defines an equity interest
as any interest in an entity other than an instrument that is
treated as indebtedness under applicable local law and which has
no substantial equity features. Although it is not free from
doubt, capital securities of Citigroup Capital offered hereby
should be treated as equity interests for purposes
of the Plan Asset Regulation.
One exception to plan asset status under the Plan Asset
Regulation (which we refer to as the Publicly Offered
Securities Exception) applies to a class of
equity interests that are (i) widely held
(
i.e.
, held by 100 or more investors who are independent
of the issuer and each other), (ii) freely transferable,
and (iii) either (a) part of a class of securities
registered under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934 (the 34 Act), or (b) sold
as part of an offering of securities to the public pursuant to
an effective registration statement under the Securities Act of
1933 and such class is registered under the 34 Act within
120 days after the end of the fiscal year of the issuer
during which the offering of such securities to the public
occurred. Although no assurances can be given, the underwriters
believe that the Publicly Offered Securities Exception will be
applicable to the capital securities of Citigroup Capital
offered hereby.
If, however, the assets of Citigroup Capital were deemed to be
plan assets of plans that are holders of the capital securities
of Citigroup Capital, a plans investment in the capital
securities of Citigroup Capital might be deemed to constitute a
delegation under ERISA of the duty to manage plan assets by a
fiduciary investing
54
in capital securities of Citigroup Capital. Also, Citigroup
might be considered a party in interest or
disqualified person relating to plans whose assets
were used to purchase capital securities of Citigroup Capital.
If this were the case, an investment in capital securities of
Citigroup Capital by a plan might constitute, or in the course
of the operation of Citigroup Capital give rise to, one or more
prohibited transactions under ERISA or the Code. In particular,
it is likely that under such circumstances a prohibited
extension of credit to Citigroup would be considered to occur
under ERISA and the Code.
In addition, Citigroup might be considered a party in
interest or disqualified person for certain
plans for reasons unrelated to the operation of Citigroup
Capital,
e.g.,
because of the provision of services by
Citigroup or its affiliates to the plan. A purchase of capital
securities of Citigroup Capital by any such plan would be likely
to result in a prohibited extension of credit to Citigroup,
without regard to whether the assets of Citigroup Capital
constituted plan assets.
Accordingly, the capital securities of Citigroup Capital may be
not purchased, held or disposed by any plan or any person
investing plan assets of any plan that is subject to
the prohibited transaction rules of ERISA or Section 4975
of the Code or other similar law, unless one of the following
Prohibited Transaction Class Exemptions (PTCE)
issued by the Department of Labor (or similar exemption or
exception) applies to such purchase, holding and disposition:
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PTCE 96-23
for transactions determined by in-house asset managers,
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PTCE 95-60
for transactions involving insurance company general accounts,
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PTCE 91-38
for transactions involving bank collective investment funds,
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PTCE 90-1
for transactions involving insurance company separate
accounts, or
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PTCE 84-14
for transactions determined by independent qualified
professional asset managers.
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Any purchaser of the capital securities of Citigroup Capital or
any interest therein will be deemed to have represented and
warranted to Citigroup Capital on each day from and including
the date of its purchase of such capital securities through and
including the date of disposition of such capital securities
that either:
(a) it is not a plan subject to Title I of ERISA or
Section 4975 of the Code and is not purchasing such
securities or interest therein on behalf of, or with plan
assets of, any such plan;
(b) its purchase, holding and disposition of the capital
securities are not and will not be prohibited because they are
exempted by one or more of the following prohibited transaction
exemptions:
PTCE 96-23,
95-60,
91-38,
90-1
or
84-14; or
(c) it is a governmental plan (as defined in section 3
or ERISA) or other plan that is not subject to the provisions of
Title I or ERISA or Section 4975 of the Code and its
purchase, holding and disposition of capital securities are not
otherwise prohibited.
The discussion set forth above is general in nature and is not
intended to be complete. Due to the complexity of these rules
and the penalties imposed upon persons involved in prohibited
transactions, it is important that any person considering the
purchase of capital securities of Citigroup Capital with plan
assets consult with its counsel regarding the consequences under
ERISA and the Code, or other similar law, of the acquisition and
ownership of capital securities of Citigroup Capital and the
availability of exemptive relief under the class exemptions
listed above. The sale of the capital securities of Citigroup
Capital to a plan is in no respect a representation by Citigroup
Capital or the underwriters that such an investment meets all
relevant legal requirements with respect to investments by plans
generally or any particular plan, or that such an investment is
appropriate for plans generally or any particular plan.
55
UNDERWRITING
The terms and conditions set forth in the underwriting agreement
dated ,
20 govern the sale and purchase of the capital
securities. Each underwriter named below has severally agreed to
purchase from Citigroup Capital, and Citigroup Capital has
agreed to sell to each underwriter, the number of capital
securities set forth opposite the name of each underwriter.
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Number of
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Capital
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Underwriter
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Securities
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Total
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The underwriting agreement provides that the obligations of the
underwriters to pay for and accept delivery of the capital
securities are subject to the approval of legal matters by their
counsel and to other conditions. The underwriters are committed
to take and pay for all of the capital securities if any are
taken.
Citigroup Capital and Citigroup have granted an option to the
underwriters to purchase up to an
additional
capital securities at the public offering price. The
underwriters may exercise this option for 30 days from the
date of this prospectus solely to cover any over-allotments. If
the underwriters exercise this option, each will be obligated,
subject to conditions contained in the underwriting agreement,
to purchase a number of additional capital securities
proportionate to that underwriters initial number of
capital securities purchased reflected in the table above.
The following table summarizes the commissions to be paid by
Citigroup to the underwriters:
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Per Capital
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Security
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Total
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Public offering price
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$
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$
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(1
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)
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Underwriting commissions to be
paid by Citigroup
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$
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(2
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)
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$
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(2
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)
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Proceeds to Citigroup Capita
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$
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$
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(1)
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Total amounts have been calculated assuming no exercise of the
underwriters over-allotment option.
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(2)
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Underwriting commissions of
$ per capital security will
be paid by Citigroup; provided, however, that for sales to
certain institutions, the commissions will be
$ per capital security.
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Citigroup estimates that its total expenses for the offering,
excluding underwriting commissions, will be approximately
$ .
The underwriters propose to offer part of the capital securities
directly to the public at the initial public offering price set
forth above and part of the capital securities to certain
dealers at the initial public offering price less a concession
not in excess of $ per
capital security, provided, however, that such concession for
sales to certain institutions will not be in excess of
$ per capital security. The
underwriters may allow, and such dealers may reallow, a
concession not in excess of
$ per capital security to
brokers and dealers, provided, however, that such re-allowance
concession for sales to certain institutions will not be in
excess of $ per capital security.
After the initial public offering, the public offering prices
and the concessions to dealers may be changed by the
representatives of the underwriters.
The underwriters are offering the capital securities subject to
prior sale and their acceptance of the capital securities from
Citigroup. The underwriters may reject any order in whole or in
part.
Citigroup Capital and Citigroup have agreed, during the period
beginning on the date of the underwriting agreement and
continuing to and including the date that is sixty days after
the closing date for the purchase of the capital securities, not
to offer, sell, contract to sell or otherwise dispose of any
preferred securities, any preferred stock or any other
securities, including any backup undertakings of such preferred
stock or other securities, of Citigroup or of Citigroup Capital,
in each case that are substantially similar to the capital
56
securities, or any securities convertible into or exchangeable
for the capital securities or such substantially similar
securities of either Citigroup Capital or Citigroup, except
securities in this offering or with the prior written consent of
the underwriters.
Underwriters, dealers and agents may be entitled, under
agreements with Citigroup Capital and Citigroup, to
indemnification by Citigroup against liabilities relating to
material misstatements and omissions. Underwriters, dealers,
agents and their affiliates may engage in transactions (which
may include commercial banking transactions) with, and perform
services for, Citigroup Capital and Citigroup and affiliates of
Citigroup Capital and Citigroup in the ordinary course of
business.
In accordance with Regulation M of the United States
Securities Exchange Act of 1934, the underwriters may over-allot
or effect transactions that stabilize or cover, each of which is
described below.
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Over-allotment involves sales in excess of the offering size,
which creates a short position for the underwriters.
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Stabilizing transactions involve bids to purchase the capital
securities so long as the stabilizing bids do not exceed a
specified maximum.
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Covering transactions involve purchases of the capital
securities in the open market after the distribution has been
completed in order to cover short positions.
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These transactions may cause the price of the capital securities
to be higher than it would otherwise be in the absence of such
transactions. The underwriters are not required to engage in any
of these activities and may end any of these activities at any
time. The underwriters may also impose a penalty bid. Penalty
bids permit an underwriter to reclaim a selling concession from
a syndicate member when that underwriter, in covering syndicate
short positions or making stabilizing purchases, purchases
capital securities originally sold by that syndicate member.
The capital securities are a new series of securities with no
established trading market. Citigroup will apply to list the
capital securities on the NYSE. If approved for listing,
Citigroup expects the capital securities will begin trading on
the NYSE within 30 days after they are first issued.
Citigroup Capital and Citigroup have been advised by the
underwriters that they presently intend to make a market in the
capital securities, as permitted by applicable laws and
regulations. The underwriters are not obligated, however, to
make a market in the capital securities and may discontinue any
market making at any time at their sole discretion. Accordingly,
neither Citigroup Capital nor Citigroup can make any assurance
as to the liquidity of, or trading markets for, the capital
securities.
This prospectus may also be used by Citigroups
broker-dealer subsidiaries and other subsidiaries or affiliates
of Citigroup in connection with offers and sales of the capital
securities in market-making transactions at negotiated prices
related to prevailing market prices at the time of sale. Any of
these subsidiaries may act as principal or agent in such
transactions.
If any broker-dealer subsidiary of Citigroup makes an offering
of the capital securities, such offering will be conducted
pursuant to any applicable sections of Rule 2810 of the
Conduct Rules of the NASD. The underwriters may not confirm
sales to any discretionary account without the prior specific
written approval of a customer.
We expect delivery of the capital securities will be made
against payment therefor on or
about ,
20 , which is
the
business day after the date hereof. Under
Rule 15c6-1
of the Securities Exchange Act, trades in the secondary market
generally are required to settle in three business days, unless
the parties to any such trade expressly agree otherwise.
Accordingly, purchasers who wish to trade the capital securities
on the date hereof or the business
days hereafter will be required, by virtue of the fact that the
capital securities initially will not settle in T+3, to specify
an alternative settlement cycle at the time of any such trade to
prevent a failed settlement and should consult their own advisor.
The underwriters have agreed that they will not offer, sell or
deliver any of the capital securities, directly or indirectly,
or distribute this prospectus or any other offering material
related to the capital securities, in or
57
from any jurisdiction, except when to the best knowledge and
belief of the underwriter it is permitted under applicable laws
and regulations. In so doing, the underwriters will not impose
any obligations on Citigroup Capital or Citigroup, except as set
forth in the underwriting agreement.
LEGAL
MATTERS
Skadden, Arps, Slate, Meagher & Flom LLP New York, New
York, will act as legal counsel to Citigroup. Cleary Gottlieb
Steen & Hamilton LLP will act as legal counsel to the
underwriters. Cleary Gottlieb Steen & Hamilton LLP has
from time to time acted as counsel for Citigroup and its
subsidiaries and may do so in the future.
EXPERTS
The consolidated financial statements of Citigroup Inc. as of
December 31, 2006 and 2005, and for each of the years in
the three-year period ended December 31, 2006, and
managements assessment of the effectiveness of internal
control over financial reporting as of December 31, 2006
have been incorporated by reference in this prospectus in
reliance upon the reports of KPMG LLP, independent registered
public accounting firm, incorporated by reference and upon the
authority of said firm as experts in accounting and auditing.
The report of KPMG LLP on the consolidated financial statements
refers to changes in 2006, in Citigroups methods of
accounting for defined benefit pensions and other postretirement
benefits, stock-based compensation, certain hybrid financial
instruments and servicing of financial assets, and in 2005, in
Citigroups method of accounting for conditional asset
retirement obligations associated with operating leases.
58
000,000 Capital
Securities
Citigroup Capital
% Enhanced
Trust Preferred Securities (Enhanced
TRUPS
®
)
$ Liquidation Amount
Guaranteed to the extent set
forth herein by
Citigroup Inc.
(CITIGROUP LOGO)
PROSPECTUS
,
20
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
|
Item 14.
|
Other
Expenses of Issuance and Distribution.
|
The following table sets forth the various expenses payable by
the Registrants in connection with the Securities being
registered hereby. All of the fees set forth below are estimates.
|
|
|
|
|
Commission Registration Fee
|
|
$
|
*
|
|
Accounting Fees
|
|
|
150,000
|
|
Trustees Fees and Expenses
|
|
|
80,000
|
|
Printing and Engraving Fees
|
|
|
200,000
|
|
Rating Agency Fees
|
|
|
600,000
|
|
NASD Fee
|
|
|
75,500
|
|
Legal Fees and Expenses
|
|
|
250,000
|
|
Stock Exchange Listing Fees
|
|
|
100,000
|
|
Total
|
|
$
|
1,455,500
|
|
|
|
|
|
|
|
|
|
*
|
|
Deferred in accordance with Rule 456(b) and 457(r) of the
Securities Act of 1933, as amended.
|
|
|
Item 15.
|
Indemnification
of Directors and Officers.
|
Subsection (a) of Section 145 of the General
Corporation Law of the State of Delaware, or DGCL, empowers a
corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that the
person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such
action, suit or proceeding if the person acted in good faith and
in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe the persons conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which
the person reasonably believed to be in or not opposed to the
best interest of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe
that the persons conduct was unlawful.
Subsection (b) of Section 145 of the DGCL
empowers a corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in right of the
corporation to procure a judgment in its favor by reason of the
fact that such person acted in any of the capacities set forth
above, against expenses (including attorneys fees)
actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit if the
person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the
corporation and except that no indemnification may be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court
in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
Subsection (d) of Section 145 of the DGCL
provides that any indemnification under subsections (a) and
(b) of Section 145 (unless ordered by a court) shall
be made by the corporation only as authorized in the
II-1
specific case upon a determination that indemnification of the
present or former director, officer, employee or agent is proper
in the circumstances because the person has met the applicable
standard of conduct set forth in subsections (a) and
(b) of Section 145. Such determination shall be made,
with respect to a person who is a director or officer at the
time of such determination, (1) by a majority vote of the
directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by the majority vote of
such directors, even though less than a quorum, or (3) if
there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (4) by
the stockholders.
Section 145 of the DGCL further provides that to the extent
a present or former director or officer of a corporation has
been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections
(a) and (b) of Section 145, or in defense of any
claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys fees) actually and
reasonably incurred by such person in connection therewith and
that such expenses may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by
the corporation as authorized in Section 145 of the DGCL;
that any indemnification and advancement of expenses provided
by, or granted pursuant to, Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may
be entitled; that indemnification provided by, or granted
pursuant to, Section 145 shall, unless otherwise provided
when authorized and ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall
inure to the benefit of such persons heirs, executors and
administrators; and empowers the corporation to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any
such capacity, or arising out of such persons status as
such, whether or not the corporation would have the power to
indemnify such person against such liabilities under
Section 145. Section Four of Article IV of
Citigroups By-Laws provides that Citigroup shall indemnify
its directors and officers to the fullest extent permitted by
the DGCL.
Citigroup also provides liability insurance for its directors
and officers which provides for coverage against loss from
claims made against directors and officers in their capacity as
such, including, subject to certain exceptions, liabilities
under the federal securities laws.
Section 102(b)(7) of the DGCL provides that a certificate
of incorporation may contain a provision eliminating or limiting
the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty
as a director, provided that such provision shall not eliminate
or limit the liability of a director (i) for any breach of
the directors duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, or
(iv) for any transaction from which the director derived an
improper personal benefit. Article Tenth of
Citigroups Restated Certificate of Incorporation limits
the liability of directors to the fullest extent permitted by
Section 102(b)(7).
The Declaration of each of the Citigroup Trusts provides that no
Institutional Trustee or any of its affiliates, Delaware Trustee
or any of its affiliates, or officer, director, shareholder,
member, partner, employee, representative custodian, nominee or
agent of the Institutional Trustee or the Delaware Trustee (each
a Fiduciary Indemnified Person), and no Regular
Trustee, affiliate of any Regular Trustee, or any officer,
director, shareholder, member, partner, employee, representative
or agent of any Regular Trustee, or any employee or agent of
such Citigroup Trust or its affiliates (each a Company
Indemnified Person) shall be liable, responsible or
accountable in damages or otherwise to such Citigroup Trust, any
affiliate of such Citigroup Trust or any holder of securities
issued by such Citigroup Trust, or to any officer, director,
shareholder, partner, member, representative, employee or agent
of such Citigroup Trust or its Affiliates for any loss, damage
or claim incurred by reason of any act or omission performed or
omitted by such Fiduciary Indemnified Person or Company
Indemnified Person in good faith on behalf of such Citigroup
Trust and in a manner such Fiduciary Indemnified Person or
Company Indemnified Person reasonably believed to be within
II-2
the scope of the authority conferred on such Fiduciary
Indemnified Person or Company Indemnified Person by such
Declaration or by law, except that a Fiduciary Indemnified
Person or Company Indemnified Person shall be liable for any
loss, damage, or claim incurred by reason of such Fiduciary
Indemnified Persons or Company Indemnified Persons
gross negligence (or in the case of a Fiduciary Indemnified
Person, negligence) or willful misconduct with respect to such
acts or omissions. The Declaration of each Citigroup Trust also
provides that, to the full extent permitted by law, Citigroup
shall indemnify any Company Indemnified Person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an
action by or in right of such Citigroup Trust) by reason of the
fact that he is or was a Company Indemnified Person against
expenses (including attorneys fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Citigroup Trust,
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
Declaration of each Citigroup Trust also provides that to the
full extent permitted by law, Citigroup shall indemnify any
Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed action or suit by or in right of such Citigroup Trust
to procure a judgment in its favor by reason of the fact that he
is or was a Company Indemnified Person against expenses
(including attorneys fees) actually and reasonably
incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best
interests of the Citigroup Trust and except that no
indemnification shall be made in respect of any claim, issue or
matter as to which such Company Indemnified Person shall have
been adjudged to be liable to the Citigroup Trust unless and
only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses
which such Court of Chancery or such other court shall deem
proper. The Declaration of each Citigroup Trust further provides
that expenses (including attorneys fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding
referred to in the immediately preceding two sentences shall be
paid by Citigroup in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or
on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not
entitled to be indemnified by Citigroup as authorized in the
Declaration.
The directors and officers of Citigroup and the Regular Trustee
are covered by insurance policies indemnifying them against
certain liabilities, including certain liabilities arising under
the Securities Act, which might be incurred by them in such
capacities and against which they cannot be indemnified by
Citigroup or the Citigroup Trusts. Any agents, dealers or
underwriters who execute any underwriting or distribution
agreement relating to securities offered pursuant to this
Registration Statement will agree to indemnify Citigroups
directors and their officers and the Citigroup Trustees who
signed the Registration Statement against certain liabilities
that may arise under the Securities Act with respect to
information furnished to Citigroup or any of the Citigroup
Trusts by or on behalf of such indemnifying party.
For the undertaking with respect to indemnification, see
Item 17 herein.
See the form of Underwriting Agreement filed as
Exhibit 1.01 for certain indemnification provisions.
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
|
|
Description
|
|
|
1
|
.01
|
|
|
|
Form of Underwriting Agreement for
Enhanced Capital Securities.*
|
|
4
|
.01
|
|
|
|
Form of Junior Subordinated Debt
Indenture between Citigroup and The Bank of New York, as
trustee.
|
|
4
|
.02
|
|
|
|
Amended and Restated Certificate
of Trust of Citigroup Capital XVIII.
|
|
4
|
.03
|
|
|
|
Certificate of Trust of Citigroup
Capital XIX.
|
II-3
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
|
|
Description
|
|
|
4
|
.04
|
|
|
|
Certificate of Trust of Citigroup
Capital XX.
|
|
4
|
.05
|
|
|
|
Certificate of Trust of Citigroup
Capital XXI.
|
|
4
|
.06
|
|
|
|
Certificate of Trust of Citigroup
Capital XXII.
|
|
4
|
.07
|
|
|
|
Form of Amended and Restated
Declaration of Trust for Enhanced Capital Securities for
Citigroup Capital XVIII.
|
|
4
|
.08
|
|
|
|
Form of Amended and Restated
Declaration of Trust for Enhanced Capital Securities for
Citigroup Capital XIX.
|
|
4
|
.09
|
|
|
|
Form of Amended and Restated
Declaration of Trust for Enhanced Capital Securities for
Citigroup Capital XX.
|
|
4
|
.10
|
|
|
|
Form of Amended and Restated
Declaration of Trust for Enhanced Capital Securities for
Citigroup Capital XXI.
|
|
4
|
.11
|
|
|
|
Form of Amended and Restated
Declaration of Trust for Enhanced Capital Securities for
Citigroup Capital XXII.
|
|
4
|
.12
|
|
|
|
Forms of Enhanced Capital Security
for each of the Trusts (included in Exhibits 4.07-4.11).*
|
|
4
|
.13
|
|
|
|
Form of Guarantee with respect to
the Enhanced Capital Securities of Citigroup Capital XVIII.
|
|
4
|
.14
|
|
|
|
Form of Guarantee with respect to
the Enhanced Capital Securities of Citigroup Capital XIX.
|
|
4
|
.15
|
|
|
|
Form of Guarantee with respect to
the Enhanced Capital Securities of Citigroup Capital XX.
|
|
4
|
.16
|
|
|
|
Form of Guarantee with respect to
the Enhanced Capital Securities of Citigroup Capital XXI.
|
|
4
|
.17
|
|
|
|
Form of Guarantee with respect to
the Enhanced Capital Securities of Citigroup Capital XXII.
|
|
4
|
.18
|
|
|
|
Form of Junior Subordinated Debt
Securities (included in Exhibit 4.01).*
|
|
5
|
.01
|
|
|
|
Opinion of Michael S.
Zuckert, Esq.
|
|
5
|
.02
|
|
|
|
Opinion of Skadden, Arps, Slate,
Meagher & Flom LLP.
|
|
8
|
.01
|
|
|
|
Opinion of Skadden, Arps, Slate,
Meagher & Flom LLP as to certain tax matters will be
filed as an Exhibit to a Current Report on
Form 8-K
and incorporated herein by reference.
|
|
12
|
.01
|
|
|
|
Calculation of Ratio of Income to
Fixed Charges (incorporated by reference to Exhibit 12.01
to Citigroups Quarterly Report on
Form 10-K
for the period ended December 31, 2006).
|
|
12
|
.02
|
|
|
|
Calculation of Ratio of Income to
Fixed Charges Including Preferred Stock Dividends (incorporated
by reference to Exhibit 12.02 to Citigroups Quarterly
Report on
Form 10-K
for the period ended December 31, 2006).
|
|
23
|
.01
|
|
|
|
Consent of KPMG LLP, Independent
Registered Public Accounting Firm.
|
|
23
|
.02
|
|
|
|
Consent of Michael S.
Zuckert, Esq. (included in Exhibit 5.01).
|
|
23
|
.03
|
|
|
|
Consent of Skadden, Arps, Slate,
Meagher & Flom LLP (included in
Exhibit 5.02).
|
|
24
|
.01
|
|
|
|
Powers of Attorney of certain
Directors.*
|
|
25
|
.01
|
|
|
|
Form T-1
Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of The Bank of New York, as
trustee under the Junior Subordinated Debt Indenture.
|
|
25
|
.02
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee under the
Declaration of Trust of Citigroup Capital XVIII.
|
|
25
|
.03
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee under the
Declaration of Trust of Citigroup Capital XIX.
|
|
25
|
.04
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee under the
Declaration of Trust of Citigroup Capital XX.
|
|
25
|
.05
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee under the
Declaration of Trust of Citigroup Capital XXI.
|
|
25
|
.06
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee under the
Declaration of Trust of Citigroup Capital XXII.
|
II-4
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
|
|
Description
|
|
|
25
|
.07
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Guarantee Trustee under
the Enhanced Capital Securities Guarantee of Citigroup Inc. for
the benefit of holders of Enhanced Capital Securities of
Citigroup Capital XVIII.
|
|
25
|
.08
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Guarantee Trustee under
the Enhanced Capital Securities Guarantee of Citigroup Inc. for
the benefit of holders of Enhanced Capital Securities of
Citigroup Capital XIX.
|
|
25
|
.09
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Guarantee Trustee under
the Enhanced Capital Securities Guarantee of Citigroup Inc. for
the benefit of holders of Enhanced Capital Securities of
Citigroup Capital XX.
|
|
25
|
.10
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Guarantee Trustee under
the Enhanced Capital Securities Guarantee of Citigroup Inc. for
the benefit of holders of Enhanced Capital Securities of
Citigroup Capital XXI.
|
|
25
|
.11
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Guarantee Trustee under
the Enhanced Capital Securities Guarantee of Citigroup Inc. for
the benefit of holders of Enhanced Capital Securities of
Citigroup Capital XXII.
|
|
|
|
*
|
|
Previously filed
|
|
|
|
Filed herewith.
|
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
Calculation of Registration Fee table in the
effective registration statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, as amended, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
II-5
(4) That, for the purpose of determining liability under
the Securities Act of 1933, as amended, to any purchaser:
(i) Each prospectus filed by a Registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and
(ii) Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii) or
(x) for the purpose of providing the information required
by Section 10(a) of the Securities Act of 1933 shall be
deemed to be part of and included in the registration statement
as of the earlier of the date such form of prospectus is first
used after effectiveness or the date of the first contract of
sale of securities in the offering described in the prospectus.
As provided in Rule 430B, for liability purposes of the
issuer and any person that is at that date an underwriter, such
date shall be deemed to be a new effective date of the
registration statement relating to the securities in the
registration statement to which the prospectus relates, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof. Provided, however, that
no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such effective date, supersede or
modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or
made in any such document immediately prior to such effective
date.
(5) That, for the purpose of determining liability of a
Registrant under the Securities Act of 1933, as amended, to any
purchaser in the initial distribution of the securities, the
undersigned Registrants undertake that in a primary offering of
securities of the undersigned Registrants pursuant to this
registration statement, regardless of the underwriting method
used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the
following communications, the undersigned Registrants will be a
seller to the purchaser and will be considered to offer or sell
such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of an
undersigned Registrant relating to the offering required to be
filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering
prepared by or on behalf of an undersigned Registrant or used or
referred to by an undersigned Registrant;
(iii) The portion of any other free writing prospectus
relating to the offering containing material information about
an undersigned Registrant or its securities provided by or on
behalf of an undersigned Registrant; and
(iv) Any other communication that is an offer in the
offering made by an undersigned Registrant to the purchaser.
(6) That, for purposes of determining any liability under
the Securities Act of 1933, as amended, each filing of Citigroup
Inc.s annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934, as
amended, (and, where applicable, each filing of an employee
benefit plans annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934, as amended) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(7) To file an application for the purpose of determining
the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust
Indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(6)(2) of the
Trust Indenture Act.
II-6
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended may be permitted to
directors, officers and controlling persons of each Registrant
pursuant to the provisions described in Item 15 above, or
otherwise, each Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the
payment by a Registrant of expenses incurred or paid by a
director, officer or controlling person of a Registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, that Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, Citigroup Inc. certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-3
and has duly caused this Registration Statement or Amendment
thereto to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of New York, State of New York, on
May 4, 2007.
CITIGROUP INC.
Name: Gary Crittenden
|
|
|
|
Title:
|
Chief Financial Officer
|
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement or Amendment thereto has
been signed below by the following persons in the capacities
indicated on May 4, 2007.
|
|
|
|
|
Signatures
|
|
|
|
/s/
CHARLES
PRINCE
Charles
Prince
|
|
Chairman and Chief Executive
Officer
(Principal Executive Officer)
|
|
|
|
/s/
GARY
CRITTENDEN
Gary
Crittenden
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
/s/
JOHN
C. GERSPACH
John
C. Gerspach
|
|
Controller and Chief Accounting
Officer
(Principal Accounting Officer)
|
|
|
|
*
C.
Michael Armstrong
|
|
Director
|
|
|
|
*
Alain
J.P. Belda
|
|
Director
|
|
|
|
*
George
David
|
|
Director
|
|
|
|
*
Kenneth
T. Derr
|
|
Director
|
|
|
|
*
John
M. Deutch
|
|
Director
|
|
|
|
*
Roberto
Hernández Ramirez
|
|
Director
|
|
|
|
*
Klaus
Kleinfeld
|
|
Director
|
II-8
|
|
|
|
|
Signatures
|
|
|
|
*
Andrew
N. Liveris
|
|
Director
|
|
|
|
*
Anne
M. Mulcahy
|
|
Director
|
|
|
|
*
Richard
D. Parsons
|
|
Director
|
|
|
|
*
Judith
Rodin
|
|
Director
|
|
|
|
*
Robert
E. Rubin
|
|
Director
|
|
|
|
*
Franklin
A. Thomas
|
|
Director
|
|
|
|
|
|
*By:
|
|
/s/
MICHAEL
S. HELFER
Michael
S. Helfer
|
|
Attorney-in-fact
|
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, each of Citigroup Capital XVIII, Citigroup Capital XIX,
Citigroup Capital XX, Citigroup Capital XXI and Citigroup
Capital XXII certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-3
and has duly caused this Registration Statement or Amendment
thereto to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of New York, State of New York, on
May 4, 2007.
CITIGROUP CAPITAL XVIII
John Gerspach, as Trustee
Saul Rosen, as Trustee
CITIGROUP CAPITAL XIX
John Gerspach, as Trustee
Eric L. Wentzel, as Trustee
Saul Rosen, as Trustee
CITIGROUP CAPITAL XX
John Gerspach, as Trustee
Eric L. Wentzel, as Trustee
Saul Rosen, as Trustee
CITIGROUP CAPITAL XXI
John Gerspach, as Trustee
Eric L. Wentzel, as Trustee
Saul Rosen, as Trustee
II-10
CITIGROUP CAPITAL XXII
John Gerspach, as Trustee
Eric L. Wentzel, as Trustee
Saul Rosen, as Trustee
II-11
EXHIBIT INDEX
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
|
|
Description
|
|
|
1
|
.01
|
|
|
|
Form of Underwriting Agreement for
Enhanced Capital Securities.*
|
|
4
|
.01
|
|
|
|
Form of Junior Subordinated Debt
Indenture between Citigroup and The Bank of New York, as
trustee.
|
|
4
|
.02
|
|
|
|
Amended and Restated Certificate
of Trust of Citigroup Capital XVIII.
|
|
4
|
.03
|
|
|
|
Certificate of Trust of Citigroup
Capital XIX.
|
|
4
|
.04
|
|
|
|
Certificate of Trust of Citigroup
Capital XX.
|
|
4
|
.05
|
|
|
|
Certificate of Trust of Citigroup
Capital XXI.
|
|
4
|
.06
|
|
|
|
Certificate of Trust of Citigroup
Capital XXII.
|
|
4
|
.07
|
|
|
|
Form of Amended and Restated
Declaration of Trust for Enhanced Capital Securities for
Citigroup Capital XVIII.
|
|
4
|
.08
|
|
|
|
Form of Amended and Restated
Declaration of Trust for Enhanced Capital Securities for
Citigroup Capital XIX.
|
|
4
|
.09
|
|
|
|
Form of Amended and Restated
Declaration of Trust for Enhanced Capital Securities for
Citigroup Capital XX.
|
|
4
|
.10
|
|
|
|
Form of Amended and Restated
Declaration of Trust for Enhanced Capital Securities for
Citigroup Capital XXI.
|
|
4
|
.11
|
|
|
|
Form of Amended and Restated
Declaration of Trust for Enhanced Capital Securities for
Citigroup Capital XXII.
|
|
4
|
.12
|
|
|
|
Forms of Enhanced Capital Security
for each of the Trusts (included in
Exhibits 4.07-4.11).*
|
|
4
|
.13
|
|
|
|
Form of Guarantee with respect to
the Enhanced Capital Securities of Citigroup Capital XVIII.
|
|
4
|
.14
|
|
|
|
Form of Guarantee with respect to
the Enhanced Capital Securities of Citigroup Capital XIX.
|
|
4
|
.15
|
|
|
|
Form of Guarantee with respect to
the Enhanced Capital Securities of Citigroup Capital XX.
|
|
4
|
.16
|
|
|
|
Form of Guarantee with respect to
the Enhanced Capital Securities of Citigroup Capital XXI.
|
|
4
|
.17
|
|
|
|
Form of Guarantee with respect to
the Enhanced Capital Securities of Citigroup Capital XXII.
|
|
4
|
.18
|
|
|
|
Form of Junior Subordinated Debt
Securities (included in Exhibit 4.01).*
|
|
5
|
.01
|
|
|
|
Opinion of Michael S.
Zuckert, Esq.
|
|
5
|
.02
|
|
|
|
Opinion of Skadden, Arps, Slate,
Meagher & Flom LLP.
|
|
8
|
.01
|
|
|
|
Opinion of Skadden, Arps, Slate,
Meagher & Flom LLP as to certain tax matters will be
filed as an Exhibit to a Current Report on
Form 8-K
and incorporated herein by reference.
|
|
12
|
.01
|
|
|
|
Calculation of Ratio of Income to
Fixed Charges (incorporated by reference to Exhibit 12.01
to Citigroups Quarterly Report on
Form 10-K
for the period ended December 31, 2006).
|
|
12
|
.02
|
|
|
|
Calculation of Ratio of Income to
Fixed Charges Including Preferred Stock Dividends (incorporated
by reference to Exhibit 12.02 to Citigroups Quarterly
Report on
Form 10-K
for the period ended December 31, 2006).
|
|
23
|
.01
|
|
|
|
Consent of KPMG LLP, Independent
Registered Public Accounting Firm.
|
|
23
|
.02
|
|
|
|
Consent of Michael S.
Zuckert, Esq. (included in Exhibit 5.01).
|
|
23
|
.03
|
|
|
|
Consent of Skadden, Arps, Slate,
Meagher & Flom LLP (included in
Exhibit 5.02).
|
|
24
|
.01
|
|
|
|
Powers of Attorney of certain
Directors.*
|
|
25
|
.01
|
|
|
|
Form T-1
Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of The Bank of New York, as
trustee under the Junior Subordinated Debt Indenture.
|
|
25
|
.02
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee under the
Declaration of Trust of Citigroup Capital XVIII.
|
|
25
|
.03
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee under the
Declaration of Trust of Citigroup Capital XIX.
|
|
25
|
.04
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee under the
Declaration of Trust of Citigroup Capital XX.
|
|
25
|
.05
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee under the
Declaration of Trust of Citigroup Capital XXI.
|
|
|
|
|
|
|
|
Exhibit
|
|
|
|
|
Number
|
|
|
|
Description
|
|
|
25
|
.06
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Trustee under the
Declaration of Trust of Citigroup Capital XXII.
|
|
25
|
.07
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Guarantee Trustee under
the Enhanced Capital Securities Guarantee of Citigroup Inc. for
the benefit of holders of Enhanced Capital Securities of
Citigroup Capital XVIII.
|
|
25
|
.08
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Guarantee Trustee under
the Enhanced Capital Securities Guarantee of Citigroup Inc. for
the benefit of holders of Enhanced Capital Securities of
Citigroup Capital XIX.
|
|
25
|
.09
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Guarantee Trustee under
the Enhanced Capital Securities Guarantee of Citigroup Inc. for
the benefit of holders of Enhanced Capital Securities of
Citigroup Capital XX.
|
|
25
|
.10
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Guarantee Trustee under
the Enhanced Capital Securities Guarantee of Citigroup Inc. for
the benefit of holders of Enhanced Capital Securities of
Citigroup Capital XXI.
|
|
25
|
.11
|
|
|
|
Form T-1
Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of The Bank of New York, as Guarantee Trustee under
the Enhanced Capital Securities Guarantee of Citigroup Inc. for
the benefit of holders of Enhanced Capital Securities of
Citigroup Capital XXII.
|
|
|
|
*
|
|
Previously filed
|
|
|
|
Filed herewith.
|
Exhibit 4.01
CITIGROUP INC.
TO
THE BANK OF NEW YORK
Trustee
INDENTURE
Dated as of [ ], 2007
Providing for the issuance of Junior Subordinated Deferrable Interest Debentures
TABLE OF CONTENTS
Page
|
|
|
|
|
Recitals of the Company
|
|
|
1
|
|
|
|
|
|
|
ARTICLE I Definitions And Other Provisions of General Application
|
|
|
1
|
|
Section 1.1. Definitions
|
|
|
1
|
|
Section 1.2. Compliance Certificates and Opinions
|
|
|
12
|
|
Section 1.3. Form of Documents Delivered to Trustee
|
|
|
12
|
|
Section 1.4. Acts of Holders; Record Dates
|
|
|
13
|
|
Section 1.5. Notices, Etc., to Trustee and Company
|
|
|
14
|
|
Section 1.6. Notice to Holders; Waiver
|
|
|
14
|
|
Section 1.7. Conflict with Trust Indenture Act
|
|
|
14
|
|
Section 1.8. Effect of Headings and Table of Contents
|
|
|
15
|
|
Section 1.9. Successors and Assigns
|
|
|
15
|
|
Section 1.10. Separability Clause
|
|
|
15
|
|
Section 1.11. Benefits of Indenture
|
|
|
15
|
|
Section 1.12. Governing Law
|
|
|
15
|
|
Section 1.13. Legal Holidays
|
|
|
15
|
|
Section 1.14. Tax Characterization
|
|
|
15
|
|
|
|
|
|
|
ARTICLE II Security Forms
|
|
|
16
|
|
Section 2.1. Forms Generally
|
|
|
16
|
|
Section 2.2. Form of Face of Security
|
|
|
16
|
|
Section 2.3. Form of Reverse of Security
|
|
|
19
|
|
Section 2.4. Form of Trustees Certificate of Authentication
|
|
|
23
|
|
|
|
|
|
|
ARTICLE III The Securities
|
|
|
23
|
|
Section 3.1. Amount Unlimited; Issuable in Series
|
|
|
23
|
|
Section 3.2. Denominations
|
|
|
25
|
|
Section 3.3. Execution, Authentication, Delivery and Dating
|
|
|
25
|
|
Section 3.4. Temporary Securities
|
|
|
26
|
|
Section 3.5. Registration, Registration of Transfer and Exchange
|
|
|
27
|
|
Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities
|
|
|
28
|
|
Section 3.7. Payment of Interest; Interest Rights Preserved
|
|
|
28
|
|
Section 3.8. Persons Deemed Owners
|
|
|
30
|
|
Section 3.9. Cancellation
|
|
|
30
|
|
Section 3.10. Interest
|
|
|
30
|
|
Section 3.11. Form and Payment
|
|
|
32
|
|
Section 3.12. Global Securities
|
|
|
32
|
|
|
|
|
|
|
ARTICLE IV Satisfaction And Discharge; Defeasance
|
|
|
33
|
|
Section 4.1. Satisfaction and Discharge of Indenture
|
|
|
33
|
|
Section 4.2. Defeasance and Discharge
|
|
|
34
|
|
Section 4.3. Covenant Defeasance
|
|
|
35
|
|
i
|
|
|
|
|
Section 4.4. Conditions to Defeasance or Covenant Defeasance
|
|
|
36
|
|
Section 4.5. Application of Trust Money
|
|
|
36
|
|
Section 4.6. Indemnity for U.S. Government Obligations
|
|
|
37
|
|
Section 4.7. Reinstatement
|
|
|
37
|
|
|
|
|
|
|
ARTICLE V Remedies
|
|
|
37
|
|
Section 5.1. Events of Default and Acceleration
|
|
|
37
|
|
Section 5.2. Acceleration of Maturity
|
|
|
38
|
|
Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee
|
|
|
38
|
|
Section 5.4. Trustee to File Claims As Attorney-In-Fact
|
|
|
39
|
|
Section 5.5. Application of Money Collected
|
|
|
40
|
|
Section 5.6. Control by Holders; Waiver of Past Default
|
|
|
41
|
|
Section 5.7. Limitation on Suits; Default
|
|
|
41
|
|
Section 5.8. Costs and Attorneys Fees in Legal Proceedings
|
|
|
43
|
|
Section 5.9. Remedies Cumulative
|
|
|
43
|
|
Section 5.10. Waiver of Stay or Extension Laws
|
|
|
44
|
|
Section 5.11. Limitation on Claim for Certain Deferred Interest in Bankruptcy
|
|
|
44
|
|
|
|
|
|
|
ARTICLE VI The Trustee
|
|
|
44
|
|
Section 6.1. Certain Duties and Responsibilities
|
|
|
44
|
|
Section 6.2. Notice of Defaults
|
|
|
46
|
|
Section 6.3. Certain Rights of Trustee
|
|
|
46
|
|
Section 6.4. Not Responsible for Recitals or Issuance of Securities
|
|
|
47
|
|
Section 6.5. May Hold Securities
|
|
|
47
|
|
Section 6.6. Money Held in Trust
|
|
|
47
|
|
Section 6.7. Compensation and Reimbursement
|
|
|
47
|
|
Section 6.8. Disqualification; Conflicting Interests
|
|
|
49
|
|
Section 6.9. Corporate Trustee Required; Eligibility
|
|
|
49
|
|
Section 6.10. Resignation and Removal; Appointment of Successor
|
|
|
49
|
|
Section 6.11. Acceptance of Appointment by Successor
|
|
|
50
|
|
Section 6.12. Merger, Conversion, Consolidation or Succession to Business
|
|
|
53
|
|
Section 6.13. Preferential Collection of Claims Against Company
|
|
|
53
|
|
Section 6.14. Appointment of Authenticating Agent
|
|
|
53
|
|
|
|
|
|
|
ARTICLE VII Holders Lists and Reports by Trustee and Company
|
|
|
55
|
|
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders
|
|
|
55
|
|
Section 7.2. Preservation of Information; Communications to Holders
|
|
|
55
|
|
Section 7.3. Reports by Trustee
|
|
|
55
|
|
Section 7.4. Reports by Company
|
|
|
56
|
|
ii
|
|
|
|
|
ARTICLE VIII Consolidation, Merger, Conveyance, Transfer Or Lease
|
|
|
57
|
|
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms
|
|
|
57
|
|
Section 8.2. Successor Corporation Substituted
|
|
|
58
|
|
Section 8.3. Effect of Business Combination
|
|
|
58
|
|
|
|
|
|
|
ARTICLE IX Supplemental Indentures
|
|
|
58
|
|
Section 9.1. Supplemental Indentures Without Consent of Holders
|
|
|
58
|
|
Section 9.2. Supplemental Indentures with Consent of Holders
|
|
|
60
|
|
Section 9.3. Execution of Supplemental Indentures
|
|
|
62
|
|
Section 9.4. Effect of Supplemental Indentures
|
|
|
62
|
|
Section 9.5. Conformity with Trust Indenture Act
|
|
|
62
|
|
Section 9.6. Reference in Securities to Supplemental Indentures
|
|
|
62
|
|
|
|
|
|
|
ARTICLE X Covenants
|
|
|
62
|
|
Section 10.1. Payment of Principal, Premium and Interest
|
|
|
62
|
|
Section 10.2. Maintenance of Office or Agency
|
|
|
62
|
|
Section 10.3. Money for Securities Payments to Be Held in Trust
|
|
|
63
|
|
Section 10.4. Statement by Officers as to Default
|
|
|
64
|
|
Section 10.5. Covenants as to Citigroup Trusts
|
|
|
64
|
|
Section 10.6. Payment of Expenses
|
|
|
65
|
|
Section 10.7. Listing on an Exchange
|
|
|
66
|
|
Section 10.8. Future Issuance of Securities
|
|
|
66
|
|
|
|
|
|
|
ARTICLE XI Redemption Of Securities
|
|
|
66
|
|
Section 11.1. Applicability of Article; Federal Reserve Concurrence or Approval
|
|
|
66
|
|
Section 11.2. Election to Redeem; Notice to Trustee
|
|
|
66
|
|
Section 11.3. Selection by Trustee of Securities to Be Redeemed
|
|
|
67
|
|
Section 11.4. Notice of Redemption
|
|
|
67
|
|
Section 11.5. Deposit of Redemption Price
|
|
|
68
|
|
Section 11.6. Securities Payable on Redemption Date
|
|
|
68
|
|
Section 11.7. Securities Redeemed in Part
|
|
|
68
|
|
Section 11.8. Tax Event Redemption
|
|
|
69
|
|
|
|
|
|
|
ARTICLE XII [INTENTIONALLY OMITTED]
|
|
|
69
|
|
|
|
|
|
|
ARTICLE XIII Extension Of Interest Payment Period
|
|
|
69
|
|
Section 13.1. Extension of Interest Payment Period
|
|
|
69
|
|
Section 13.2. Notice of Extension
|
|
|
70
|
|
Section 13.3. Limitation of Transactions
|
|
|
71
|
|
Section 13.4. Limitation on Source of Payment of Deferred Interest
|
|
|
71
|
|
Section 13.5. Obligation to Effect Certain Common Stock Sales
|
|
|
72
|
|
Section 13.6. Notice of Market Disruption Event
|
|
|
74
|
|
Section 13.7. Notice of Supervisory Event
|
|
|
74
|
|
Section 13.8. Notices to the Federal Reserve
|
|
|
74
|
|
iii
|
|
|
|
|
Section 13.9. Obligation to Notify Federal Reserve of Intent to Sell Stock
|
|
|
74
|
|
|
|
|
|
|
ARTICLE XIV Subordination Of Securities
|
|
|
75
|
|
Section 14.1. Agreement to Subordinate
|
|
|
75
|
|
Section 14.2. Default on Senior Indebtedness
|
|
|
75
|
|
Section 14.3. Liquidation; Dissolution; Bankruptcy
|
|
|
76
|
|
Section 14.4. Subrogation
|
|
|
77
|
|
Section 14.5. Trustee to Effectuate Subordination
|
|
|
79
|
|
Section 14.6. Notice by the Company
|
|
|
79
|
|
Section 14.7. Rights of the Trustee; Holders of Senior Indebtedness
|
|
|
80
|
|
Section 14.8. Subordination May Not Be Impaired
|
|
|
80
|
|
Section 14.9. Trustees Compensation Not Prejudiced
|
|
|
80
|
|
Section 14.10. Disclaimer of Right to Enforce Covenants
|
|
|
80
|
|
|
|
|
|
|
ARTICLE XV Miscellaneous
|
|
|
81
|
|
Section 15.1. Acknowledgement of Rights
|
|
|
81
|
|
Section 15.2. Severability
|
|
|
81
|
|
Section 15.3. Counterparts
|
|
|
81
|
|
iv
INDEX OF TERMS
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Page
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Act
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2,13
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Additional Interest
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2,31
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Affiliate
|
|
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2
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|
Authenticating Agent
|
|
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2
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|
Board of Directors
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|
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2
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Board Resolution
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|
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2
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|
Book Entry Interest
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|
|
2
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|
Business Day
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|
|
2
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|
Citigroup Standard T
ru
PS
®
Trust
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|
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2
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Citigroup Trust
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|
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3
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Commission
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3
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Common Securities
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3
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Company
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1,3,17
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Company Order
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3
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Company Request
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3
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Compounded Interest
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3,68
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Corporate Trust Office
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3
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|
Coupon Rate
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3,30
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Covenant Defeasance
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3,35
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Current Stock Market Price
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3
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|
Declaration
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4
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Defaulted Interest
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|
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4,29
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Defeasance
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4,35
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Deferred Interest
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4,69
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Delaware Trustee
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4
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Depositary
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4
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Direct Action
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4,80
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Dissolution Event
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4
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Distributions
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4
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Event of Default and Acceleration
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4
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Exchange Act
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4
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Extended Interest Payment Period
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4,21,68
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|
Federal Reserve
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4
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|
Fifth Deferral Anniversary
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5
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Floating or Adjustable Rate Provision
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5
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Floating or Adjustable Rate Security
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5
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generally accepted accounting principles
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1
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Global Security
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5
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Holder
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5
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Indenture
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5,19
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Institutional Trustee
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5
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Interest Payment Date
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5,17,30
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Market Disruption Event
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|
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5
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|
i
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|
|
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Page
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Maturity
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|
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5
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Ministerial Action
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68
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New Equity Amount
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|
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6
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No Recognition Opinion
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7
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Non Book-Entry Preferred Securities
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7,32
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Officers Certificate
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7
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Opinion of Counsel
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7
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Optional Redemption
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19
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Optional Redemption Price
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19
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Outstanding
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7
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Paying Agent
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8
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Person
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8
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Place of Payment
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8
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Predecessor Security
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8
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Preferred Securities
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8
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Preferred Security Certificate
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8
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Qualified Warrants
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8
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Qualifying Capital Securities
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8
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Quarterly Interest Accrual Period
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|
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9
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Redemption Date
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|
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9
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|
Redemption Option Date
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|
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9
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Redemption Price
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|
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9
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Redemption Tax Opinion
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|
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9
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Regular Record Date
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|
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9
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Regular Trustees
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|
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9
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|
Responsible Officer
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|
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9
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Securities
|
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1,9,19
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Security Beneficial Owner
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9
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Security Register
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9,27
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Security Registrar
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9,27
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Senior Indebtedness
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|
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9
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Special Event
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|
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10
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Special Record Date
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|
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10
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Stated Maturity
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|
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11
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|
Supervisory Event
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|
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11
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Tax Event
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11
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Tax Event Opinion
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|
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11
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Tenth Deferral Anniversary
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|
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11
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Trust Indenture Act
|
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11
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Trust Securities
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11
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Trustee
|
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1,11,19
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U.S. Government Obligations
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11,36
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Underwriting Agreement
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11
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Vice President
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12
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ii
Citigroup Inc.
Reconciliation and tie between Trust Indenture Act of 1939 and
Indenture, dated as of July 23, 2004
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Trust Indenture
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Act Section
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Indenture Section
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§ 310
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(a)(1)
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6.9
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(a)(2)
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6.9
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(a)(3)
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Not Applicable
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(a)(4)
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Not Applicable
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(b)
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6.8 6.10
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§ 311
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(a)
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6.13(a)
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(b)
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6.13(b)
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(b)(2)
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7.3(a)(2)
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7.3(b)
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§ 312
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(a)
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7.1 7.2(a)
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(b)
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7.2(b)
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(c)
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7.2(c)
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§ 313
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(a)
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7.3(a)
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(b)
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7.3(b)
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(c)
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7.3(a). 7.3(b)
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(d)
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7.3(c)
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§ 314
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(a)
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7.4
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(b)
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Not Applicable
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(c)(1)
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1.2
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(c)(2)
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1.2
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(c)(3)
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Not Applicable
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(d)
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Not Applicable
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(e)
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1.2
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§ 315
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(a)
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6.1(a)
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(b)
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6.2
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7.3(a)(6)
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(c)
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6.1(b)
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(d)
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6.1(c)
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(d)(1)
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6.1(a)(1)
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(d)(2)
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6.1(c)(2)
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(d)(3)
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6.1(c)(3)
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(e)
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5.14
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§ 316
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(a)
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1.1
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(a)(1)(A)
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5.2
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|
|
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5.12
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(a)(1)(B)
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5.13
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(a)(2)
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Not Applicable
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(b)
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5.8
|
viii
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Trust Indenture
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Act Section
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Indenture Section
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§ 317
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(a)(1)
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5.3
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(a)(2)
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5.4
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(b)
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10.3
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§ 318
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(a)
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1.7
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|
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the
Indenture.
|
ix
INDENTURE, dated as of [ ], 2007, between CITIGROUP INC., a corporation duly
organized and existing under the laws of the State of Delaware (herein called the Company),
having its principal office at 399 Park Avenue, New York, New York 10043, and THE BANK OF NEW YORK,
a national banking association duly organized and existing under the laws of the United States of
America, as Trustee (herein called the Trustee).
Recitals of the Company
The Company has duly authorized the execution and delivery of this Indenture to provide for
the issuance from time to time of its unsecured junior subordinated deferrable interest debentures,
notes or other evidences of indebtedness (herein called the Securities), to be issued
in one or more series as in
Indenture provided.
All things necessary to make this Indenture a valid agreement of the Company, in accordance
with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities by the Holders
thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Securities or of series thereof, as follows:
ARTICLE I
Definitions And Other Provisions
of General Application
Section 1.1.
Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or unless the
context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this
Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture Act, either
directly or by reference therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles, and, except as otherwise
herein expressly provided, the term generally accepted accounting principles with respect
to any computation required or permitted hereunder shall mean such accounting principles as
are generally accepted at the date of such computation; and
(4) the words herein, hereof and hereunder and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section or other
subdivision.
Certain terms, used principally in Article Six, are defined in that Article.
Act when used with respect to any Holder, has the meaning specified in Section 1.4.
Additional Interest has the meaning specified in Section 3.10(c).
Affiliate of any specified Person means any other Person directly or indirectly controlling
or controlled by or under direct or indirect common control with such specified Person. For the
purposes of this definition, control when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms controlling and
controlled have meanings correlative to the foregoing.
Alternative Payment Mechanism has the meaning specified in Section 13.5(a).
APM Maximum Obligation has the meaning specified in Section 13.5(f).
Authenticating Agent means any Person authorized by the Trustee to act on behalf of the
Trustee to authenticate Securities.
Board of Directors means either the board of directors of the Company or any duly authorized
committee of that board.
Board Resolution means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification, and delivered to the Trustee.
Book Entry Interest means a beneficial interest in a Global Security, ownership of which
shall be maintained and transfers of which shall be made through book entries by the Depositary.
Business Day means any day other than a Saturday, Sunday or any other day on which banking
institutions in New York, New York are authorized or obligated by any applicable law to close.
Citigroup Standard T
ru
PS
®
Trust means each of Citigroup Capital II,
Citigroup Capital VI, Citigroup Capital VII,
|
|
|
®
T
rups
®
is a registered service mark of Citigroup Global Markets Inc. Citigroup Global
Markets Inc. has applied for patent protection for the Enhanced
T
rups
®
structure.
|
2
Citigroup Capital VIII, Citigroup Capital IX, Citigroup Capital X, Citigroup Capital XI,
Citigroup Capital XII and Citigroup Capital XIII, each a Delaware statutory trust, or any other
similar trust created for the purpose of issuing preferred securities in connection with the
issuance of junior subordinated debt securities under either (i) the junior subordinated debt
indenture dated as of July 23, 2004, between Citigroup and JP Morgan Chase Bank, as trustee, as the
same has been or may be amended, modified, or supplemented from time to time or (ii) the indenture,
dated as of October 7, 1996, between Citigroup and JPMorgan Chase Bank, N.A., as trustee, as the
same has been amended, modified, or supplemented.
Citigroup Trust means Citigroup Capital XV, Citigroup Capital XVI, Citigroup Capital XVII or
Citigroup Capital XVIII or any other similar trust created for the purpose of issuing preferred
securities in connection with the issuance of Securities under this Indenture.
Commission means the Securities and Exchange Commission, as from time to time constituted,
created under the Exchange Act, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
Common Securities means undivided beneficial interests in the assets of a Citigroup Trust
which rank, except upon the occurrence and continuation of an Event of Default,
pari passu
with
Preferred Securities issued by such Citigroup Trust.
Company means the Person named as the Company in the first paragraph of this instrument
until a successor corporation shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter Company shall mean such successor corporation.
Company Request or Company Order means a written request or order signed in the name of
the Company by its Chairman or a Vice Chairman of the Board, its President, a Vice President, its
Chief Financial Officer, its Chief Accounting Officer or its Treasurer, and by a Deputy Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.
Compounded Interest has the meaning specified in Section 13.1.
Corporate Trust Office means the principal office of the Trustee in the City of New York,
New York at which at any particular time its corporate trust business shall be principally
administered, which at the date hereof is located at 101 Barclay Street-8W New York, New York
10286.
Coupon Rate has the meaning specified in Section 3.10(a).
Covenant Defeasance has the meaning specified in Section 4.3.
Current Stock Market Price on any date shall be the closing sale price per share of common
stock of the Company (or if no closing sale price is reported, the average of the bid and ask
prices or, if more than one in either case, the average of the average bid
3
and the average ask
prices) on that date as reported in composite transactions by the New York Stock Exchange or, if
the Companys common stock is not then listed on the New York Stock Exchange, as reported by the
principal U.S. securities exchange on which the Companys common stock is listed. If the Companys
common stock is not either listed on any U.S. securities exchange on the relevant date, the Current
Stock Market Price shall be the last quoted bid price for its common stock in the over-the-counter
market on the relevant date as reported by the National Quotation Bureau or similar organization.
If the Companys common stock is not so quoted, the Current Stock Market Price shall be the average
of the mid-point of the last bid and ask prices for its common stock on the relevant date from each
of at least three nationally recognized independent investment banking firms selected by the
Company for this purpose.
Declaration means, with respect to a Citigroup Trust, the amended and restated declaration
of trust or any other governing instrument of such Citigroup Trust.
Default has the meaning specified in Section 5.7.
Defaulted Interest has the meaning specified in Section 3.7.
Defeasance has the meaning specified in Section 4.2.
Deferred Interest has the meaning specified in Section 13.1.
Delaware Trustee has the meaning specified in the Declaration of the applicable Citigroup
Trust.
Depositary means, with respect to Securities of any series issuable in whole or in part in
the form of one or more Global Securities, a clearing agency registered under the Exchange Act that
is designated to act as Depositary for such Securities as contemplated by Section 3.1.
Direct Action has the meaning specified in Section 15.1.
Dissolution Event means, with respect to a Citigroup Trust, that as a result of the
occurrence and continuation of a Special Event with respect to such Citigroup Trust, such Citigroup
Trust is to be dissolved in accordance with its Declaration.
Distributions on Trust Securities of a Citigroup Trust has the meaning set forth in the
Declaration of such Citigroup Trust.
Event of Default and Acceleration has the meaning specified in Section 5.1.
Exchange Act means the Securities Exchange Act of 1934 as amended from time to time, and any
successor legislation.
Extended Interest Payment Period has the meaning specified in Section 13.1.
4
Federal Reserve means either or both of the Board of Governors of the Federal Reserve System
and the Federal Reserve Bank of New York, or its successor as the Companys primary federal banking
regulator.
Fifth Deferral Anniversary means the date which is five (5) years after the date of
commencement of an Extended Interest Payment Period, if on such date such Extended Interest Payment
Period has not ended.
Floating or Adjustable Rate Provision means a formula or provision, specified in a Board
Resolution or an indenture supplemental hereto, providing for the determination, whether pursuant
to objective factors or pursuant to the sole discretion of any Person (including the Company), and
periodic adjustment of the interest rate per annum borne by a Floating or Adjustable Rate Security.
Floating or Adjustable Rate Security means any Security which provides for interest to be
payable thereon at a rate per annum that may vary from time to time over the term thereof in
accordance with a Floating or Adjustable Rate Provision.
Global Security means a Security that evidences all or part of the Securities of any series
and is authenticated and delivered to, and registered in the name of, the Depositary for such
Securities or a nominee thereof.
Holder means a Person in whose name a Security is registered in the Security Register.
Indenture means this instrument as originally executed or as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof and shall include the terms of particular series of Securities
established as contemplated by Section 3.1.
Institutional Trustee has the meaning set forth in the Declaration of the applicable
Citigroup Trust.
Interest Payment Date, when used with respect to any Security, means the Stated Maturity of
an installment of interest on such Security.
Maturity, when used with respect to any Security, means the date on which the principal of
such Security or an installment of principal becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
Market Disruption Event, means the occurrence or existence of any of the following events
or circumstances:
(1) the Company would be required to obtain the consent or approval of its shareholders or a
regulatory body (including, without limitation, any securities exchange but excluding the Federal
Reserve) or governmental authority to issue or sell shares of its common stock and such consent or
approval has not yet been obtained even
5
though the Company has used commercially reasonable efforts
to obtain the required consent or approval;
(2) trading in securities generally on the principal exchange on which the Companys
securities are listed and traded (as of the date hereof, the New York Stock Exchange) shall have
been suspended or materially disrupted or minimum prices shall have been established on any such
exchange or market by the Commission, by the relevant exchange or any other regulatory body or by
governmental authority having jurisdiction;
(3) an event occurs and is continuing as a result of which the offering document for such
offer and sale of securities would, in the reasonable judgment of the Company, contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and either (1) the disclosure of that event
at such time, in the reasonable judgment of the Company, would have a material adverse effect on
the Companys business or (2) the disclosure relates to a previously undisclosed proposed or
pending material development or business transaction, and the Company has a bona fide business
reason for keeping the same confidential or the disclosure of which would impede the Companys
ability to consummate such transaction, provided that no single suspension period contemplated by
this paragraph (iii) may exceed 90 consecutive days and multiple suspension periods contemplated by
this paragraph (iii) may not exceed an aggregate of 90 days in any 180-day period;
(4) the Company reasonably believes that the offering document for such offer and sale of
securities would not be in compliance with a rule or regulation of the Commission (for reasons
other than those referred to in paragraph (iii) above) and the Company is unable to comply with
such rule or regulation or such compliance is impracticable, provided that no single suspension
contemplated by this paragraph (iv) may exceed 90 consecutive days and multiple suspension periods
contemplated by this paragraph (iv) may not exceed an aggregate of 90 days in any 180-day period;
(5) there is an adverse change in general domestic or international economic, political or
financial conditions, including without limitation as a result of terrorist activities, or the
effect of international conditions on the financial markets in the United States and such adverse
change materially disrupts or otherwise has a material adverse effect on the issuance, sale or
trading of the Companys common stock;
(6) a material disruption shall have occurred in commercial banking or securities settlement
or clearing services in the United States; or
(7) a banking moratorium shall have been declared by federal or state authorities of the
United States.
New Equity Amount means, at any date, (i) the net cash proceeds (after underwriters or
placement agents fees, commissions or discounts and other expenses relating to the issuances),
plus (ii) the fair market value of property, other than cash
6
(based on the Current Stock Market
Price of common stock issued or delivered for such property), received by the Company during the
180-day period immediately prior to such date in arms length transactions, from the issuance or
sale of shares of (A) the Companys common stock, including treasury shares and shares of common
stock sold pursuant to the Companys dividend reinvestment plan and employee benefit plans and (B)
the Companys Qualified Warrants.
No Recognition Opinion, with respect to a Citigroup Trust, has the meaning specified in the
Declaration of such Citigroup Trust.
Non Book-Entry Preferred Securities has the meaning specified in Section 3.12(a)(ii).
Officers Certificate means a certificate signed by the Chairman or Vice Chairman of the
Board, the President, a Vice President, the Chief Financial Officer, the Chief Accounting Officer
or the Treasurer, and by a Deputy Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. The officer signing an Officers
Certificate pursuant to Section 10.4 shall be the principal executive, financial or accounting
officer of the Issuer or the Company, as the case may be.
Opinion of Counsel means a written opinion of counsel, who may be counsel for the Company.
Outstanding, when used with respect to Securities, means, as of the date of determination,
all Securities theretofore authenticated and delivered under this Indenture,
except
:
(i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for
cancellation;
(ii) Securities for whose payment or redemption money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated in trust by the Company (if the
Company shall act as its own Paying Agent) for the Holders of such Securities;
provided
that, if
such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 3.6 or in exchange for or in lieu of
which other Securities have been authenticated and delivered pursuant to this Indenture, other than
any such Securities in respect of which there shall have been presented to the Trustee proof
satisfactory to it that such Securities are held by a protected purchaser in whose hands such
Securities are valid obligations of the Company;
provided
that in determining whether the Holders of the requisite principal amount of the
Outstanding Securities have given any request, demand, authorization, direction, notice,
7
consent or
waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be
Outstanding;
provided
,
however
, that, in determining whether the Trustee shall be protected in
relying, upon any such request, demand, authorization, direction, notice, consent or waiver, only
Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded and
provided
,
further
, that Securities held by the Institutional Trustee for the
benefit of the holders of the Trust Securities shall not be so disregarded. Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to
the satisfaction of the Trustee the pledgees right so to act with respect to such Securities and
that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor.
Paying Agent means any Person authorized by the Company to pay the principal of (or premium,
if any) or interest on any Securities on behalf of the Company.
Person means any individual, corporation, partnership, limited liability company, joint
venture, association, joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
Place of Payment, when used with respect to the Securities of any series, means the place or
places where the principal of (and premium, if any) and interest on the Securities of that series
are payable as specified as contemplated by Section 3.1.
Predecessor Security of any particular Security means every previous Security evidencing all
or a portion of the same debt as that evidenced by such particular Security; and, for the purposes
of this definition, any Security authenticated and delivered under Section 3.6 in exchange for or
in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Security.
Preferred Securities means undivided beneficial interests in the assets of a Citigroup Trust
which rank, except upon the occurrence and continuation of an Event of Default and Acceleration,
pari passu
with Common Securities issued by such Citigroup Trust.
Preferred Security Certificate has the meaning specified in the Declaration of the
applicable Citigroup Trust.
Qualified Warrants means warrants for the Companys common stock that (1) have an exercise
price greater than the Current Stock Market Price of the Companys common stock on their date of
issuance, and (2) the Company is not entitled to redeem for cash and the holders are not entitled
to require the Company to repurchase for cash in any circumstances.
Qualifying Capital Securities means securities (other than common stock, rights to acquire
common stock and securities convertible into common stock) that, in the determination of the Board
of Directors, have equity-like characteristics that are the same
8
as, or more equity-like than, the
applicable characteristics of the Securities at the time of redemption and repurchase.
Quarterly Interest Accrual Period means each period commencing on an Interest Payment Date
and continuing to but not including the next succeeding Interest Payment Date.
Redemption Date, when used with respect to any Security to be redeemed, means the date fixed
for such redemption by or pursuant to this Indenture.
Redemption Option Date means, with respect to a series of Securities, the date specified as
contemplated by Section 3.1 on or after which, from time to time, the Company, at its option, may
redeem such series of Securities in whole or in part.
Redemption Price, when used with respect to any Security to be redeemed, means such
percentage of the principal amount of such Security that is specified pursuant to Section 3.1 plus
any accrued and unpaid interest thereon to the date of redemption.
Redemption Tax Opinion, with respect to a Citigroup Trust, has the meaning set forth in the
Declaration of the applicable Citigroup Trust.
Regular Record Date for the interest payable on any Interest Payment Date on the Securities
of any series means the date specified as such pursuant to Section 3.1.
Regular Trustees has the meaning set forth in the Declaration of the applicable Citigroup
Trust.
Responsible Officer means, with respect to the Trustee, any officer within the Corporate
Trust Office of the Trustee having direct responsibility for the administration of this Indenture
and also means, with respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officers knowledge of and familiarity with the particular
subject.
Securities has the meaning stated in the first recital of this Indenture and more
particularly means any Securities authenticated and delivered under this Indenture.
Security Beneficial Owner means, with respect to a Book Entry Interest, a person who is the
beneficial owner of such Book Entry Interest, as reflected on the books of the Depositary, or on
the books of a Person maintaining an account with such Depositary (directly as a Depositary
participant or as an indirect participant, in each case in accordance with the rules of the
Depositary).
Security Register and Security Registrar have the respective meanings specified in Section
3.5.
Senior Indebtedness means with respect to the Company:(i) the principal, premium, if any,
and interest in respect of (A) indebtedness for money borrowed and (B) indebtedness evidenced by
securities, notes, debentures, bonds or other similar
9
instruments issued by the Company, including
without limitation (a) all indebtedness (whether now or hereafter outstanding) issued under the
senior debt indenture, dated as of March 15, 1987, between Citigroup and The Bank of New York, as
trustee, as the same has been or may be amended, modified, or supplemented from time to time, (b)
all indebtedness (whether now or hereafter outstanding) issued under the subordinated debt
indenture, dated as of April 12, 2001, between Citigroup and J.P. Morgan Trust Company, National
Association, as trustee, as the same has been or may be amended, modified, or supplemented from
time to time, (c) all indebtedness (whether now or hereafter outstanding) issued to a Citigroup
Standard T
ru
PS
®
Trust under the junior subordinated debt indenture dated as of
July 23, 2004, between Citigroup and JP Morgan Chase Bank, N.A., as trustee, as the same has been
or may be amended, modified, or supplemented from time to time, (d) all indebtedness issued to a
Citigroup Standard T
ru
PS
®
Trust under the indenture, dated as of October 7,
1996, between Citigroup and JPMorgan Chase Bank, N.A., as trustee, as the same has been or may be
amended, modified, or supplemented from time to time, and (e) any guarantee entered into by
Citigroup in respect of any preferred securities, capital securities or preference stock of a
Citigroup Standard T
ru
PS
®
Trust to which Citigroup issued any indebtedness
under a junior subordinated debt indenture identified in (c) or (d) above; (ii) all capital lease
obligations of the Company; (iii) all obligations of the Company issued or assumed as the deferred
purchase price of property, all conditional sale obligations of the Company and all obligations of
the Company under any conditional sale or title retention agreement (but excluding trade accounts
payable in the ordinary course of business); (iv) all obligations, contingent or otherwise, of the
Company in respect of any letters of credit, bankers acceptance, security purchase facilities and
similar credit transactions; (v) all obligations of the Company in respect of interest rate swap,
cap or other agreements,
interest rate future or option contracts, currency swap agreements, currency future or option
contracts and other similar agreements; (vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons for the payment of which the Company is responsible or liable as
obligor, guarantor or otherwise; and (vii) all obligations of the type referred to in clauses (i)
through (vi) of other Persons secured by any lien on any property or asset of the Company (whether
or not such obligation is assumed by the Company),
except
that Senior Indebtedness does not
include obligations in respect of (1) any indebtedness issued under this Indenture, (2) any
guarantee entered into by the Company in respect of any capital securities issued by a Citigroup
Trust, (3) any indebtedness or any guarantee that is by its terms subordinated to, or ranks equally
with, the Securities (including the indebtedness issued in connection with the issuance of enhanced
capital securities by Citigroup Capital XIV) and the issuance of which does not at the time of
issuance prevent the Securities from qualifying for Tier 1 capital treatment (irrespective of any
limits on the amount of Citigroups Tier 1 capital) under applicable capital adequacy guidelines,
regulations, policies, published interpretations, or the concurrence or approval of the Federal
Reserve; or (4) trade accounts payable and other accrued liabilities arising in the ordinary course
of business.
Share Cap Amount has the meaning specified in Section 13.5(c).
Special Event, with respect to a Citigroup Trust, has the meaning specified in the
Declaration of such Citigroup Trust.
10
Special Record Date for the payment of any Defaulted Interest means a date fixed by the
Trustee pursuant to Section 3.7.
Stated Maturity, when used with respect to any Security or any installment of principal
thereof or interest thereon, means the date specified in such Security as the fixed date on which
the principal of such Security or such installment of principal or interest is due and payable.
Supervisory Event, shall commence upon the later to occur of (i) the Fifth Deferral
Anniversary and (ii) the date on which the Company has given notice to the Federal Reserve pursuant
to Section 13.9 of its intention both (1) to sell shares of its common stock and (2) to apply the
net proceeds from such sale to pay Deferred Interest. A Supervisory Event shall cease upon the
Business Day following the earlier to occur of (A) the tenth business day after the Company gives
notice to the Federal Reserve described in clause (ii) above so long as the Federal Reserve does
not disapprove of the Companys intention both (1) to sell common stock and (2) to apply the net
proceeds from such sale to pay Deferred Interest, (B) the Tenth Deferral Anniversary or (C) the day
on which the Federal Reserve notifies the Company in writing that it no longer disapproves of the
Companys intention both (1) to sell common stock and (2) to apply the net proceeds from such sale
to pay Deferred Interest;
provided
,
however
, that after the termination of a
Supervisory Event, if the Federal Reserve shall at any time disapprove of the Company (1) selling
common stock and (2) applying the net proceeds from such sale to pay Deferred Interest, a
Supervisory Event shall recommence.
Tax Event, with respect to a Citigroup Trust, has the meaning set forth in the Declaration
of the applicable Citigroup Trust.
Tax Event Opinion, with respect to a Citigroup Trust, has the meaning set forth in the
Declaration of the applicable Citigroup Trust.
Tenth Deferral Anniversary means the date which is ten (10) years after the date of
commencement of an Extended Interest Payment Period, if on such date such Extended Interest Payment
Period has not ended.
Trust Indenture Act means the Trust Indenture Act of 1939, as in force at the date as of
which this instrument was executed, except as provided in Section 9.5.
Trust Securities means Common Securities and Preferred Securities of any Citigroup Trust.
Trustee means the Person named as the Trustee in the first paragraph of this instrument
until a successor Trustee shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter Trustee shall mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, Trustee as used with respect to
the Securities of any series shall mean the Trustee with respect to Securities of that series.
11
Underwriting Agreement has the meaning set forth in the Declaration of the applicable
Citigroup Trust.
U.S. Government Obligations has the meaning specified in Section 4.4.
Vice President, when used with respect to the Company or the Trustee, means any vice
president, whether or not designated by a number or a word or words added before or after the title
vice president.
Section 1.2.
Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any action under any
provision of this Indenture, the Company shall furnish to the Trustee an Officers Certificate
stating that all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel sating that in the opinion of
such counsel all such conditions precedent, if any, have been complied with, except that in the
case of any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture shall include,
(1) a statement that each individual signing such certificate or opinion has read such
covenant or condition and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has made such
examination or investigation as is necessary to enable him to express an informed opinion
as to whether or not such covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such individual, such condition
or covenant has been complied with.
Section 1.3.
Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
12
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the certificate or opinion
or representations with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an officer or officers of
the Company stating that the information with respect to such factual matters is in the possession
of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that
the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this Indenture, they may,
but need not, be consolidated and form one instrument.
Section 1.4.
Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action
provided or permitted by this Indenture to be given or taken by Holders shall be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by such Holders in
person or by an agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments are delivered to
the Trustee and, where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the Act of the Holders
signing such instrument or instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to
Section 6.1) conclusive in favor of the Trustee and the Company, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such instrument or writing may be
proved by the affidavit of a witness of such execution or by a certificate of a notary public or
other officer authorized by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof. Where such execution
is by a signer acting in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the
Holder of any Security shall bind every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered
13
to be done by the Trustee or the Company
in reliance thereon, whether or not notation of such action is made upon such Security.
Section 1.5.
Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or furnished to, or
filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for every purpose
hereunder if made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Institutional Trust Group;
provided
,
however
, that such
instrument will be considered properly given if submitted in an electronic format,
i.e.
, by
facsimile, E-Mail or otherwise, or
(2) the Company by the Trustee or by any Holder shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company;
provided
,
however
, that such
instrument will be considered properly given if submitted in an electronic format,
i.e.
, by
facsimile, E-Mail or otherwise.
Section 1.6.
Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his address as it appears in
the Security Register, not later than the latest date and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to other Holders. Where this
Indenture provides for notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken-in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by reason of any other cause it
shall be impracticable to give such notice by mail, then such notification as shall be made with
the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 1.7.
Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such
required provision shall control.
14
Section 1.8.
Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 1.9.
Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind its successors and
assigns, whether so expressed or not.
Section 1.10.
Separability Clause.
In case any provision in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 1.11.
Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, the holders of Senior Indebtedness
and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 1.12.
Governing Law.
This Indenture and the Securities shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York, and all rights and remedies shall be governed
by such laws without regard for the principles of its conflicts of laws.
Section 1.13.
Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any
Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of interest or principal (and premium, if
any) need not be made at such Place of Payment on such date, but may be made on the next succeeding
Business Day at such Place of Payment with the same force and effect as if made on the Interest
Payment Date or Redemption Date, or at the Stated Maturity,
provided
that no interest shall accrue
for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as
the case may be, except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case with the same force
and effect as if made on such date.
Section 1.14.
Tax Characterization.
The Company, the Trustee and each Holder of a Security (by acceptance thereof) agrees to treat
the Securities as debt instruments for United States federal, state and local
15
income and franchise
tax purposes and agrees not to take any contrary position before any taxing authority or on any tax
return unless otherwise required by law.
ARTICLE II
Security Forms
Section 2.1.
Forms Generally.
The Securities of each series shall be in substantially the form
set forth in this Article, or in such other form as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any securities exchange
or Depositary therefor or as may, consistently herewith, be determined by the officers executing
such Securities, as evidenced by their execution of such Securities. If the form of Securities of
any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate
record of such action shall be certified by the Secretary or an Assistant Secretary of the Company
and delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by Section 3.3 for the
authentication and delivery of such Securities.
The Trustees certificates of authentication shall be in substantially the form set forth in
this Article.
The definitive Securities may be produced in any manner as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.
Section 2.2.
Form of Face of Security.
[IF THE SECURITY IS TO BE A GLOBAL SECURITY, INSERT -
This Security is a Global Security within the meaning of the Indenture hereinafter referred to and
is registered in the name of a Depositary or a nominee of a Depositary. This Security is
exchangeable for Securities registered in the name of a person other than the Depositary or its
nominee only in the limited circumstances described in the Indenture, and no transfer of this
Security (other than a transfer of this Security as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Security is presented by an authorized representative of The Depository Trust
Company (55 Water Street, New York, New York) to the issuer or its agent for registration of
transfer, exchange or payment, and any Security issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.]
16
No.
CITIGROUP INC.
[INSERT TITLE OF SERIES OF SECURITY]
CITIGROUP INC., a Delaware corporation (the Company, which term includes any successor
corporation under the Indenture hereinafter referred to), for value received, hereby promises to
pay to
or registered
assigns, the principal sum of
Dollars ($
) on
, ___, and to
pay interest on said principal sum from
, ___, or
from the most recent interest payment date (each such date, an Interest Payment Date) to which
interest has been paid or duly provided for, [quarterly] [(subject to deferral as set forth
herein)] in arrears on [
,
,
and
] of each year
commencing
, ___, at [
If
the Security is to bear interest at a fixed rate, insert
-a rate of ___% per annum,] [
If
the Security is a Floating or Adjustable Rate Security, insert
a rate of ___% per annum
[computed-determined] in accordance with the [
insert defined name of Floating or Adjustable Rate
Provision
] set forth below] until the principal hereof shall have become due and payable, and on
any overdue principal and premium, if any, and (without duplication and to the extent that payment
of such interest is enforceable under applicable law) on any overdue installment of interest at the
same rate per annum compounded [quarterly]. The amount of interest payable on any Interest Payment
Date shall be computed on the basis of a 360-day year of twelve 30-day months. In the event that
any date on which interest is payable on this Security is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), except that, if such Business
Day is in the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made on such date. The
interest installment so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one
or more Predecessor Securities, as defined in said Indenture) is registered at the close of
business on the regular record date for such interest installment, which shall be the close of
business on the Business Day next preceding such Interest Payment Date, [IF PURSUANT TO THE
PROVISIONS OF THE INDENTURE THE SECURITIES ARE NO LONGER REPRESENTED BY A GLOBAL SECURITY which
shall be the close of business on the ___Business Day
next preceding such Interest Payment Date.]
Any such interest installment not punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holders on such regular record date and may be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered Holders of this series of Securities not
less than 10 days prior to such special record date, or may be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on which the Securities
may be listed, and upon such notice as may
17
be required by such exchange, all as more fully provided
in the Indenture. Payments on this Global Security will be made to the Depository Trust Company,
or to a successor Depositary. [IF PURSUANT TO THE PROVISIONS OF THE INDENTURE THE SECURITIES ARE
NO LONGER REPRESENTED BY A GLOBAL SECURITY The principal of (and premium, if any) and the
interest on this Security shall be payable at the office or agency of the Trustee maintained for
that purpose in any coin or currency of the United States of America that at the time of payment is
legal tender for payment of public and private debts;
provided, however
, that payment of interest
may be made at the option of the Company by check mailed to the registered Holder at such address
as shall appear in the Security Register. Notwithstanding the foregoing, so long as the Holder of
this Security is the Institutional Trustee of a Citigroup Trust, the payment of the principal of
(and premium, if any) and interest on this Security will be made at such place and to such account
as may be designated by such Institutional Trustee.]
The Securities are not deposits or savings accounts. The Securities are not insured by the
Federal Deposit Insurance Corporation or any other governmental agency or instrumentality.
[At this point in the Security Form of any series of Floating or Adjustable Rate Securities,
the text of the Floating or Adjustable Rate Provision relating thereto should be inserted.]
The indebtedness evidenced by this Security is, to the extent provided in the Indenture,
subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness
of the Company, and this Security is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by,
such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c)
appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder
hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of Senior
Indebtedness of the Company, whether now outstanding or hereafter incurred, and waives reliance by
each such holder upon said provisions.
This Security shall not be entitled to any benefit under the Indenture hereinafter referred
to, be valid or become obligatory for any purpose until the Certificate of Authentication hereon
shall have been signed by or on behalf of the Trustee.
The provisions of this Security are continued on the reverse side hereof and such continued
provisions shall for all purposes have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed.
Dated:
18
CITIGROUP INC.
By:
Name:
Title:
By:
Name:
Title:
Section 2.3.
Form of Reverse of Security.
This Security is one of a duly authorized series of
securities of the Company (herein sometimes referred to as the Securities), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant to an Indenture
dated as of [ ], 2007 (the Indenture), duly executed and delivered between the
Company and The Bank of New York, as Trustee (the Trustee), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the respective rights,
limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company
and the Holders of the Securities. By the terms of the Indenture, the Securities are issuable in
series that may vary as to amount, date of maturity, rate of interest and in other respects as
provided in the Indenture. This series of Securities is limited in aggregate principal amount to $
(, plus up to an additional $
aggregate principal amount which may be issued
upon exercise of the over-allotment option contemplated by the Underwriting Agreement).
The Company shall have the right to redeem this Security at the option of the Company, in
whole or in part, at any time on or after ___, 20___(an Optional Redemption), or any time in
certain circumstances upon the occurrence of a Tax Event, an Investment Company Event or a
Regulatory Capital Event (as defined in the Companys Prospectus dated ___, 20___) (each, a
Special Event) at a redemption price equal to 100% of the principal amount thereof, plus any
accrued and unpaid interest to the date of such redemption (the Optional Redemption Price). Any
redemption pursuant to this paragraph will be made upon not less than 30 days nor more than 60 days
notice, or with respect to a redemption upon a Special Event, within 90 days following the
occurrence of such Special Event, at the Optional Redemption Price. If the Securities are only
partially redeemed by the Company pursuant to an Optional Redemption, the Securities will be
redeemed pro rata or by lot or by any other method utilized by the Trustee; provided that if, at
the time of redemption, the Securities are registered as a Global Security, the Depositary (as
defined herein) shall determine the principal amount of such Securities held by each Security
Beneficial Owner to be redeemed in accordance with its procedures.
19
Any redemption of the Securities of this series, in whole or in part, prior to the stated
maturity date is subject to the prior concurrence or approval of the Board of Governors of the
Federal Reserve System, the Federal Reserve Bank of New York, or a successor to either of them, as
the Companys primary federal banking regulator (the Federal Reserve), or the staff thereof, (i)
if such approval is then required in order for securities such as the Securities to qualify as tier
1 capital of a bank holding company under applicable capital adequacy guidelines, regulations,
policies, or published interpretations of the Federal Reserve, or (ii) if the Federal Reserve or
its staff has informed the Company that it must obtain such approval before redeeming the
Securities.
In the event of redemption of this Security in part only, a new Security or Securities of this
series for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.
In case an Event of Default and Acceleration, as defined in the Indenture, shall have occurred
and be continuing, the principal of all of the Securities may be declared,
and upon such declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee, with the consent of
the Holders of not less than a majority in aggregate principal amount of the Securities of each
series affected at the time outstanding, as defined in the Indenture, to execute supplemental
indentures for the purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Securities;
provided, however,
that no such supplemental indenture
shall (i) extend the fixed maturity of any Securities of any series, or reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any
premium payable upon the redemption thereof, without the consent of the Holder of each Security so
affected, or (ii) reduce the aforesaid percentage of Securities, the Holders of which are required
to consent to any such supplemental indenture, without the consent of the Holders of each Security
then outstanding and affected thereby. The Indenture also contains provisions permitting the
Holders of a majority in aggregate principal amount of the Securities of any series at the time
outstanding affected thereby, on behalf of all of the Holders of the Securities of such series, to
waive any past default in the performance of any of the covenants contained in the Indenture, or
established pursuant to the Indenture with respect to such series, and its consequences, except a
default in the payment of the principal of or premium, if any, or interest on any of the Securities
of such series. Any such consent or waiver by the registered Holder of this Security (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Security and of any Security issued in exchange herefor or in
place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and
20
unconditional, to pay
the principal of and premium, if any, and interest on this Security at the time and place and at
the rate and in the money herein prescribed.
The Company shall have the right at any time during the term of the Securities and from time
to time to extend the interest payment period of such Securities for up to 40 consecutive quarters
(an Extended Interest Payment Period), at the end of which period the Company shall pay all
interest then accrued and unpaid (together with interest thereon at the rate specified for the
Securities to the extent that payment of such interest is enforceable under applicable law);
provided
, that no such Extended Interest Payment Period shall extend beyond the maturity of the
Securities; and
provided further
that during any such Extended Interest Payment Period (a) the
Company and any subsidiary of the Company shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payment with respect thereto (other than
(i) purchases, redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar arrangement with or for the
benefit of
employees, officers, directors or consultants, (ii) purchases of shares of common stock of the
Company pursuant to a contractually binding requirement to buy stock existing prior to the
commencement of the Extended Interest Payment Period, including under a contractually binding stock
repurchase plan, (iii) as a result of an exchange or conversion of any class or series of the
Companys capital stock for any other class or series of the Companys capital stock, (iv) the
purchase of fractional interests in shares of the Companys capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being converted or
exchanged) or (v) the purchase of capital stock of the Company in connection with the distribution
thereof), and (b) the Company and any subsidiary of the Company will not make any payment of
interest, principal or premium on, or repay, purchase or redeem, any debt securities or guarantees
issued by the Company that rank pari passu with or junior to the Securities (other than (i) any
payment of current or Deferred Interest on securities that rank pari passu with the Securities that
is made pro rata to the amounts due on such securities (including the Securities), provided that
any such payments of Deferred Interest are made in accordance with Section 13.5(d) of the
Indenture, (ii) any payments of Deferred Interest on securities that rank pari passu with the
Securities that, if not made, would give rise to an event of default permitting acceleration of
such securities or (iii) any repayment or redemption of a security necessary to avoid a breach of
the instrument governing the same). The foregoing, however, will not apply to any stock dividends
paid by the Company where the dividend stock is the same stock as that on which the dividend is
being paid. Before the termination of any such Extended Interest Payment Period, the Company may
further extend such Extended Interest Payment Period,
provided
that such Extended Interest Payment
Period together with all such previous and further extensions thereof shall not exceed 40
consecutive quarters. At the termination of any such Extended Interest Payment Period and upon the
payment of all accrued and unpaid interest and any additional amounts then due, the Company may
commence a new Extended Interest Payment Period. The Company may pay current interest at any time
with cash from any source.
21
Commencing on the earlier of (i) the Fifth Deferral Anniversary and (ii) the date of any
payment of current interest on the Securities during an Extended Interest Payment Period, if any
Deferred Interest is outstanding, the Company shall be subject to the Alternative Payment
Mechanism, pursuant to which it will continuously use its commercially reasonable efforts to effect
sales of shares of its common stock, including treasury shares, in an amount that will generate
sufficient net proceeds to enable the Company to pay in full all Deferred Interest on the
Securities then outstanding (subject to the APM Maximum Obligation, if applicable, and the Share
Cap Amount); provided that the Company shall not be obligated to make offers for or effect sales of
its common stock during the occurrence and continuation of a Market Disruption Event or a
Supervisory Event. The Companys obligation to use commercially reasonable efforts to sell shares
of its common stock to pay all Deferred Interest on the Securities shall resume at such time as no
Market Disruption Event or Supervisory Event exists or is continuing. The Company may pay Deferred
Interest with cash from any source (i) upon and following the Tenth Deferral Anniversary, (ii) upon
the Maturity of the Securities, (iii) during the occurrence and continuation of a Supervisory
Event, (iv) if the Company has previously sold shares of its common stock up to the Share Cap
Amount and the Company has not
increased the Share Cap Amount or (v) if an Event of Default and Acceleration shall have
occurred and be continuing.
The Holder of this Security, by such holders acceptance thereof, agrees that upon any payment
or distribution of assets to creditors of the Company upon any liquidation, dissolution, winding
up, reorganization, or in connection with any insolvency, receivership or proceeding under any
bankruptcy law with respect to the Company, such Holder shall not have a claim for Deferred
Interest, to the extent that the aggregate amount thereof (including Compounded Interest, and
Additional Interest thereon) exceeds 25% of the original principal amount of such Security.
As provided in the Indenture and subject to certain limitations therein set forth, this
Security is transferable by the registered Holder hereof on the Security Register of the Company,
upon surrender of this Security for registration of transfer at the office or agency of the Trustee
in the City and State of New York accompanied by a written instrument or instruments of transfer in
form satisfactory to the Company or the Trustee duly executed by the registered Holder hereof or
his attorney duly authorized in writing, and thereupon one or more new Securities of authorized
denominations and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any such transfer, but
the Company or the Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this Security, the Company, the
Trustee, any paying agent and the Security Registrar may deem and treat the registered holder
hereof as the absolute owner hereof (whether or not this Security shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone other than the Security
Registrar) for the purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all
22
other purposes, and neither the Company nor
the Trustee nor any paying agent nor any Security Registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of or the interest on this Security,
or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture, against any incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the consideration for
the issuance hereof, expressly waived and released.
[The Securities of this series are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof.] [This Global Security is exchangeable for
Securities in definitive form only under certain limited circumstances set forth in the Indenture.
Securities of this series so issued are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof.] As provided in the Indenture and subject
to certain limitations [herein and] therein set forth.
Securities of this series [so issued] are exchangeable for a like aggregate principal amount
of Securities of this series of a different authorized denomination, as requested by the Holder
surrendering the same.
All terms used in this Security that are defined in the Indenture shall have the meanings
assigned to them in the Indenture.
Section 2.4.
Form of Trustees Certificate of Authentication.
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series of Securities described in the within-mentioned
Indenture.
THE BANK OF NEW YORK,
as Trustee
By:
Authorized Officer
ARTICLE III
The Securities
Section 3.1.
Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
23
The Securities may be issued in one or more series. There shall be established in or pursuant
to a Board Resolution, and set forth in an Officers Certificate, or established in one or more
indentures supplemental hereto, prior to the issuance of Securities of any series:
(1) the title of the Securities of the series (which shall distinguish the Securities
of the series from all Securities of any other series);
(2) the date or dates on which the principal of the Securities of the series is
payable;
(3) the rate or rates at which the Securities of the series shall bear interest or the
Floating or Adjustable Rate Provision pursuant to which such rates shall be determined, the
date or dates from which any such interest shall accrue, the Interest Payment Dates on
which any such interest shall be payable and the Regular Record Date for the interest
payable on any Interest Payment Date (if such Interest Payment Dates or Regular Record
Dates differ from those provided herein);
(4) the place or places where the principal of (and any premium, if any) and interest
on Securities of the series shall be payable;
(5) in addition to the redemption rights provided herein, the period or periods within
which (including the Redemption Option Date for the series) and the price or prices at
which any Securities of the series may be redeemed, in whole or in part, at the option of
the Company;
(6) if other than denominations of $25 and any integral multiple thereof, the
denominations in which Securities of the series shall be issuable;
(7) any other defaults applicable with respect to the Securities of the series in
addition to those provided in Section 5.7(a) through (f);
(8) any other covenant or warranty included for the benefit of Securities of the
series in addition to (and not inconsistent with) those included in this Indenture for the
benefit of Securities of all series, or any other covenant or warranty included for the
benefit of Securities of the series in lieu of any covenant or warranty included in this
Indenture for the benefit of Securities of all series, or any provision that any covenant
or warranty included in this Indenture for the benefit of Securities of all series shall
not be for the benefit of Securities of the series, or any combination of such covenants,
warranties or provisions;
(9) the subordination terms of the Securities of the series;
(10) the provisions of this Indenture, if any, that shall not apply to the series; and
24
(11)any other terms of the series (which additional terms shall not be inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to such Board Resolution and set forth, or determined in the manner provided, in the Officers Certificate referred to above or in any such indenture supplemental hereto.
If any of the terms of the Securities of a series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers Certificate setting forth the terms of the Securities of such series.
Section 3.2.
Denominations.
The Securities of each series shall be issuable in registered form without
coupons and in such denominations as shall be specified as contemplated by Section 3.1.
In the absence of any such provisions with respect to the Securities of any series, the Securities
of such series shall be issuable in denominations of $25 and any integral multiple thereof.
Section 3.3.
Execution, Authentication, Delivery and Dating.
The Securities shall be executed
on behalf of the Company by its Chairman or a Vice Chairman of the Board, its President, a Vice
President, the Chief Financial Officer, the Chief Accounting Officer, the Treasurer, any Deputy
Treasurer or any Assistant Treasurer, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who were at any time the
proper officers of the Company shall bind the Company, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the authentication and delivery of such
Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities of any series executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and delivery of such
Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver
such Securities. If the form or terms of the Securities of the series have been established in or
pursuant to one or more Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating
such Securities, and accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive at the time of the initial delivery by
the Company of Securities of such series to the Trustee for authentication, and (subject to Section
6.1) shall be fully protected in relying upon, an Opinion of Counsel stating,
25
(1) if the form of such Securities has been established by or pursuant to Board
Resolution as permitted by Section 2.1, that such form has been established in conformity
with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or pursuant to Board
Resolution as permitted by Section 3.1, that such terms have been established in conformity
with the provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by or on behalf of the
Trustee and issued by the Company in the manner and subject to any conditions specified in
such Opinion of Counsel, will constitute valid and legally binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy, insolvency,
reorganization, and other laws of general applicability relating to or affecting the
enforcement or creditors rights and to general equity principles.
If such form or terms have been so established, the Trustee shall not be required to authenticate
such Securities if the issue of such Securities pursuant to this Indenture will affect the
Trustees own rights, duties or immunities under the Securities and this Indenture or otherwise in
a manner which is not reasonably acceptable to the Trustee.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory
for any purpose unless there appears on such Security a certificate of authentication substantially
in the form provided for herein executed by the Trustee by manual signature, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture.
Section 3.4.
Temporary Securities.
Pending the preparation of definitive Securities of any
series, the Company may execute, and upon receipt of a Company Order the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the directors or officers executing such Securities may
determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause definitive Securities
of that series to be prepared without unreasonable delay. After the preparation of definitive
Securities of such series, the temporary Securities of such series shall be exchangeable for
definitive Securities of such series upon surrender of the temporary Securities of such series at
the office or agency of the Company in a Place of Payment for Securities of that series, without
charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of
any series the Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like aggregate principal
26
amount of definitive Securities of the same series and of like
tenor of authorized denominations. Until so exchanged, the temporary Securities of any series
shall in all respects be entitled to the same benefits under this Indenture as definitive
Securities of such series.
Section 3.5.
Registration, Registration of Transfer and Exchange.
The Company shall cause to be
kept at the Corporate Trust Office of the Trustee a register (the register maintained in such
office and in any other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the Security Register) in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration of Securities, or
of Securities of a particular series, and of transfers of Securities or of Securities of such
series. The Trustee is hereby appointed Security Registrar for the purpose of registering
Securities and transfers of Securities as herein provided.
Subject to Section 3.11, upon surrender for registration of transfer of any Security of any
series at the office or agency of the Company in a Place of Payment for Securities of that series,
the Company shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new Securities of like
tenor of the same series, of any authorized denominations and of a like aggregate principal amount.
Subject to Section 3.11, at the option of the Holder, Securities of any series may be
exchanged for other Securities of like tenor of the same series, of any authorized denominations
and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of Securities shall be the
valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if
so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Securities,
but the Company or the Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of transfer or exchange
of Securities, other than exchanges pursuant to Section 3.4, 9.6 or 11.7 not involving any
transfer.
27
The Company shall not be required (i) to issue, register the transfer of or exchange any
Security of any series during a period beginning at the opening of business 15 days before the day
of the mailing of a notice of redemption of Securities of such series selected for redemption under
Section 11.3 and ending at the close of business on the day of such mailing, or (ii) to register
the transfer of or exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
Section 3.6.
Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is
surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction
of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be
required by them to save each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Trustee that such Security has been acquired by a protected
purchaser, the Company shall execute and
upon its written request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, the Company in its discretion may, instead of issuing a new Security, pay
such Security.
Upon the issuance of any new Security under this Section, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this Section in lieu of any destroyed,
lost or stolen Security shall constitute an original additional contractual obligation of the
Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately
with any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost
or stolen Securities.
Section 3.7.
Payment of Interest; Interest Rights Preserved.
Interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to
the Person in whose name that Security (or one or more Predecessor
28
Securities) is registered at the
close of business on the Regular Record Date for such interest.
Interest on any Security of any series which is payable, but is not punctually paid or duly
provided for, on any Interest Payment Date (herein called Defaulted Interest) shall forthwith
cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as
provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the Persons in
whose names the Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The Company shall notify
the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each
Security of such series and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Securities of such series at his address as
it appears in the Security Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on the Securities of any
series in any other lawful manner not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon such notice as may be required by
such exchange, if, after written notice given by the Company to the Trustee of the proposed
payment pursuant to this Clause, such manner of payment shall be deemed practicable by the
Trustee in its sole discretion.
Subject to the foregoing provisions of this Section, each Security delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any other
29
Securities shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such
other Security.
For the purposes of determining the Holders who are entitled to participate in any
distribution on the Securities in respect of which a Regular Record Date or a Special Record Date
is not otherwise provided for in this Indenture, or for the purpose of any other action (unless
provided for pursuant to Section 3.1), the Company may from time to time fix a date, not more than
90 days prior to the date of the payment of distribution or other action, as the case may be, as a
record date for the determination of the identity of the Holders of record for such purposes.
Section 3.8.
Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or
the Trustee may treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to
Section 3.7) interest on such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the
Trustee shall be affected by notice to the contrary.
Section 3.9.
Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange
for any Securities cancelled as provided in this Section, except as expressly permitted by this
Indenture. Unless otherwise directed by a Company Order, delivery of which must be delivered in a
timely manner to prevent such destruction, all cancelled Securities held by the Trustee shall be
destroyed by it, and the Trustee, upon receipt of a written request of the Company, shall deliver a
certificate of such destruction to the Company.
Section 3.10.
Interest.
Each Security will bear interest at the rate established for the
series of Securities of which such Security is a part pursuant to Section 3.1 (the Coupon Rate)
from and including the original date of issuance of such Security until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of interest at the Coupon
Rate, compounded quarterly, payable (subject to the provisions of Article Four) quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year (or in such other periodic
installments on such other dates established as payment dates for the series of Securities of which
such Security is a part pursuant to Section 3.1) (each, an Interest Payment Date) commencing on
the date established for the series of Securities of which such Security is a part pursuant to
Section 3.1, to the Person in whose name such Security or any Predecessor Security is registered,
at the close of business on the Regular Record Date for such interest installment, which, in
respect of any Securities of which the Institutional Trustee of any Citigroup Trust is the Holder
or a Global Security, shall be the close of business on the Business Day next
30
preceding that
Interest Payment Date. Notwithstanding the foregoing sentence, if the Preferred Securities of a
Citigroup Trust are no longer in book-entry only form or, except if the Securities originally
issued to such Citigroup Trust are held by the Institutional Trustee of such Citigroup Trust, the
Securities of any series are not represented by a Global Security, the Company may select a Regular
Record Date for such interest installment on such series of Securities which shall be any date more
than 14 days but less than 60 days before an Interest Payment Date.
(b) The amount of interest payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months and will include the first day but exclude the last day of such
period. Except as provided in the following sentence, the amount of interest payable for any
period shorter than a full quarterly period for which interest is computed, will be computed on the
basis of the actual number of days elapsed in each 30-day month. In the event that any date on
which interest is payable on the
Securities of any series is not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
(c) If, at any time while the Institutional Trustee of a Citigroup Trust is the Holder of
Securities of any series, such Citigroup Trust or such Institutional Trustee is required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any case, the Company
will pay as additional interest (Additional Interest) on the Securities of such series, such
additional amounts as shall be required so that the net amounts received and retained by such
Citigroup Trust and/or such Institutional Trustee, as the case may be, after paying such taxes,
duties, assessments or other governmental charges will be equal to the amounts Citigroup Trust
and/or such Institutional Trustee, as the case may be, would have received had no such taxes,
duties, assessments or other government charges been imposed.
31
Section 3.11.
Form and Payment.
Except as provided in Section 3.12, the Securities of each
series shall be issued in fully registered certificated form without interest coupons. Principal
and interest on the Securities issued in certificated form will be payable, the transfer of such
Securities will be registrable, and such Securities will be exchangeable, for Securities of the
same series bearing identical terms and provisions at the office or agency of the Trustee;
provided
,
however
, that payment of interest may be made at the option of the Company by check
mailed to the Holders of such Securities at such address as shall appear in the Security Register.
Notwithstanding the foregoing, so long as the Holder of all Securities of any series is the
Institutional Trustee of any Citigroup Trust, the payment of the principal of and interest
(including Compounded Interest and Additional Interest, if any) on Securities of such series will
be made at such place and to such account as may be designated by the Institutional Trustee.
Section 3.12.
Global Securities.
In connection with Dissolution Event with respect to any
Citigroup Trust,
(i) the Securities in non book-entry certificated form held by such Citigroup Trust, or its
Institutional Trustee, will be presented to the Trustee by the Institutional Trustee of such
Citigroup Trust in exchange for a Global Security in an aggregate principal amount equal to the
aggregate principal amount of all outstanding Securities of the series issued to such Citigroup
Trust, to be registered in the name of the Depositary, or its nominee, and delivered by the Trustee
to the Depositary for crediting to the accounts of its participants pursuant to the instructions of
the Regular Trustees of the relevant Citigroup Trust. The Company upon any such presentation shall
execute a
Global Security in such aggregate principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with this Indenture. Payments on any Securities issued
as a Global Security will be made to the Depositary; and
(ii) if any Preferred Securities of a Citigroup Trust are held in non book-entry certificated
form, the Securities in non book-entry certificated form held by such Citigroup Trust, or its
Institutional Trustee, may be presented to the Trustee by the Institutional Trustee of such
Citigroup Trust and any Preferred Security Certificate which represents Preferred Securities of
such Citigroup Trust other than Preferred Securities held by the Depositary or its nominee (Non
Book-Entry Preferred Securities) will be deemed to represent Securities presented to the Trustee
by such Institutional Trustee having an aggregate principal amount equal to the aggregate
liquidation amount of the Non Book-Entry Preferred Securities until such Preferred Security
Certificates are presented to the Security Registrar for transfer or reissuance at which time such
Preferred Security Certificates will be cancelled and a Security, registered in the name of the
holder of the Preferred Security Certificate or the transferee of the holder of such Preferred
Security Certificate, as the case may be, with an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Security Certificate cancelled, will be executed by the Company
and delivered to the Trustee for authentication and delivery in accordance with this Indenture. On
issue of such Securities, Securities with an equivalent aggregate principal amount that were
presented by the Institutional Trustee to the Trustee will be deemed to have been cancelled.
32
(b) A Global Security may be transferred, in whole but not in part, only to another nominee of
the Depositary, or to a successor Depositary selected or approved by the Company or to a nominee of
such successor Depositary.
(c) If at any time the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for any series of Securities or if at any time the Depositary for such
series shall no longer be registered or in good standing under the Exchange Act, or other
applicable statute or regulation, and a successor Depositary for such series is not appointed by
the Company within 90 days after the Company receives such notice or becomes aware of such
condition, as the case may be, the Company will execute, and, subject to this Article III, the
Trustee, upon written notice from the Company, will authenticate and deliver the Securities of such
series in definitive registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security in exchange for
such Global Security. In addition, the Company may at any time determine that the Securities of
any series shall no longer be represented by a Global Security. In such event the Company will
execute, and subject to Section 3.5, the Trustee, upon receipt of an Officers Certificate
evidencing such determination by the Company, will authenticate and deliver the Securities of such
series in definitive registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Security for such series in
exchange for such Global Security. Upon the exchange of the Global Security for such Securities in
definitive registered form without coupons, in authorized denominations, the Global Security shall
be
cancelled by the Trustee. Such Securities in definitive registered form issued in exchange
for the Global Security shall be registered in such names and in such authorized denominations as
the Depositary, pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Securities to the Depositary, for
delivery to the Persons in whose names such Securities are so registered.
ARTICLE IV
Satisfaction And Discharge; Defeasance
Section 4.1.
Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request
cease to be of further effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been replaced
or paid as provided in Section 3.6 and (ii) Securities for whose payment money has
theretofore been deposited in trust or
33
segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust, as provided in
Section 10.3) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one year,
or
(iii) are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the
purpose an amount sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any)
and interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption Date,
as the case may be;
(2) the Company has paid or caused to be paid all other sums payable hereunder by the
Company; and
(3) the Company has delivered to the Trustee an Officers Certificate and an Opinion
of Counsel, each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the
Company to the Trustee under Section 6.7, the Companys obligation to pay the expenses of any
Citigroup Trust under Section 10.6 (except upon the application of subclauses 1(A) or 1(B)(i)
above), the obligations of the Trustee to any Authenticating Agent under Section 6.14, and, if
money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this
Section, the obligations of the Trustee under Section 4.2 and the last paragraph of Section 10.3
shall survive.
Section 4.2.
Defeasance and Discharge.
The following provisions shall apply to the Securities
of each series unless specifically otherwise provided in a Board Resolution, Officers Certificate
or indenture supplemental hereto provided pursuant to Section 3.1. In addition to discharge of
this Indenture pursuant to Sections 4.1 and 4.3, in the case of any series of Securities with
respect to which an amount sufficient to pay and discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee for
34
cancellation, for principal (and premium,
if any) and interest, as certified pursuant to subparagraph (a) of Section 4.4 can be determined at
the time of making the deposit referred to in such subparagraph (a), the Company shall be deemed to
have paid and discharged the entire indebtedness on all the Securities of such a series as provided
in this Section on and after the date the conditions set forth in Section 4.4 are satisfied, and
the provisions of this Indenture with respect to the Securities of such series shall no longer be
in effect (except as to (i) rights of registration of transfer and exchange of Securities of such
series, (ii) substitution of mutilated, defaced, destroyed, lost or stolen Securities of such
series, (iii) rights of Holders of Securities of such series to receive, solely from the trust fund
described in subparagraph (a) of Section 4.4, payments of principal thereof and interest, if any,
thereon upon the original stated due dates therefor (but not upon acceleration), (iv) the rights,
obligations, duties and immunities of the Trustee hereunder, (v) this Section 4.2, (vi) the rights
of the Holders of Securities of such series as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them and (vii) the Companys obligation to pay
the expenses of any Citigroup Trust under Section 10.6) (hereinafter called Defeasance), and the
Trustee at the cost and expense of the Company, shall execute proper instruments acknowledging the
same.
Section 4.3.
Covenant Defeasance.
In the case of any series of Securities with respect to which
an amount sufficient to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and
interest, as certified pursuant to subparagraph (a) of Section 4.4 can be determined at the time of
making the deposit referred to in such subparagraph (a), (i) the Company shall be released from its
obligations under any covenants specified in or pursuant to this Indenture (except as to (A) rights
of registration of transfer and exchange of Securities of such series, (B) substitution of
mutilated, defaced, destroyed, lost or stolen Securities of such series, (C) rights of Holders of
Securities of such series to receive, from the Company pursuant to Section 10.1, payments of
principal thereof and interest, if any, thereon upon the original stated due dates therefor (but
not upon acceleration), (D) the rights, obligations, duties and immunities of the Trustee
hereunder, (E) the rights of the Holders of Securities of such series as beneficiaries hereof with
respect to the property so deposited with the Trustee payable to all or any of them and (F) the
Companys obligation to pay the expenses of any Citigroup Trust under Section 10.6), and (ii) the
occurrence of any event specified in Sections 5.7(d) (with respect to any of the covenants
specified in or pursuant to this Indenture) and 5.7(e) shall be deemed not to be or result in a
Default, in each case with respect to the Outstanding Securities of such series as provided in this
Section on and after the date the conditions set forth in Section 4.4 are satisfied (hereinafter
called Covenant Defeasance), and the Trustee, at the cost and expense of the Company, shall
execute proper instruments acknowledging the same. For this purpose, such Covenant Defeasance
means that the Company may omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant (to the extent so specified in the case of
Section 5.7(d)), whether directly or indirectly by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other provision herein or
in any other document, but the remainder of this Indenture and the Securities of such series shall
be unaffected thereby.
35
Section 4.4.
Conditions to Defeasance or Covenant Defeasance.
The following shall be the
conditions to application of either Section 4.2 or 4.3 to the Outstanding Securities:
(a) with reference to Section 4.2 or 4.3, the Company has irrevocably deposited or caused to
be irrevocably deposited with the Trustee as funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of Securities of such series (i) cash in an
amount, or (ii) direct obligations of the United States of America, backed by its full faith and
credit (U.S. Government Obligations), maturing as to principal and interest, if any, at such
times and in such amounts as will insure the availability of cash, or (iii) a combination thereof,
in each case sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the Trustee, to pay and
discharge, the principal of and interest, if any, on all Securities of such series on each date
that such principal or interest, if any, is due and payable;
(b) in the case of Defeasance under Section 4.2, the Company has delivered to the Trustee an
Opinion of Counsel based on the fact that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (y), since the date hereof, there has been a
change in the applicable United States federal income tax law, in either case to the effect that,
and such opinion shall confirm that, the Holders of the Securities of such series will not
recognize income, gain or loss for United States federal income tax purposes as a result of such
deposit, Defeasance and discharge and will be subject to United States federal income tax on the
same amount and in the same manner and at the same times, as would have been the case if such
deposit, Defeasance and discharge had not occurred;
(c) in the case of Covenant Defeasance under Section 4.3, the Company has delivered to the
Trustee an Opinion of Counsel to the effect that, and such opinion shall confirm that, the Holders
of the Securities of such series will not recognize income, gain or loss for United States federal
income tax purposes as a result of such deposit and Covenant Defeasance and will be subject to
United States federal income tax on the same amount and in the same manner and at the same times,
as would have been the case if such deposit and Covenant Defeasance had not occurred;
(d) such Defeasance or Covenant Defeasance will not result in a breach or violation of, or
constitute a default under, any agreement or instrument to which the Company is a party or by which
it is bound; and
(e) the Company shall have delivered to the Trustee an Officers Certificate and an Opinion of
Counsel, each stating that all conditions precedent contemplated by this provision have been
complied with.
Section 4.5.
Application of Trust Money.
Subject to the provisions of the last paragraph of
Section 10.3, all money and U.S. Government Obligations deposited with the Trustee pursuant to
Section 4.4 shall be held in trust, and such money and all money from such U.S. Government
Obligations shall be applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying
36
Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money and U.S. Government
Obligations has been deposited with the Trustee.
Section 4.6.
Indemnity for U.S. Government Obligations.
The Company shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 4.4 or the principal or interest received in respect of
such obligations other than any such tax, fee or other charge that by law is for the account of the
Holders of Outstanding Securities.
Section 4.7.
Reinstatement.
If the Trustee is unable to apply any money or Government
Obligations in accordance with Section 4.4 by reason of any legal preceding or by reason of any
order or judgment of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Companys obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to Section 4.4, until
such time as the Trustee or Paying Agent is permitted to apply all such money or Government
Obligations in accordance with Section 4.4; provided that, if the Company has made any payment of
principal or interest on the Securities of any series because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or Government Obligations held by the Trustee or Paying Agent.
ARTICLE V
Remedies
Section 5.1.
Events of Default and Acceleration.
The term Event of Default and Acceleration
as used in this Indenture with respect to Securities of any series shall mean one of the following
described events (whatever the reason for such Event of Default and Acceleration and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any administrative or governmental
body):
(a) failure to pay in full interest accrued upon any Security of that series upon the
conclusion of a period consisting of 40 consecutive quarters, commencing with the earliest quarter
for which interest (including Deferred Interest) has not been paid in full, and continuance of such
failure to pay for a period of 30 days;
(b) the entry by a court having jurisdiction in the premises of a decree or order for relief
in respect of the Company in an involuntary case under the Federal bankruptcy code, as now or
hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) of the Company or for substantially all of its
property, or ordering the winding-up or liquidation
37
of its affairs and such decree or order shall
remain unstayed and in effect for a period of 90 consecutive days; or
(c) the commencement by the Company of a voluntary case under the Federal bankruptcy code, as
now or hereafter constituted, or any other applicable Federal or State bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by the Company to the entry of an
order for relief in an involuntary case under any such law, or the consent by the Company to the
appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian or sequestrator (or similar official) of the Company
or for substantially all of its property, or the making by it of an assignment for the benefit of
creditors.
Section 5.2.
Acceleration of Maturity.
If any one or more Event of Default and Acceleration
shall occur with respect to Securities of any series at the time Outstanding, then, and in each and
every such case, during the continuance of any such Event of Default and Acceleration, the Trustee
or the Holders of 25% or more in principal amount of the Securities of such series then Outstanding
may declare the principal amount of all the Securities of such series then Outstanding, if not then
due and payable, to be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by such Holders), and upon any such declaration the same shall become and be
immediately due and payable, anything in this Indenture or in the Securities of such series
contained to the contrary notwithstanding. This provision, however, is subject to the condition
that, if at any time after the principal of all the Securities of such series shall have been so
declared to be due and payable, all arrears of interest, if any, upon all the Securities of such
series (with interest, to the extent that interest thereon shall be legally enforceable, on any
overdue installment of interest at the rate borne by the Securities of such series) and all amounts
owing the Trustee and any predecessor trustee hereunder under Section 6.7 and all other sums
payable under this Indenture (except the principal of the Securities of such series which would not
be due and payable were it not for such declaration) shall be paid by the Company, and every other
Default under this Indenture, other than the non-payment of the principal of Securities of that
series which have become due solely by such declaration of acceleration, shall have been made good
to the reasonable satisfaction of the Trustee or of the Holders of a majority in principal amount
of the Securities of such series then Outstanding, or provision deemed by the Trustee or by such
Holders to be adequate therefor shall have been made, then and in every such case the Holders of a
majority in principal amount of the Securities of such series then Outstanding may, on behalf of
the Holders of all the Securities of such series, waive the Event of Default and Acceleration by
reason of which the principal of the Securities of such series shall have been so declared to be
due and payable and may rescind and annul such declaration and its consequences; but no such
waiver, rescission or annulment shall extend to or affect any subsequent Default or impair any
right consequent thereon. Any declaration by the Trustee pursuant to this Section 5.2 shall be by
written notice to the Company, and any declaration or waiver by the Holders of Securities of any
series pursuant to this Section 5.2 shall be by written notice to the Company and the Trustee.
Section 5.3.
Collection of Indebtedness and Suits for Enforcement by Trustee.
If the Company
shall fail for a period of 30 days to pay any installment of interest on the
38
Securities of any
series or shall fail to pay the principal of and premium, if any, on any of the Securities of such
series when and as the same shall become due and payable, whether at maturity, or by call for
redemption by declaration as authorized by this Indenture or otherwise, then, upon demand of the
Trustee, the Company will pay to the Trustee for the benefit of the Holders of Securities of such
series then Outstanding the
whole amount which then shall have become due and payable on any such Security, with interest
on the overdue principal and premium, if any, and (so far as the same may be legally enforceable)
on the overdue installments of interest at the rate borne by the Securities of such series, and all
amounts owing the Trustee and any predecessor trustee hereunder under Section 6.7.
In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in
its own name and as trustee of an express trust, shall be entitled and empowered to institute any
action or proceeding at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company or any other obligor upon the Securities of such
series, and collect the moneys adjudged or decreed to be payable out of the property of the Company
or any other obligor upon the Securities of such series, wherever situated, in the manner provided
by law. Every recovery of judgment in any such action or other proceeding, subject to the payment
to the Trustee of all amounts owing the Trustee and any predecessor trustee hereunder under Section
6.7, shall be for the ratable benefit of the Holders of such series of Securities which shall be
the subject of such action or proceeding. All rights of action upon or under any of the Securities
or this Indenture may be enforced by the Trustee without the possession of any of the Securities
and without the production of any thereof at any trial or any proceeding relative thereto.
If a Default, of which a Responsible Officer of the Trustee has actual knowledge, with respect
to any series of Securities occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce
any such rights, whether for the specific enforcement of any covenant or agreement in this
Indenture, or in aid of the exercise of any power granted herein, or to enforce any other proper
remedy.
Section 5.4.
Trustee to File Claims As Attorney-In-Fact.
The Trustee is hereby appointed, and
each and every Holder of the Securities, by receiving and holding the same, shall be conclusively
deemed to have appointed the Trustee, the true and lawful attorney-in-fact of such Holder, with
authority to make or file (whether or not the Company shall be in default in respect of the payment
of the principal of, or interest on, any of the Securities), in its own name and as trustee of an
express trust or otherwise as it shall deem advisable, in any receivership, insolvency,
liquidation, bankruptcy, reorganization or other judicial proceeding relative to the Company or any
other obligor upon the Securities or to their respective creditors or property, any and all claims,
proofs of claim, proofs of debt, petitions, consents, other papers and documents and amendments
39
of
any thereof, as may be necessary or advisable in order to have the claims of the Trustee and any
predecessor trustee hereunder and of the Holders of the Securities allowed in any such proceeding
and to collect and receive any moneys or other property payable or deliverable on any such claim,
and to execute and deliver any and all
other papers and documents and to do and perform any and all other acts and things, as it may
deem necessary or advisable in order to enforce in any such proceeding any of the claims of the
Trustee and any predecessor trustee hereunder and of any of such Holders in respect of any of the
Securities; and any receiver, assignee, trustee, custodian or debtor in any such proceeding is
hereby authorized, and each and every taker or Holder of the Securities, by receiving and holding
the same, shall be conclusively deemed to have authorized any such receiver, assignee, trustee,
custodian or debtor, to make any such payment or delivery only to or on the order of the Trustee,
and to pay to the Trustee any amount due it and any predecessor trustee hereunder under Section
6.7; provided, however, that nothing herein contained shall be deemed to authorize or empower the
Trustee to consent to or accept or adopt, on behalf of any Holder of Securities, any plan of
reorganization or readjustment of the Company affecting the Securities or the rights of any Holder
thereof, or to authorize or empower the Trustee to vote in respect of the claim of any Holder of
any Securities in any such proceeding.
Section 5.5.
Application of Money Collected.
Any moneys collected by the Trustee with respect
to a series of Securities under this Article Five shall be applied in the order following, at the
date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the
several Securities, and stamping thereon the payment, if only partially paid, and upon surrender
thereof, if fully paid:
First: To the payment of all amounts due to the Trustee and any predecessor trustee
hereunder under Section 6.7.
Second: Subject to Article Fourteen, in case the principal of the Outstanding
Securities of such series shall not have become due and be unpaid, to the payment of
interest on the Securities of such series, in the order of the maturity of the
installments of such interest, with interest (to the extent that such interest has been
collected by the Trustee) upon the overdue installments of interest at the rate borne by
such Securities, such payments to be made ratably to the Persons entitled thereto.
Third: Subject to Article Fourteen, in case the principal of the Outstanding
Securities of such series shall have become due, by declaration or otherwise, to the
payment of the whole amount then owing and unpaid upon the Securities of such series for
principal and premium, if any, and interest, with interest on the overdue principal and
premium, if any, and (to the extent that such interest has been collected by the Trustee)
upon overdue installments of interest at the rate borne by the Securities of such series,
and in case such moneys shall be insufficient to pay in full the whole amounts so due and
unpaid upon the Securities of such series, then to the payment of such principal and
premium, if any, and interest without preference or priority of principal and premium, if
any, over interest, or of interest over principal and premium, if any, or of any
40
installment of interest over any other installment of interest, or of any Security of
such series over any other Security of such series, ratably to the aggregate of such
principal and premium, if any, and accrued and unpaid interest.
Section 5.6.
Control by Holders; Waiver of Past Default.
The Holders of a majority in principal
amount of the Outstanding Securities of any series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee hereunder, or of exercising any
trust or power hereby conferred upon the Trustee with respect to the Securities of such series;
provided, however, that the Trustee shall have the right to decline to follow any such direction if
the Trustee being advised by counsel determines that the action so directed may not lawfully be
taken or would be unduly prejudicial to Holders not joining in such direction or would involve the
Trustee in personal liability. Prior to any declaration accelerating the maturity of the Securities
of any series, the Holders of a majority in aggregate principal amount of such series of
Outstanding Securities may on behalf of the Holders of all of the Securities of such series waive
any past default hereunder and its consequences except a default not theretofore cured in the
payment of interest or any premium on or the principal of the Securities of such series or in
respect of any covenant or provision hereof which under Article Nine cannot be modified or waived
without the consent of the Holder of each Outstanding Security of each series affected thereby;
provided, however
, that if the Securities of such series are held by a Citigroup Trust or a trustee
of such trust, such waiver or modification to such waiver shall not be effective until the holders
of Trust Securities representing a majority in liquidation preference of Trust Securities of the
applicable Citigroup Trust shall have consented to such waiver or modification to such waiver;
provided further
, that if the consent of the Holder of each Outstanding Security is required, such
waiver shall not be effective until each holder of the Trust Securities of the applicable Citigroup
Trust shall have consented to such waiver. Upon any such waiver the Company, the Trustee and the
Holders of the Securities of such series shall be restored to their former positions and rights
hereunder, respectively, but no such waiver shall extend to any subsequent or other default or
impair any right consequent thereon. Whenever any default hereunder shall have been waived as
permitted by this Section 5.6, said default shall for all purposes of the Securities of such series
and this Indenture cease to exist, and any Default or Event of Default and Acceleration arising
therefrom shall be deemed to have been cured and to be not continuing.
Section 5.7.
Limitation on Suits; Default.
No Holder of any Security of any series shall have
any right to institute any action, suit or proceeding at law or in equity for the execution of any
trust hereunder or for the appointment of a receiver or for any other remedy hereunder, in each
case with respect to a Default with respect to such series of Securities, unless such Holder
previously shall have given to the Trustee written notice of the happening of one or more of the
Defaults herein specified with respect to such series of Securities, and unless also the Holders of
25% or more in principal amount of the Securities of such series then Outstanding shall have
requested the Trustee in writing to take action in respect of the matter complained of, and unless
also there shall have been offered to the Trustee
security and indemnity satisfactory to it against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after receipt of such notification,
request and offer of indemnity, shall have neglected or refused to
41
institute any such action, suit
or proceeding; and such notification, request and offer of indemnity are hereby declared in every
such case to be conditions precedent to any such action, suit or proceeding by any Holder of any
Security of such series; it being understood and intended that no one or more of the Holders of
Securities of such series shall have any right in any manner whatsoever by his or their action to
enforce any right hereunder, except in the manner herein provided, and that every action, suit or
proceeding at law or in equity shall be instituted, had and maintained in the manner herein
provided and for the equal and ratable benefit of all Holders of the Outstanding Securities of such
series; provided, however, that nothing contained in this Indenture or in the Securities of such
series shall affect or impair the obligation of the Company, which is absolute and unconditional,
to pay the principal of, and premium, if any, and interest on the Securities of such series to the
respective Holders of such Securities at the respective due dates in such Securities stated, or
affect or impair the right, which is also absolute and unconditional, of such Holders to institute
suit to enforce the payment thereof.
The following events shall be Defaults with respect to any series of Securities under this
Indenture:
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(a)
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an Event of Default and Acceleration with respect to such series specified
in Section 5.1; or
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(b)
|
|
the failure of the Company to pay any installment of interest on any Security
of such series, when and as the same shall become payable, which failure shall have
continued unremedied for a period of 30 days, it being understood that the occurrence
of an Extended Interest Payment Period in accordance with the terms of such Security
will not constitute such a default; or
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(c)
|
|
the failure of the Company to pay the principal of (and premium, if any, on)
any Security of such series, when and as the same shall become payable, whether at
maturity as therein expressed, by call for redemption, by declaration as authorized by
this Indenture or otherwise, whether or not permitted by Article Fourteen; or
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(d)
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the failure of the Company, subject to the provisions of Section 8.1, to
observe and perform any other of the covenants or agreements on the part of the
Company contained in this Indenture (including any indenture supplemental hereto)
(other than a covenant or agreement which has been expressly included in this
Indenture solely for the benefit of a series of Securities other than that series),
which failure shall not have been remedied for a period of 90 days after written
notice shall have been given to the Company by the Trustee or shall have been given to
the Company
and the Trustee by Holders of 25% or more in aggregate principal amount of the
Securities of such series then Outstanding, specifying such failure and requiring
the Company to remedy the same; or
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(e)
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in the event Securities of a series are issued and sold to a Citigroup Trust
or a trustee of such trust in connection with the issuance of Trust Securities by such
Citigroup Trust, such Citigroup Trust shall have voluntarily or involuntarily
dissolved, wound-up its business or otherwise terminated its existence except in
connection with (i) the distribution of Securities to holders of Trust Securities in
liquidation or redemption of their interests in such Citigroup Trust upon a Special
Event with respect to such Citigroup Trust, (ii) the redemption of all of the
outstanding Trust Securities of such Citigroup Trust or (iii) certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of such
Citigroup Trust; or
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(f)
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any other Default provided with respect to Securities of that series.
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Section 5.8.
Costs and Attorneys Fees in Legal Proceedings.
All parties to this Indenture and
the Holders of the Securities agree that the court may in its discretion require, in any action,
suit or proceeding for the enforcement of any right or remedy under this Indenture, or in any
action, suit or proceeding against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such action, suit or proceeding of an undertaking to pay the
costs of such action, suit or proceeding, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys fees, against any party litigant in such action,
suit or proceeding, having due regard to the merits and good faith of the claims or defenses made
by such party litigant; provided, however, that the provisions of this Section 5.8 shall not apply
to any action, suit or proceeding instituted by the Trustee, to any action, suit or proceeding
instituted by any one or more Holders of Securities holding in the aggregate more than 10% in
principal amount of the Outstanding Securities, or to any action, suit or proceeding instituted by
any Holder of Securities for the enforcement of the payment of the principal of or premium, if any,
or the interest on, any of the Securities, on or after the respective due dates expressed in such
Securities.
Section 5.9.
Remedies Cumulative.
Except as provided in the last sentence of Section 3.6, no
remedy herein conferred upon or reserved to the Trustee or to the Holders of Securities of any
series is intended to be exclusive of any other remedy or remedies, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. No delay or omission of the Trustee or of any Holder of
the Securities of any series to exercise any right or power accruing upon any Default shall impair
any such right or power or shall be construed to be a waiver of any such Default or an acquiescence
therein; and every power and remedy given by this Article Five to the Trustee and to the Holders,
respectively, may be exercised from time
to time and as often as may be deemed expedient by the Trustee or by the Holders, as the case
may be. In case the Trustee or any Holder of Securities shall have proceeded to enforce any right
under this Indenture and the proceedings for the enforcement thereof shall have been discontinued
or abandoned because of waiver or for any other reason or shall have been adjudicated adversely to
the Trustee or to such Holder, then and in every such case the Company, the Trustee and the Holders
shall severally and respectively be restored to their former positions and rights
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hereunder and
thereafter all rights, remedies and powers of the Trustee and the Holders shall continue as though
no such proceedings had been instituted, except as to any matters so waived or adjudicated.
Section 5.10.
Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance of this Indenture;
and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the execution of every such
power as though no law had been enacted.
Section 5.11.
Limitation on Claim for Certain Deferred Interest in Bankruptcy.
Notwithstanding anything to the contrary in this Indenture, each Holder of a Security, by such
holders acceptance thereof, agrees that upon any payment or distribution of assets to creditors of
the Company upon any liquidation, dissolution, winding up, reorganization, or in connection with
any insolvency, receivership or proceeding under any bankruptcy law with respect to the Company,
such Holder shall not have a claim for Deferred Interest, to the extent that the aggregate amount
thereof (including Compounded Interest and Additional Interest thereon) exceeds 25% of the original
principal amount of such Security.
ARTICLE VI
The Trustee
Section 6.1.
Certain Duties and Responsibilities.
Except during the continuance of a
Default;
(1) the Trustee undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of any such certificates
or opinions which by any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture.
(b) In case a Default with respect to any series of Securities, of which a Responsible Officer
of the Trustee has actual knowledge, has occurred and is continuing,
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the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the Trustee from liability
for its own negligent action, its own negligent failure to act, or its own willful misconduct,
except
that
(1) this subsection shall not be construed to limit the effect of subsection (a) of
this Section;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Holders of a majority in
principal amount of the Outstanding Securities of any series determined as provided in
Section 5.6, relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture with respect to the Securities of such series; and
(4) no provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or indemnity, reasonably satisfactory to
it, against such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of this Indenture relating
to the conductor affecting the liability of or affording protection to the Trustee shall be subject
to the provisions of this Section.
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Section 6.2.
Notice of Defaults.
Within 90 days after the occurrence of any Default hereunder
with respect to Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the Security Register, notice of
such Default hereunder actually known to a Responsible Officer of the Trustee, unless such
Default shall have been cured or waived;
provided
that, except in the case of a Default in the
payment of the principal of (or premium, if any) or interest on any Security of such series, the
Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of
the Trustee in good faith determines that the withholding of such notice is in the interest of the
Holders of Securities of such series; and
provided, further
, that in the case of any Default of the
character specified in Section 5.7(e) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof.
Section 6.3.
Certain Rights of Trustee.
Subject to the provisions of Section 6.1
(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein shall be sufficiently evidenced
by a Company Request or Company Order, and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall deem it desirable that
a matter be proved or established prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, conclusively rely upon an Officers Certificate;
(d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity, reasonably
satisfactory to it, against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee
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shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(g) the Trustee may execute any of the trust or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney appointed with
due care by it hereunder.
(h) the Trustee shall not be charged with knowledge of any Default or Event of Default and
Acceleration with respect to the Securities, unless either (1) a Responsible Officer shall have
actual knowledge of such Default or Event of Default and Acceleration or (2) written notice of such
Default or Event of Default and Acceleration shall have been given to the Trustee by the Company or
by any Holder of the Securities; and
(i) the permissive rights of the Trustee enumerated herein shall not be construed as duties.
Section 6.4.
Not Responsible for Recitals or Issuance of Securities.
The recitals contained
herein and in the Securities, except the Trustees certificates of authentication, shall be taken
as the statements of the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. The Trustee or any Authenticating Agent shall
not be accountable for the use or application by the Company of Securities or the proceeds thereof.
Section 6.5.
May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to Sections 6.8 and 6.13, may otherwise deal
with the Company with the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Security Registrar or such other agent.
Section 6.6.
Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise agreed with the
Company.
Section 6.7.
Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such reasonable compensation for all
services rendered by it hereunder (which compensation shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this
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Indenture (including the reasonable
compensation and the expenses and disbursements of its agents, nominees, custodians and
counsel), except any such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability
or expense incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trust hereunder, including
the costs and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Company under this Section, the
Trustee shall have a lien prior to the Securities upon all property and funds held or collected by
the Trustee as such, except funds held in trust for the benefit of Holders of particular
Securities. The obligations of the Company under this Section shall survive the removal or
resignation of the Trustee and the satisfaction and discharge of this Indenture.
When the Trustee incurs any expenses or renders any services after the occurrence of an Event
of Default and Acceleration specified in Section 5.1(b) or Section 5.1(c), such expenses and the
compensation for such services are intended to constitute expenses of administration under the
United States Bankruptcy Code (Title 11 of the United States Code) or any similar federal or state
law for the relief of debtors.
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Section 6.8.
Disqualification; Conflicting Interests.
The Trustee shall be subject to the
provisions of Section 310(b) of the Trust Indenture Act of 1939 during the period of time provided
for therein. In determining whether the Trustee has a conflicting interest as defined in Section
310(b) of the Trust Indenture Act of 1939 with respect to the Securities of any series, there shall
be excluded for purposes of the conflicting interest provisions of such Section 310(b) the
Securities of every other series issued under this Indenture. Nothing herein shall prevent the
Trustee from filing with the Commission the application referred to in the second to last paragraph
of Section 310(b) of the Trust Indenture Act of 1939.
Section 6.9.
Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee
hereunder which shall be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by Federal or State authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements of said
supervision or examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
Section 6.10.
Resignation and Removal; Appointment of Successor.
No resignation or removal
of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the Securities of one or more series by
giving written notice thereof to the Company. If the instrument of acceptance by a successor
Trustee required by Section 6.11 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Securities of such
series.
(c) The Trustee may be removed at any time with respect to the Securities of any series by Act
of the Holders of a majority in principal amount of the Outstanding Securities of such series,
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8(a) after written request
therefor by the Company or by any Holder who has been a bona fide Holder of a Security for
at least six months, or
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(2) the Trustee shall cease to be eligible under Section 6.9 and shall fail to resign
after written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged bankrupt or
insolvent or a receiver of the Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) the
Company, by a Board Resolution, may remove the Trustee with respect to all Securities, or
(ii) subject to Section 5.8, any Holder who has been a bona fide Holder of a Security for
at least six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy
shall occur in the office of Trustee for any cause, with respect to the Securities of one or more
series, the Company, by a Board Resolution, shall promptly appoint a
successor Trustee or Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the Securities of one
or more or all of such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable requirements of
Section 6.11. If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall
be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities
of such series delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of Section 6.11, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner required by Section
6.11, any Holder who has been a bona fide Holder of a Security of such series for at least six
months may, on behalf of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the Securities of such
series.
(f) The Company shall give notice of each resignation and each removal of the Trustee with
respect to the Securities of any series and each appointment of a successor Trustee with respect to
the Securities of any series by mailing written notice of such event by first-class mail, postage
prepaid, to all Holders of Securities of such series as their names and addresses appear in the
Security Register. Each notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its Corporate Trust Office.
Section 6.11.
Acceptance of Appointment by Successor.
In case of the appointment hereunder
of a successor Trustee with respect to all Securities, every such successor
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Trustee so appointed
shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall
become effective and such successor Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the
request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with respect to the Securities
of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee
with respect to the Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such appointment and which (1)
shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates, (2) if the retiring
Trustee is not retiring with respect to the Securities of all series for which it is the Trustee
hereunder, shall contain such provisions as shall be deemed necessary or desirable to confirm that
all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of
that or those series as to which the retiring Trustee is not retiring shall continue to be vested
in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as
shall be necessary to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee
of a trust or trusts hereunder separate and apart from any mist or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental indenture the
resignation or removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor Trustee relates; but,
on request of the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which the appointment of such
successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may
be.
(d) No successor Trustee shall accept its appointment unless at the time of such acceptance
such successor Trustee shall be qualified and eligible under this Article.
(e) The Trustee shall not be liable for the acts or omissions to act of any successor Trustee.
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Section 6.12.
Merger, Conversion, Consolidation or Succession to Business.
Any corporation or
association into which the Trustee may be merged or converted or with which it may be consolidated,
or any corporation or association resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation or association to which all or substantially all
of the corporate trust business of the Trustee may be sold or otherwise transferred, shall be the
successor trustee hereunder without any further act. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such successor Trustee had
itself authenticated such Securities.
Section 6.13.
Preferential Collection of Claims Against Company.
The Trustee shall comply with
the Trust Indenture Act Section 311(a), excluding any creditor relationship listed in the Trust
Indenture Act Section 311(b). A Trustee who has resigned or been removed shall be subject to the
Trust Indenture Act Section 311(a) to the extent indicated therein.
Section 6.14.
Appointment of Authenticating Agent.
At any time when any of the Securities
remain Outstanding the Trustee may appoint an Authenticating Agent or Agents with respect to one or
more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate
Securities of such series issued upon exchange, registration of transfer or partial redemption
thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustees certificate of authentication, such
reference shall be deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at
all times be a corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion or consolidation to
which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate
agency or corporate trust business of an
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Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible under this Section,
without the execution or filing of any paper or any further act on the part of the Trustee or the
Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee
and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time such Authenticating
Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may
appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall give notice of such
appointment by first-class mail, postage prepaid, to all Holders of Securities of the series with
respect to which such Authenticating Agent will serve, as their names and addresses appear in the
Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall
be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time reasonable
compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to this Section, the
Securities of such series may have endorsed thereon an alternative certificate of authentication in
the following form:
This is one of the Securities of the series designated herein referred to in the
within-mentioned Indenture.
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THE BANK OF NEW YORK,
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As Trustee
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By:
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As Authenticating Agent
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By:
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Authorized Officer
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ARTICLE VII
Holders Lists and Reports by Trustee and Company
Section 7.1.
Company to Furnish Trustee Names and Addresses of Holders.
The Company will
furnish or cause to be furnished to the Trustee
(a) semi-annually not more than 15 days after each Regular Record Date a list, in such form as
the Trustee may reasonably require, of the names and addresses of the Holders of Securities of such
series as of the preceding March 1 or September 1, or as of such Regular Record Date, as the case
may be, and
(b) at such other times as the Trustee may request in writing, within 30 days after the
receipt by the Company of any such request, a list of similar form and content as of a date not
more than 15 days prior to the time such list is furnished;
provided
that if and so long as the Trustee shall be the Security Registrar for such series, such
list shall not be required to be furnished.
Section 7.2.
Preservation of Information; Communications to Holders.
Holders may communicate
pursuant to the Trust Indenture Act Section 312(b) with other Holders with respect to their rights
under this Indenture and the Securities. The Company, the Trustee, the Registrar and any other
person shall have the protection of the Trust Indenture Act Section 312(c).
Section 7.3.
Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with
the year 2007, the Trustee shall transmit by mail to all Holders of Securities for which it is
Trustee hereunder, as their names and addresses appear in the Security Register, a brief report
dated as of such May 15 with respect to:
(1) its eligibility under Section 6.9 and its qualifications under Section 6.8, or in
lieu thereof, if to the best of its knowledge it has continued to be eligible and qualified
under said Sections, a written statement to such effect;
(2) the character and amount of any advances (and if the Trustee elects so to state,
the circumstances surrounding the making thereof) made by the Trustee (as such) which
remain unpaid on the date of such report, and for the reimbursement of which it claims or
may claim a lien or charge, prior to that of such Securities, on any property or funds held
or collected by it as Trustee, except that the Trustee shall not be required (but may
elect) to report such advances if such advances so remaining unpaid aggregate not more than
1
/
2
of 1% of the principal amount of such Securities Outstanding on the date of such report;
(3) the amount, interest rate and maturity date of all other indebtedness owing by the
Company (or by any other obligor on the Securities) to the Trustee in its individual
capacity, on the date of such report, with a brief description of
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any property held as
collateral security therefor, except an indebtedness based upon a creditor relationship
arising in any manner described in Section 6.13(b)(2), (3), (4) or (6);
(4) the property and funds, if any, physically in the possession of the Trustee as
such on the date of such report;
(5) any additional issue of Securities for which it is Trustee hereunder which the
Trustee has not previously reported; and
(6) any action taken by the Trustee in the performance of its duties hereunder which
it has not previously reported and which in its opinion materially affects such Securities,
except action in respect of a default, notice of which has been or is to be withheld by the
Trustee in accordance with Section 6.2.
(b) The Trustee shall transmit by mail to all Holders of Securities for which it is Trustee
hereunder, as their names and addresses appear in the Security Register, a brief report with
respect to the character and amount of any advances (and if the Trustee elects so to state, the
circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the
last report transmitted pursuant to subsection (a) of this Section (or if no such report has yet
been so transmitted, since the date of execution of this instrument) for the reimbursement of which
it claims or may claim a lien or charge, prior to that of such Securities, on property or funds
held or collected by it as Trustee and which it has not previously reported pursuant to this
subsection, except that the Trustee shall not be required (but may elect) to report such advances
if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of such
Securities Outstanding at such time, such report to be transmitted within 90 days after such time.
(c) A copy of each such report shall, at the time of such transmission to such Holders, be
filed by the Trustee with each securities exchange upon which any such Securities are listed, with
the Commission and with the Company. The Company will notify the Trustee when any such Securities
are listed on any securities exchange.
Section 7.4.
Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the Company may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934; or, if the Company is not required to file information, documents or reports
pursuant to either of said Sections, then it shall file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information, documents and reports
which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in
respect of a security listed and registered on a
55
national securities exchange as may be
prescribed from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such additional information,
documents and reports with respect to compliance by the Company with the conditions and
covenants of this Indenture as may be required from time to time by such rules and
regulations; and
(3) transmit by mail to all Holders, as their names and addresses appear in the
Security Register, within 30 days after the filing thereof with the Trustee, such summaries
of any information, documents and reports required to be filed by the Company pursuant to
paragraphs (1) and (2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.
Delivery of such reports, information and documents to the Trustee is for informational
purposes only and the Trustees receipt of such reports shall not constitute constructive notice of
any information contained therein or determinable from information contained therein, including the
Companys compliance with any of its covenants hereunder (as to which the Trustee is entitled to
rely exclusively on Officers Certificates).
ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer Or Lease
Section 8.1.
Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not
consolidate with or merge into any other corporation or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, unless:
(1) the Person formed by such consolidation or into which the Company is merged or the
Person which acquires by conveyance or transfer, or which leases, the properties and assets
of the Company substantially as an entirety shall be a corporation organized and existing
under the laws of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of (and premium, if any) and interest on all the Securities and the
performance of every covenant of this Indenture on the part of the Company to be
performed or observed;
(2) immediately after giving effect to such transaction, no Default, and no event
which, after notice or lapse of time or both, would become a Default, shall have happened
and be continuing; and
56
(3) the Company has delivered to the Trustee an Officers Certificate and an Opinion
of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and
such supplemental indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been complied with.
Section 8.2.
Successor Corporation Substituted.
Upon any consolidation of the Company with, or
merger of the Company into, any other corporation or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance with Section 8.1,
the successor corporation formed by such consolidation or into with the Company is merged or to
which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor corporation shall be relieved of all obligations and covenants under this
Indenture and the Securities.
Section 8.3.
Effect of Business Combination.
If the Company is involved in a business combination where, immediately after the consummation
of such business combination, more than 50% of the surviving entitys voting stock is owned by the
shareholders of the other party to the business combination, then:
(1) any Deferred Interest on the Securities as of the date of consummation of the
business combination shall not be subject to the requirements of Section 13.4 and Section
13.5 to the extent that the applicable Extended Interest Payment Period is terminated on
the next Interest Payment Date following the date of consummation of the business
combination (or, if later, at any time within 90 days following the date of such
consummation); and
(2) the Companys covenant not to, and to not permit its subsidiaries to, purchase any
of its common stock for a one year period following the end of an Extended Interest Payment
Period that lasts longer than one year as described in Section 13.3 will not apply to any
Extended Interest Payment Period that is terminated on the next Interest Payment Date
following the date of consummation of the business combination (or, if later, at any time
within 90 days following the date of such consummation).
ARTICLE IX
Supplemental Indentures
Section 9.1.
Supplemental Indentures Without Consent of Holders.
Without the consent of any
Holders, the Company, when authorized by a Board Resolution, and the Trustee,
57
at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company and the
assumption by any such successor of the covenants of the Company contained herein and in
the Securities, pursuant to Article VIII; or
(2) to add to the covenants of the Company for the benefit of the Holders of all or
any series of Securities (and if such covenants are to be for the benefit of less than all
series of Securities, stating that such covenants are expressly being included solely for
the benefit of one or more specified series) or to surrender any right or power herein
conferred upon the Company; or
(3) to add any additional Defaults; or
(4) to change or eliminate any of the provisions of this Indenture,
provided
that any
such change or elimination shall become effective only when there is no Security
Outstanding of any series created prior to the execution of such supplemental indenture
which is entitled to the benefit of such provision; or
(5) to secure the Securities; or
(6) to establish the form or terms of Securities of any series as permitted by
Sections 2.1 and 3.1; or
(7) to evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more series and to add to or change any of
the provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to the
requirements of Section 6.11(b); or
(8) to cure any ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein, or to make any other provisions with respect
to matters or questions arising under this Indenture,
provided
such action shall not
adversely affect the interests of the Holders of Securities of any series in any material
respect.
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Section 9.2.
Supplemental Indentures with Consent of Holders.
With the consent of the Holders
of not less than a majority in principal amount of the Outstanding Securities of each series
affected by such supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner
the rights of the Holders of Securities of such series under this Indenture;
provided
that no such
supplemental indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of principal of
or interest on, any Security, or reduce the principal amount thereof or the rate of
interest thereon (including any change in the Floating or Adjustable Rate Provision
pursuant to which such rate is determined that would reduce that rate for any period) or
any premium payable upon the redemption thereof, or change any Place of Payment where, or
the coin or currency in which, any Security or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or modify the provisions of this Indenture with respect to the
subordination of the Securities in a manner adverse to the Holders, or
(2) reduce the percentage in principal amount of the Outstanding Securities of any
series, the consent of whose Holders is required for any such supplemental indenture, or
the consent of whose Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their consequences) provided
for in this Indenture, or
(3) modify any of the provisions of this Section or Section 5.6, except to increase
any such percentage or to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Outstanding Security affected
thereby;
provided
that this clause shall not be deemed to require the consent of any Holder
with respect to changes in the references to the Trustee and concomitant changes in this
Section or the deletion of this proviso, in accordance with the requirements of Sections
6.11(b) and 9.1(8), or
(4) remove or impair the rights of any Holder of Securities to bring a Direct Action
in certain circumstances, as provided in Section 15.1;
provided, further
, that if the Securities of such series are held by a Citigroup Trust or a trustee
of such trust, such supplemental indenture shall not be effective until the holders of a majority
in liquidation preference of Trust Securities of the applicable Citigroup Trust shall have
consented to such supplemental indenture;
provided, further
, that if the consent of the Holder of
each Outstanding Security is required, such supplemental
59
indenture shall not be effective until each holder of the Trust Securities of the applicable
Citigroup Trust shall have consented to such supplemental indenture.
A supplemental indenture which changes or eliminates any covenant or other provision of this
Indenture which has expressly been included solely for the benefit of one or more particular series
of Securities, or which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to approve the particular
form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve
the substance thereof.
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Section 9.3.
Execution of Supplemental Indentures.
In executing, or accepting the additional
trusts created by, any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, in
addition to the documents required by Section 1.2, and (subject to Section 6.1) shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the Trustees own rights,
duties or immunities under this Indenture or otherwise.
Section 9.4.
Effect of Supplemental Indentures.
Upon the execution of any supplemental
indenture under this Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of
Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby
to the extent provided therein.
Section 9.5.
Conformity with Trust Indenture Act.
Every supplemental indenture executed
pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in
effect.
Section 9.6.
Reference in Securities to Supplemental Indentures.
Securities of any series
authenticated and delivered after the execution of any supplemental indenture pursuant to this
Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee
as to any matter provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.
ARTICLE X
Covenants
Section 10.1.
Payment of Principal, Premium and Interest.
The Company covenants and agrees for
the benefit of each series of Securities that it will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities of that series in accordance with the terms of the
Securities of such series and this Indenture, and will duly comply with all other terms, agreements
and conditions contained in, or made in the Indenture for the benefit of, the Securities of such
series.
Section 10.2.
Maintenance of Office or Agency.
The Company will maintain in each Place of
Payment for any series of Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series may be surrendered for
registration of transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities of that series and this Indenture may be served. The Company will give
prompt written notice to the Trustee of the location, and
61
any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee,
and the Company hereby appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.
The Company may also from time to time designate one or more other offices or agencies where
the Securities of one or more series may be presented or surrendered for any or all such purposes
and may from time to time rescind such designations;
provided
that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain an office or
agency in each Place of Payment for Securities of any series for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
Section 10.3.
Money for Securities Payments to Be Held in Trust.
If the Company shall at any
time act as its own Paying Agent with respect to any series of Securities, it will, on or before
each due date of the principal of (and premium, if any) or interest on any of the Securities of
that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify
the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of Securities, it
will, prior to each due date of the principal of (and premium, if any) or interest on any
Securities of that series, deposit with a Paying Agent a sum sufficient to
pay the principal (and premium, if any) or interest so becoming due, such sum to be held in
trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless
such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent for any series of Securities other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of (and premium, if any)
or interest on Securities of that series in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of as herein
provided;
(2) give the Trustee notice of any default by the Company (or any other obligor upon
the Securities of that series) in the making of any payment of principal (and premium, if
any) or interest on the Securities of that series; and
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(3) at any time during the continuance of any such default, upon the written request
of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying
Agent.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of
this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay,
to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any) or interest on any Security of any
series and remaining unclaimed for three years after such principal (and premium, if any) or
interest has become due and payable shall be paid to the Company on Company Request, or (if then
held by the Company) shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money, and all liability
of the Company as trustee thereof, shall thereupon cease;
provided
that the Trustee or such Paying
Agent, before being required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City of New York, New
York, notice that such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
Section 10.4.
Statement by Officers as to Default.
The Company will deliver to the Trustee,
within 120 days after the end of each fiscal year of the Company ending after the date hereof, an
Officers Certificate stating whether or not to the best knowledge of the signers thereof the
Company is in default in the performance and observance of any of the terms, provisions and
conditions of Sections 10.1 to 10.3, inclusive, and if the Company shall be in default, specifying
all such defaults and the nature and status thereof of which they may have knowledge.
Section 10.5.
Covenants as to Citigroup Trusts.
For so long as any Trust Securities of a
Citigroup Trust remain outstanding, the Company will (i) maintain 100% direct or indirect ownership
of the Common Securities of such Citigroup Trust;
provided, however
, that any permitted successor
of the Company hereunder may succeed to the Companys ownership of such Common Securities, (ii) not
voluntarily dissolve, wind up or terminate such Citigroup Trust, except in connection
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with a
distribution of Securities upon a Special Event, and in connection with certain mergers,
consolidations or amalgamations permitted by the Declaration of the applicable Citigroup Trust,
(iii) timely perform its duties as Sponsor of the applicable Citigroup Trust, (iv) use its
reasonable efforts to cause such Citigroup Trust to (a) remain a business trust, except in
connection with a distribution of Securities to the holders of Trust Securities as provided in the
Declaration of such Citigroup Trust, the redemption of all of the Trust Securities and in
connection with certain mergers, consolidations or amalgamations permitted by the Declaration of
such Citigroup Trust, and (b) otherwise continue to be classified as a grantor trust for United
States federal income tax purposes and (v) not knowingly take any action that would cause such
Citigroup Trust to not be classified as a grantor trust for United States federal income tax
purposes.
Section 10.6.
Payment of Expenses.
(a) In connection with the offering, sale and issuance of
each series of Securities to the Institutional Trustee of a Citigroup Trust and in connection with
the sale of Trust Securities by such Citigroup Trust, the Company, in its capacity as borrower with
respect to such Securities, shall:
(i) pay all costs and expenses relating to the offering, sale and issuance of such Securities,
including commissions to the underwriters payable pursuant to the applicable Underwriting Agreement
and compensation of the Trustee under this Indenture in accordance with the provisions of Section
6.7;
(ii) pay all costs and expenses of such Citigroup Trust (including, but not limited to, costs
and expenses relating to the organization of the trust, the offering, sale and issuance of the
Trust Securities of such Citigroup Trust (including commissions to the underwriters in connection
therewith), the fees and expenses of the Institutional Trustee, the Regular Trustees and the
Delaware Trustee of such Citigroup Trust, the costs and expenses relating to the operation,
maintenance and dissolution of such Citigroup Trust and the enforcement by such Institutional
Trustee of the rights of the
holders of the Preferred Securities of such Citigroup Trust, including without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s), registrar(s),
transfer agent(s), duplicating, travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the acquisition, financing, and disposition of
assets of such Citigroup Trust);
(iii) be primarily liable for any indemnification obligations arising with respect to the
Declaration of such Citigroup Trust;
(iv) pay any and all taxes (other than United States withholding taxes in respect of amounts
paid on the Securities held by such Citigroup Trust) and all liabilities, costs and expenses with
respect to such taxes of such Citigroup Trust.
(b) Upon termination of this Indenture or any series of Securities or the removal or
resignation of the Trustee pursuant to Section 6.10, the Company shall pay to the Trustee all
amounts accrued and owing to the Trustee to the date of such termination, removal or resignation.
Upon termination of the Declaration of any Citigroup Trust or the removal or resignation of the
Delaware Trustee or the Institutional Trustee, as the case
64
may be, pursuant to Section 5.6 of the
Declaration of such Citigroup Trust, the Company shall pay to such Delaware Trustee or such
Institutional Trustee, as the case may be, all amounts accrued and owing to such Delaware Trustee
or such Institutional Trustee, as the case may be, to the date of such termination, removal or
resignation.
Section 10.7.
Listing on an Exchange.
If Securities of any series are to be issued as a Global
Security in connection with the distribution of such Securities to the holders of the Preferred
Securities of a Citigroup Trust upon a Dissolution Event with respect to such Citigroup Trust, the
Company will use its best efforts to list such series of Securities on the New York Stock Exchange,
Inc. or on such other securities exchange as the Preferred Securities of such Citigroup Trust are
then listed. The Company will promptly notify the Trustee in writing of any Securities that will be
listed on any securities exchange.
Section 10.8.
Future Issuance of Securities.
Any Securities issued under this Indenture shall
(x) be issued with the concurrence or approval of the Federal Reserve or its staff or (y) qualify
at the time of issuance for tier 1 capital treatment (irrespective of any limits on the amount of
the Companys tier 1 capital) under applicable capital adequacy guidelines, regulations, policies
or published interpretations of the Federal Reserve.
ARTICLE XI
Redemption Of Securities
Section 11.1.
Applicability of Article; Federal Reserve Concurrence or Approval.
Securities of
each series are redeemable before their respective Stated Maturities in accordance with their
respective terms and (except as otherwise specified as contemplated by Section 3.1 for Securities
of any series) in accordance with this Article. Any redemption of any series of Securities, in
whole or in part, prior to their respective Stated Maturities shall be subject to receipt by the
Company of the prior concurrence or approval of the Federal Reserve or its staff, (i) if such
concurrence or approval is then required in order for securities such as the Securities to qualify
as tier 1 capital under applicable capital adequacy guidelines, regulations, policies, published
interpretations, or concurrence or approval of the Federal Reserve or its staff, or (ii) if the
Federal Reserve or its staff has informed the Company that it must obtain such approval before
redeeming the Securities.
Section 11.2.
Election to Redeem; Notice to Trustee.
Subject to the provisions of Section
11.2(b) and to the other provisions of this Article XI, except as otherwise may be specified in
this Indenture or, with respect to any series of Securities, as otherwise specified as contemplated
by Section 3.1 for the Securities of such series, the Company shall have the right to redeem any
series of Securities, in whole or in part, from time to time, on or after the Redemption Option
Date for such series at the Redemption Price. The election of the Company to redeem any Securities
redeemable at the election of the Company shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company of less than all the Securities of any series, the
Company shall, at least 40 days (unless a shorter period is acceptable to the Trustee), but not
more than 60 days, prior to the Redemption Date fixed by the Company, notify the Trustee of such
Redemption Date and of the principal amount of Securities of such series to be redeemed.
65
In the case of any redemption of Securities prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish
the Trustee with an Officers Certificate evidencing compliance with such restriction.
(b) If a partial redemption of any series of Securities would result in the delisting of the
Preferred Securities of the Citigroup Trust that purchased such Securities from any national
securities exchange or other organization on which the Preferred Securities of such Citigroup Trust
are then listed, the Company shall not be permitted to effect such partial redemption and may only
redeem such series of Securities in whole.
Section 11.3.
Selection by Trustee of Securities to Be Redeemed.
If less than all the
Securities of any series are to be redeemed, the particular Securities to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series not
previously called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions (equal to the
minimum authorized denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series;
provided
, that, if at the time of redemption
such Securities are registered as a Global Security, the Depositary shall determine, in accordance
with its procedures, the principal amount of such Securities held by each Security Beneficial Owner
to be redeemed.
The Trustee shall promptly notify the Company in writing of the Securities selected for
redemption and, in case of any Securities selected for partial redemption, the principal amount
thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions
relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to
be redeemed only in part, to the portion of the principal amount of such Securities which has been
or is to be redeemed.
Section 11.4.
Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series are to be redeemed, the
identification (and, in the case of partial redemption, the principal amounts) of the
particular Securities of such series to be redeemed,
66
(4) that on the Redemption Date the Redemption Price will become due and payable upon
each such Security to be redeemed and that interest thereon will cease to accrue on and
after said date, and
(5) the place or places where such Securities are to be surrendered for payment of the
Redemption Price.
Notice of redemption of Securities to be redeemed at the election of the Company shall be
given by the Company or, at the Companys request, by the Trustee in the name and at the expense of
the Company.
Section 11.5.
Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on any
Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.3)
an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed
on that date.
Section 11.6.
Securities Payable on Redemption Date.
Notice of redemption having been given as
aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Securities shall cease to
bear interest. Upon surrender of any such Security for redemption in accordance with said notice,
such Security shall be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date;
provided
that installments of interest whose Stated Maturity is on or prior
to the Redemption Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 3.7.
If any Security called for redemption shall not be so paid upon surrender thereof for
redemption, the principal (and premium, if any) shall, until paid, bear interest from the
Redemption Date at the rate prescribed therefor in the Security.
The Redemption Price shall be paid prior to 12:00 noon, New York City time, on the date of
such redemption or such earlier time as the Company determines,
provided
that the Company shall
deposit with the Trustee an amount sufficient to pay the Redemption Price by 10:00 a.m., New York
City time, on the date such Redemption Price is to be paid.
Section 11.7.
Securities Redeemed in Part.
Any Security which is to be redeemed only in part
shall be surrendered at a Place of Payment for Securities of that series (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company duly executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities of the same series, of
like tenor and of any authorized
67
denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of the Security so
surrendered.
Section 11.8.
Tax Event Redemption.
If a Tax Event with respect to any Citigroup Trust has
occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion with respect to such Citigroup Trust; or
(b) after receiving a Tax Event Opinion, the Regular Trustees of such Citigroup Trust shall
have been informed by tax counsel rendering the Tax Event Opinion that a No Recognition Opinion
cannot be delivered to such Citigroup Trust,
then, notwithstanding Section 11.2(a) but subject to Section 11.2(b) and Section 11.1, the Company
shall have the right upon not less than 30 days nor more than 60 days notice to the Holders of
Securities of the series issued to such Citigroup Trust, or to its Institutional Trustee, to redeem
such Securities, in whole or in part, for cash within 90 days following the occurrence of such Tax
Event at the Redemption Price,
provided
that if at the time there is available to the Company or
such Citigroup Trust the opportunity to eliminate, within such 90-day period, the Tax Event by
taking some ministerial action (Ministerial Action), such as filing a form or making an election,
or pursuing some other similar reasonable measure which has no adverse effect on the Company, the
Trust or the holders of the Trust Securities of such Citigroup Trust, the Company or such Citigroup
Trust shall pursue such Ministerial Action in lieu of redemption, and,
provided further
that the
Company shall have no right to redeem such Securities while the Company or such Citigroup Trust is
pursuing any Ministerial Action pursuant to its obligations under the Declaration of such Citigroup
Trust.
ARTICLE XII
[INTENTIONALLY OMITTED]
ARTICLE XIII
Extension Of Interest Payment Period
Section 13.1.
Extension of Interest Payment Period.
The Company shall have the right, at any
time and from time to time during the term of the Securities of any series, to defer payments of
interest by extending the interest payment period of all Securities of such series for a period not
exceeding 40 consecutive quarters (the Extended Interest Payment Period), during which Extended
Interest Payment Period no interest shall be due and payable on Securities of such series;
provided
that no Extended Interest Payment Period may extend beyond the Maturity of such Securities. To the
extent permitted by applicable law, interest, the payment of which has been deferred because of the
extension of the
interest payment period pursuant to this Section 13.1, will bear interest thereon at
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the
Coupon Rate compounded quarterly for each quarter of the Extended Interest Payment Period
(Compounded Interest). At the end of any Extended Interest Payment Period with respect to any
series of Securities, the Company shall pay all interest accrued and unpaid on such Securities,
including any Additional Interest and Compounded Interest (together, Deferred Interest) that
shall be payable to the Holders of Securities of such Series in whose names such Securities are
registered in the Security Register on the first record date after the end of such Extended
Interest Payment Period. Before the termination of any Extended Interest Payment Period, the
Company may further extend such period;
provided
that such period, together with all such further
extensions thereof, shall not exceed 40 consecutive quarters; and
provided further
that no
prepayment of interest during an Extended Interest Payment Period shall allow the Company to extend
such Extended Interest Payment Period beyond 40 consecutive quarters. Upon the termination of any
Extended Interest Payment Period with respect to any series of Securities and upon the payment of
all Deferred Interest then due, the Company may commence a new Extended Interest Payment Period
with respect to such series of Securities, subject to the foregoing requirements. No interest on a
series of Securities shall be due and payable during an Extended Interest Payment Period with
respect thereto, except at the end thereof,
provided
the Company may prepay at any time all or any
portion of the interest accrued during any Extended Interest Payment Period.
Section 13.2.
Notice of Extension.
(a) If the Institutional Trustee of a Citigroup Trust is the
only Holder of Securities of a series at the time the Company selects an Extended Interest Payment
Period with respect thereto, the Company shall give written notice to the Regular Trustees and the
Institutional Trustee of such Citigroup Trust and to the Trustee of its selection of such Extended
Interest Payment Period at least one Business Day before the earlier of (i) the next succeeding
date on which Distributions on the Trust Securities issued by such Citigroup Trust are payable, or
(ii) the date such Citigroup Trust is required to give notice of the record date, or the date such
Distributions would be payable if not for such Extended Interest Payment Period, to the New York
Stock Exchange or other applicable self-regulatory organization or to holders of the Preferred
Securities issued by such Citigroup Trust, but in any event at least one Business Day before such
record date.
(b) If the Institutional Trustee of a Citigroup Trust is not the only Holder of Securities of
a series at the time the Company selects an Extended Interest Payment Period with respect thereto,
the Company shall give written notice to the Holders of Securities of such series and the Trustee
of its selection of such Extended Interest Payment Period at least 10 Business Days before the
earlier of (i) the next succeeding Interest Payment Date, or (ii) the date the Company is required
to give notice of the record or payment date of such interest payment to the New York Stock
Exchange or other applicable self-regulatory organization or to Holders of Securities of such
series.
(c) The quarter in which any notice is given pursuant to paragraphs (a) or (b) of this Section
13.2 shall be counted as one of the 40 quarters permitted in the maximum Extended Interest Payment
Period with respect to any series of Securities permitted under Section 1.3.
69
(d) Notwithstanding anything else contained in this Indenture, the Company shall be
required to give notice to any person of its selection of an Extended Interest Payment Period no
more than 15 Business Days and no less than 5 Business Days before the next succeeding Interest
Payment Date of the affected Securities.
Section 13.3.
Limitation of Transactions.
If with respect to any series of Securities (i) the Company shall
exercise its right to defer payments of interest thereon as provided in Section 13.1 or (ii) there
shall have occurred any Default, then (a) the Company and any subsidiary of the Company shall not
declare or pay any dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock or make any
guarantee payment with respect thereto (other than (i) purchases, redemptions or other acquisitions
of shares of capital stock of the Company in connection with any employment contract, benefit plan
or other similar arrangement with or for the benefit of employees, officers, directors or
consultants, (ii) purchases of shares of common stock of the Company pursuant to a contractually
binding requirement to buy stock existing prior to the commencement of the extension period,
including under a contractually binding stock repurchase plan, (iii) as a result of an exchange or
conversion of any class or series of the Companys capital stock for any other class or series of
the Companys capital stock, (iv) the purchase of fractional interests in shares of the Companys
capital stock pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged, or (v) purchase of the Companys capital stock in connection
with the distribution thereof); and (b) the Company and any subsidiary of the Company will not make
any payment of interest, principal or premium on, or repay, purchase or redeem, any debt securities
or guarantees issued by the Company that rank pari passu with or junior to the Securities (other
than (i) any payment of current or Deferred Interest on securities that rank pari passu with the
Securities that is made pro rata to the amounts due on such securities (including the Securities),
provided that any such payments of Deferred Interest are made in accordance with Section 13.5(d),
(ii) any payments of Deferred Interest on securities that rank pari passu with the Securities that,
if not made, would give rise to an event of default permitting acceleration of such securities or
(iii) any repayment or redemption of a security necessary to avoid a breach of the instrument
governing the same),
provided, however
, that the Company may declare and pay a stock dividend where
the dividend stock is the same stock as that on which the dividend is being paid. If any Extended
Interest Payment Period lasts longer than one year, unless required to do so by the Federal Reserve
and subject to the exceptions listed in clauses (a) and (b) of this Section 13.3, the Company will
not, and will not permit any subsidiary to purchase any of its common stock for a one-year period
following the payment of all Deferred Interest with the New Equity Amount.
Section 13.4.
Limitation on Source of Payment of Deferred Interest.
During an Extended Interest Payment
Period, the Company may not pay Deferred Interest on the Securities on any date in an amount that
exceeds the New Equity Amount for such date;
provided
,
however
, that (i) upon the Maturity of the
Securities, (ii) during
the occurrence and continuation of a Supervisory Event or (iii) if an Event of Default and
Acceleration shall have occurred and be continuing, the provisions of this Section 13.4 shall not
apply and the Company may pay Deferred Interest with cash from any source. Nothing in this
70
Indenture will prevent the Company from paying current interest on the Securities at any time using
cash from any source.
Section 13.5
Obligation to Effect Certain Common Stock Sales.
(a) Commencing on the earlier of (i) the Fifth
Deferral Anniversary, if on such date the related Extended Interest Payment Period has not ended,
and (ii) the date of any payment of current interest on the Securities during an Extended Interest
Payment Period, if any Deferred Interest is outstanding, the Company shall be subject to the
Alternative Payment Mechanism, pursuant to which it will continuously use its commercially
reasonable efforts to effect sales of shares of its common stock, including treasury shares, in an
amount that will generate sufficient net proceeds to enable the Company to pay in full all Deferred
Interest on the Securities then outstanding; provided that the Company shall not be obligated to
make offers for or effect sales of its common stock during the occurrence and continuation of a
Market Disruption Event or a Supervisory Event and will be permitted to pay Deferred Interest using
cash from any source upon the occurrence of a Supervisory Event. The Companys obligation to use
commercially reasonable efforts to sell shares of its common stock to pay all Deferred Interest on
the Securities shall resume at such time as no Market Disruption Event or Supervisory Event exists
or is continuing.
(b) As used in this Section 13.5, the term commercially reasonable efforts means
commercially reasonable efforts on the part of the Company to complete the sale of shares of its
common stock, including treasury shares, to third parties that are not subsidiaries of the Company.
The Company will not be considered to have used its commercially reasonable efforts to effect a
sale of stock if it determines not to pursue or complete such sale solely due to pricing or
dilution considerations.
(c) The Company is not permitted to sell shares of common stock in excess of a number of
shares of common stock to be specified pursuant to a Board Resolution, and set forth in an
Officers Certificate for each series of Securities (in each case, the Share Cap Amount), for the
purpose of satisfying Section 13.5(a) or otherwise paying Deferred Interest on the Securities of
the relevant series then outstanding. If the issued and outstanding shares of common stock shall
have been changed into a different number of shares or a different class by reason of any stock
split, reverse stock split, stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or other similar transaction, then each affected Share Cap Amount
shall be correspondingly adjusted. The Company shall increase a Share Cap Amount (including through
the increase of its authorized share capital, if necessary) to an amount that would allow the
Company to raise sufficient proceeds to satisfy its obligations to pay Deferred Interest in full at
the end of the first year of an Extended Interest Payment Period (and on each subsequent
anniversary of the end of the first year of an Extended Interest Payment
Period to the extent that an Extended Interest Payment Period would last more than one year),
if a then-current Share Cap Amount would not allow the Company to raise sufficient proceeds to
satisfy its obligations to pay Deferred Interest (including Compounded Interest to that date)
assuming a price per share equal to the average trading price of the Companys common shares over
the ten-trading-day period preceding such date;
provided
that the Company will not be obligated to
increase a Share Cap Amount above the maximum number of shares specified in the relevant Officers
Certificate.
71
Until the Tenth Deferral Anniversary, a Default will occur if the Company does not
increase the relevant Share Cap Amount to an amount that is greater than the minimum number of
shares specified in the relevant Officers Certificate when required to do so as described above;
provided that no Default will occur if the Company has increased the relevant Share Cap Amount to
the maximum number of shares specified in the relevant Officers Certificate.
(d) Following the earlier of (i) the Fifth Deferral Anniversary and (ii) the date of any
payment of current interest during an Extended Interest Payment Period, the Company shall apply the
net proceeds received by it from sales of shares of its common stock, including sales of treasury
shares, to the payment of all amounts owing in respect of Deferred Interest, with net proceeds to
be paid promptly after receipt until all amounts owing in respect of Deferred Interest have been
paid in full. In the event that net proceeds received by the Company from one or more sales of
shares of its common stock following such Fifth Deferral Anniversary are not sufficient to satisfy
the full amount of Deferred Interest, such net proceeds will be paid to the holders of the
Securities in chronological order; provided, that if the Company has outstanding at such time any
debt securities ranking pari passu with the Securities under the terms of which the Company is
obligated to sell shares of its common stock and apply the net proceeds to payment of deferred
interest on such pari passu securities and the Company at such time is required to apply such
proceeds to pay deferred interest on such pari passu securities, then on any date and for any
period the amount of net proceeds received by the Company from such sales and available for payment
of such deferred interest shall be applied on a pro rata basis to the amounts due on each series of
such securities (including the Securities) up to any APM Maximum Obligation, Share Cap Amount or
other similar limit then applicable to such series. Notwithstanding the above, the Company shall
not be obligated to sell common stock or to apply such net proceeds or any portion thereof to the
payment of Deferred Interest during the occurrence and continuation of Market Disruption Event or a
Supervisory Event.
(e) Notwithstanding anything to the contrary in this Indenture, under no circumstances will
the Company be obligated to sell shares of Qualified Warrants or to apply the proceeds of any such
sale to pay Deferred Interest on the Securities.
(f) Notwithstanding anything to the contrary in this Indenture, the Company will not be
obligated to issue common stock prior to the Fifth Deferral Anniversary if the gross proceeds of
any issuance of common stock and Qualified Warrants applied to pay Deferred Interest on the
Securities pursuant to this Section 13.5, together with the gross proceeds of all prior issuances
of common stock and Qualified Warrants applied since the commencement of the Extended Interest
Payment Period, would exceed an amount equal
to 2% of the product of (1) the average of the Current Stock Market Prices of the Companys
common stock on the 10 consecutive trading days ending on the fourth trading day immediately
preceding the date of issuance by the Company of common stock applied to pay Deferred Interest on
the Securities pursuant to Section 13.5 and (2) the total number of issued and outstanding shares
of the Companys common stock as of the date of the Companys publicly available consolidated
financial statements (the APM Maximum Obligation). Once the Company reaches the APM Maximum
72
Obligation for an Extended Interest Payment Period, the Company will not be obligated to issue more
common stock or Qualified Warrants pursuant to this Section 13.5 prior to the Fifth Deferral
Anniversary even if the Current Stock Market Price of the Companys common stock or the number of
outstanding shares of its common stock subsequently increase. The APM Maximum Obligation will cease
to apply following the Fifth Deferral Anniversary, at which point the Company must repay any
Deferred Interest, regardless of the time at which it was deferred, using proceeds from sales of
the Companys common stock, including treasury shares, subject to any Market Disruption Event,
Supervisory Event, and the Share Cap Amount. If the APM Maximum Obligation has been reached during
an Extended Interest Payment Period and the Company subsequently repays all Deferred Interest, the
APM Maximum Obligation will cease to apply at the termination of such Extended Interest Payment
Period and will not apply again unless and until the Company starts a new Extended Interest Payment
Period.
Section 13.6.
Notice of Market Disruption Event.
Upon and after the Fifth Deferral Anniversary, if a Market Disruption Event has occurred and
is continuing, the Company shall give, as promptly as possible after the Company becomes aware of
such occurrence, a written notice (a Market Disruption Event Notice) to the Trustee, stating the
date on which such Market Disruption Event has occurred, the nature thereof and what action it will
take in connection therewith.
Section 13.7.
Notice of Supervisory Event.
Upon and after the Fifth Deferral Anniversary, if a Supervisory Event has occurred and is
continuing, the Company shall give, as promptly as possible after the Company becomes aware of such
occurrence, a written notice (a Supervisory Event Notice) to the Trustee stating that a
Supervisory Event has commenced and the actions it will take in connection therewith. No later
than five (5) Business Days following termination of a Supervisory Event, the Company shall give a
written notice to the Trustee stating the date on which such Supervisory Event terminated.
Section 13.8.
Notices to the Federal Reserve.
The Company shall give written notice to the Federal Reserve:
(a) No later than five (5) Business Days following commencement of an Extended Interest
Payment Period; and
(b) Upon the earlier to occur of (i) the Fifth Deferral Anniversary of such Extended Interest
Payment Period or (ii) the payment of current interest during an Extended Interest Payment Period.
Section 13.9.
Obligation to Notify Federal Reserve of Intent to Sell Stock.
(a) At least 25 Business Days in
advance of the relevant payment date (or such longer period as may be required by the Federal
Reserve or by other supervisory action) the Company shall give written notice to the Federal
Reserve of its intent both (1) to sell shares of common stock or, at the Companys sole discretion,
Qualified Warrants and (2) to apply the net proceeds from such sale to pay Deferred Interest, and
shall only take any such actions if the
73
Federal Reserve does not disapprove of any such actions
within ten (10) Business Days (or such longer period as may be required by Federal Reserve order or
by other supervisory action) after the Company gives such notice to the Federal Reserve or has
withdrawn any prior disapproval.
ARTICLE XIV
Subordination Of Securities
Section 14.1.
Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Securities
issued hereunder by such Holders acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of this Article Fourteen; and each Holder of a
Security, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to
be bound by such provisions.
The payment by the Company of the principal of, premium, if any, and interest on all
Securities issued hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinated and junior in right of payment to the prior payment in full of all Senior Indebtedness
of the Company, whether outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article Fourteen shall prevent the occurrence of any Default hereunder.
Section 14.2.
Default on Senior Indebtedness.
In the event and during the continuation of any default by the
Company in the payment of principal, premium, interest or any other payment due on any Senior
Indebtedness of the Company, as the case may be, or in the event that the maturity of any Senior
Indebtedness of the Company, as the case may be, has been accelerated because of a default, then,
in either case, no payment shall be made by the Company with respect to the principal (including
redemption payments) of, or premium, if any, or interest on, the Securities or to acquire any of
the Securities.
In the event that, notwithstanding the foregoing, any payment shall be received by the
Trustee, by any Holder or by any Paying Agent (or, if the Company is acting as its own Paying
Agent, money for any such payment is segregated and held in trust) when such payment is prohibited
by the preceding paragraph of this Section 14.2, before all Senior Indebtedness of the Company is
paid in full, or provision is made for such payment in money in accordance with its terms, such
payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness of the Company or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, ratably according to the aggregate amount
remaining unpaid on account of the principal, premium, interest or any other payment due on the
Senior Indebtedness held or represented by each, for application to the payment of all Senior
Indebtedness of the Company, as the case may be, remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money in
74
accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such Senior
Indebtedness, but only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing within 90 days of
such payment of the amounts then due and owing on the Senior Indebtedness and only the amounts
specified in such notice to the Trustee shall be paid to the holders of Senior Indebtedness.
Section 14.3.
Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets
of the Company of any kind or character, whether in cash, property or securities, to creditors upon
any dissolution or winding-up or liquidation or reorganization of the Company, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due upon
all Senior Indebtedness of the Company shall first be paid in full, or payment thereof provided for
in money in accordance with its terms, before any payment is made by the Company on account of the
principal (and premium, if any) or interest on the Securities; and upon any such dissolution or
winding-up or liquidation or reorganization, any payment by the Company, or distribution of assets
of the Company of any kind or character, whether in cash, property or securities, to which the
Holders of the Securities or the Trustee would be entitled to receive, except for the provisions of
this Article Fourteen, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution, or by the Holders
of the Securities or by the Trustee under this Indenture if received by them or it, directly to the
holders of Senior Indebtedness of the Company (
pro
rata
to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders, as calculated by the
Company) or their representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent necessary to pay such Senior
Indebtedness in full, in money or moneys worth, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness, before any payment or distribution
is made to the Holders of Securities or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, prohibited by the
foregoing, shall be received by the Trustee, by any Holder or by any Paying Agent (or, if the
Company is acting as its own Paying Agent, money for any such payment is segregated and held in
trust) before all Senior Indebtedness of the Company is paid in full, or provision is made for such
payment in money in accordance with its terms,
such payment or distribution shall be held in trust
for the benefit of and shall be paid over or delivered to the holders of such Senior Indebtedness
or their representative or representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, ratably according to the aggregate amount remaining unpaid on account of the
principal, premium, interest or any other payment due on the Senior Indebtedness held or
represented by each, as calculated by the Company, for application to the payment of all Senior
Indebtedness of the Company, as the case may be, remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money in accordance with its terms,
75
after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such Senior
Indebtedness.
For purposes of this Article Fourteen, the words cash, property or securities shall not be
deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the
Company or any other corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this Article Fourteen with
respect to the Securities to the payment of all Senior Indebtedness of the Company, as the case may
be, that may at the time be outstanding, provided that (i) such Senior Indebtedness is assumed by
the new corporation, if any, resulting from any such reorganization or readjustment, and (ii) the
rights of the holders of such Senior Indebtedness are not, without the consent of such holders,
altered by such reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or dissolution of the Company
following the conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in Article VIII shall
not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 14.3 if such other corporation shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions stated in Article VIII. Nothing in Section 14.2 or in this
Section 14.3 shall apply to-claims of, or payments to the Trustee under or pursuant to Section 6.7.
Section 14.4.
Subrogation.
Subject to the payment in full of all Senior Indebtedness of the Company, the
rights of the Holders of the Securities shall be subrogated to the rights of the holders of such
indebtedness to receive payments or distributions of cash, property or securities of the Company,
as the case may be, applicable to such Senior Indebtedness until the principal of (and premium, if
any) and interest on the Securities shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee would be entitled
except for the provisions of this Article
Fourteen, and no payment over pursuant to the provisions of this Article Fourteen to or for
the benefit of the holders of such Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as between the Company, its creditors other than Holders of Senior Indebtedness of the
Company, and the holders of the Securities, be deemed to be a payment by the Company to or on
account of such Senior Indebtedness. It is understood that the provisions of this Article Fourteen
are and are intended solely for the purposes of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article Fourteen or elsewhere in this Indenture or in the Securities
is intended to or shall impair, as between the Company, its creditors other than the holders of
Senior Indebtedness of the Company, and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional, to pay to the Holders of the Securities the principal
of (and premium, if any) and interest on the Securities as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the relative rights of
the Holders of the Securities and creditors of the Company, as the case may be, other than the
holders of Senior Indebtedness of the
76
Company, as the case may be, nor shall anything herein or
therein prevent the Trustee or the Holder of any Security from exercising all remedies otherwise
permitted by applicable law upon default under the Indenture, subject to the rights, if any, under
this Article Fourteen of the holders of such Senior Indebtedness in respect of cash, property or
securities of the Company, as the case may be, received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in this Article
Fourteen, the Trustee, subject to the provisions of Section 6.1, and the Holders of the Securities
shall be entitled to conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or reorganization proceedings are
pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or
other Person making such payment or distribution, delivered to the Trustee or to the Holders of the
Securities, for the purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the Company, as the case
may be, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Fourteen.
77
Section 14.5.
Trustee to Effectuate Subordination.
Each Holder of Securities by such Holders acceptance
thereof authorizes and directs the Trustee on such Holders behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this Article Fourteen and
appoints the Trustee such Holders attorney-in-fact for any and all such purposes.
Section 14.6.
Notice by the Company.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of any
payment of monies to or by the Trustee in respect of the Securities pursuant to the provisions
of this Article Fourteen. Notwithstanding the provisions of this Article Fourteen or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of
any facts that would prohibit the making of any payment of monies to or by the Trustee in respect
of the Securities pursuant to the provisions of this Article Fourteen, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof from the Company or a
holder or holders of Senior Indebtedness or their representative or representatives or from any
trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the
provisions of Section 6.1 shall be entitled in all respects to assume that no such facts exist;
provided, however
, that if the Trustee shall not have received the notice provided for in this
Section 14.6 at least three Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the payment of the
principal of (or premium, if any) or interest on any Security), then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority to receive such money
and to apply the same to the purposes for which they were received, and shall not be affected by
any notice to the contrary that may be received by it within three Business Days prior to such
date.
The Trustee, subject to the provisions of Section 6.1, shall be entitled to conclusively rely
on the delivery to it of a written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company, as the case may be (or a trustee on behalf of such holder), to
establish that such notice has been given by a holder of such Senior Indebtedness or a trustee on
behalf of any such holder or holders. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder of such Senior
Indebtedness to participate in any payment or distribution pursuant to this Article Fourteen, the
Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of such Senior Indebtedness held by such Person, the extent to which such Person
is entitled to participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article Fourteen, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as to the right of such
Person to receive such payment.
78
Section 14.7.
Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity
shall be entitled to all the rights set forth in this Article Fourteen in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness,
and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the Company, the Trustee undertakes to
perform or to observe only such of its covenants and obligations as are specifically set forth in
this Article Fourteen, and no implied covenants or obligations with respect to the holders of such
Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not
be deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and, subject to the
provisions of Section 6.1, the
Trustee shall not be liable to any holder of such Senior Indebtedness if it shall pay over or
deliver to Holders of Securities, the Company or any other Person money or assets to which any
holder of such Senior Indebtedness shall be entitled by virtue of this Article Fourteen or
otherwise.
Section 14.8.
Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness of the Company to enforce
subordination as herein provided shall at any time in any way be prejudiced or impaired by any act
or failure to act on the part of the Company, as the case may be, or by any act or failure to act,
in good faith, by any such holder, or by any noncompliance by the Company, as the case may be, with
the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any
such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the holders of Senior
Indebtedness of the Company may, at any time and from time to time, without the consent of or
notice to the Trustee or the Holders of the Securities, without incurring responsibility to the
Holders of the Securities and without impairing or releasing the subordination provided in this
Article Fourteen or the obligations hereunder of the Holders of the Securities to the holders of
such Senior Indebtedness, do any one or more of the following: (i) change the manner, place or
terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or
otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing
the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior
Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior
Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company, as the
case may be, and any other Person.
Section 14.9.
Trustees Compensation Not Prejudiced.
Nothing in this Article Fourteen shall apply to amounts
due to the Trustee pursuant to Section 6.7 of this Indenture.
Section 14.10.
Disclaimer of Right to Enforce Covenants.
Except as specifically provided for in this Article
14, no holder of Senior Indebtedness shall have any right to enforce any
79
of the covenants in this
Indenture, including but not limited to those contained in Sections 5.11, 13.4, 13.5, 13.6, 13.7
and 13.8
ARTICLE XV
Miscellaneous
Section 15.1.
Acknowledgement of Rights.
The Company acknowledges that, with respect to any Securities held
by a Citigroup Trust or a trustee of such Trust, if the Institutional Trustee of such Citigroup
Trust fails to enforce its rights under this Indenture as the Holder of the series of Securities
held as the assets of such Citigroup Trust, any holder of Preferred Securities of such Citigroup
Trust may institute legal proceedings directly against the Company to enforce such Institutional
Trustees rights under this Indenture without first instituting any legal proceedings against such
Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the applicable series of
Securities on the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), the Company acknowledges that a holder of Trust Securities
issued by the Citigroup Trust which is, or the Institutional Trustee of which is, the Holder of
such Securities may directly institute a proceeding for enforcement of payment to such holder of
the principal of or interest on the applicable series of Securities having a principal amount equal
to the aggregate liquidation amount of the Trust Securities of such holder (a Direct Action) on
or after the respective due date specified of such holder on or after the respective due date
specified in the applicable series of Securities. Notwithstanding any payments made to such holder
of Trust Securities by the Company in connection with a Direct Action, the Company shall remain
obligated to pay the principal of or interest on the series of Securities held by a Citigroup Trust
or the Institutional Trustee of a Citigroup Trust, and the Company shall be subrogated to the
rights of the holder of such Trust Securities to the extent of any payments made by the Company to
such holder in any Direct Action.
Section 15.2.
Severability.
In case any provision in this Indenture or in any series of Securities shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section 15.3.
Counterparts.
This instrument may be executed in any number of counterparts, each of which so executed shall
be deemed to be an original, but all such counterparts shall together constitute but one and the
same instrument.
80
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of
the day and year first above written.
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CITIGROUP INC.
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By:
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Name:
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Title:
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THE BANK OF NEW YORK,
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As Trustee
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By:
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Name:
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Title:
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Exhibit 4.07
FORM OF
AMENDED AND RESTATED DECLARATION
OF TRUST
CITIGROUP CAPITAL XVIII
Dated as of , 20
TABLE OF CONTENTS
ARTICLE I INTERPRETATION AND DEFINITIONS
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SECTION 1.1 Definitions
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1
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ARTICLE II TRUST INDENTURE ACT
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SECTION 2.1 Trust Indenture Act; Application
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7
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SECTION 2.2 Lists of Holders of Securities
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7
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SECTION 2.3 Reports by the Institutional Trustee
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8
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SECTION 2.4 Periodic Reports to Institutional Trustee
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8
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SECTION 2.5 Evidence of Compliance with Conditions Precedent
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8
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SECTION 2.6 Defaults; Waiver
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8
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SECTION 2.7 Default; Notice
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9
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ARTICLE III ORGANIZATION
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SECTION 3.1 Name
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10
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SECTION 3.2 Office
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10
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SECTION 3.3 Purpose
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10
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SECTION 3.4 Authority
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11
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SECTION 3.5 Title to Property of the Trust
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11
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SECTION 3.6 Powers and Duties of the Regular Trustees
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11
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SECTION 3.7 Prohibition of Actions by the Trust and the Trustees
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14
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SECTION 3.8 Powers and Duties of the Institutional Trustee
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14
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SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee
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16
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SECTION 3.10 Certain Rights of Institutional Trustee
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17
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SECTION 3.11 Delaware Trustee
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19
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SECTION 3.12 Execution of Documents
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20
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SECTION 3.13 Not Responsible for Recitals or Issuance of Securities
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20
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SECTION 3.14 Duration of Trust
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20
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SECTION 3.15 Mergers
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20
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ARTICLE IV SPONSOR
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SECTION 4.1 Sponsors Purchase of Common Securities
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22
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SECTION 4.2 Responsibilities of the Sponsor
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22
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ARTICLE V TRUSTEES
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i
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SECTION 5.1 Number of Trustees
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22
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SECTION 5.2 Delaware Trustee
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23
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SECTION 5.3 Institutional Trustee; Eligibility
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23
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SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally
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24
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SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees
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24
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SECTION 5.6 Appointment, Removal and Resignation of Trustees
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25
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SECTION 5.7 Vacancies among Trustees
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26
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SECTION 5.8 Effect of Vacancies
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27
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SECTION 5.9 Meetings
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27
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SECTION 5.10 Delegation of Power
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27
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SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business
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28
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ARTICLE VI DISTRIBUTIONS
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SECTION 6.1 Distributions
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28
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ARTICLE VII ISSUANCE OF SECURITIES
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SECTION 7.1 General Provisions Regarding Securities
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28
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ARTICLE VIII TERMINATION OF TRUST
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SECTION 8.1 Termination of Trust
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29
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ARTICLE IX TRANSFER OF INTERESTS
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SECTION 9.1 Transfer of Securities
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30
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SECTION 9.2 Transfer of Certificates
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30
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SECTION 9.3 Deemed Security Holders
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31
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SECTION 9.4 Book Entry Interests
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31
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SECTION 9.5 Notices to Clearing Agency
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32
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SECTION 9.6 Appointment of Successor Clearing Agency
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32
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SECTION 9.7 Definitive Capital Security Certificates
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32
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SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates
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32
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ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
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SECTION 10.1 Liability
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33
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SECTION 10.2 Exculpation
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33
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SECTION 10.3 Fiduciary Duty
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34
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SECTION 10.4 Indemnification
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35
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SECTION 10.5 Outside Businesses
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37
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ii
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ARTICLE XI ACCOUNTING
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SECTION 11.1 Fiscal Year
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38
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SECTION 11.2 Certain Accounting Matters
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38
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SECTION 11.3 Banking
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38
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SECTION 11.4 Withholding
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39
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ARTICLE XII AMENDMENTS AND MEETINGS
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SECTION 12.1 Amendments
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39
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SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent
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41
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ARTICLE XIII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
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SECTION 13.1 Representations and Warranties of Institutional Trustee
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42
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SECTION 13.2 Representations and Warranties of Delaware Trustee
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43
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ARTICLE XIV MISCELLANEOUS
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SECTION 14.1 Notices
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43
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SECTION 14.2 Governing Law
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45
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SECTION 14.3 Intention of the Parties
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45
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SECTION 14.4 Headings
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45
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SECTION 14.5 Successors and Assigns
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45
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SECTION 14.6 Partial Enforceability
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45
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SECTION 14.7 Counterparts
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45
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ANNEX I
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TERMS OF SECURITIES
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I-1
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EXHIBIT A-1
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FORM OF CAPITAL SECURITY CERTIFICATE
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A1-1
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EXHIBIT A-2
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FORM OF COMMON SECURITY CERTIFICATE
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A2-1
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EXHIBIT B
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SPECIMEN OF DEBENTURE
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B-1
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EXHIBIT C
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UNDERWRITING AGREEMENT
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C-1
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iii
CROSS-REFERENCE TABLE*
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Section of
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Trust Indenture Act
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of 1939, as amended
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Section of Declaration
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310(a)
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5.3(a)
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310(c)
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Inapplicable
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311(c)
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Inapplicable
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312(a)
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2.2(a)
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312(b)
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2.2(b)
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313
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2.3
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314(a)
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2.4
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314(b)
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Inapplicable
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314(c)
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2.5
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314(d)
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Inapplicable
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314(f)
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Inapplicable
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315(a)
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3.9(b)
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315(c)
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3.9(a)
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315(d)
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3.9(a)
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316(a)
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Annex I
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316(c)
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3.6(e)
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*
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This Cross-Reference Table does not constitute part of the Declaration and shall not affect
the interpretation of any of its terms or provisions.
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iv
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CITIGROUP CAPITAL XVIII
, 20
AMENDED AND RESTATED DECLARATION OF TRUST (Declaration) dated and effective as of
, 20 , by the Trustees (as defined herein), the Sponsor (as defined herein) and by the
holders, from time to time, of undivided beneficial interests in the assets of the Trust to be
issued pursuant to this Declaration;
WHEREAS, The Bank of New York (Delaware) is the successor-in-interest to Chase Bank USA,
National Association, as Delaware Trustee (as defined herein), and The Bank of New York is the
successor-in-interest to JPMorgan Chase Bank, N.A., as Institutional Trustee (as defined herein);
WHEREAS, the Trustees and the Sponsor established Citigroup Capital XVIII (the Trust), a
trust under the Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated as
of June 19, 2006 (the Original Declaration) and a Certificate of Trust filed with the Secretary
of State of the State of Delaware on June 19, 2006, as amended and restated on December 8, 2006,
for the sole purpose of issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend and restate each and
every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a
statutory trust under the Statutory Trust Act and that this Declaration constitute the governing
instrument of such statutory trust, the Trustees declare that all assets contributed to the Trust
will be held in trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to
the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1
Definitions
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Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning throughout;
(c) all references to the Declaration or this Declaration are to this Declaration as
modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and Annexes and Exhibits are
to Articles and Sections of and Annexes and Exhibits to this Declaration unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in this
Declaration unless otherwise defined in this Declaration or unless the context otherwise requires;
and
(f) a reference to the singular includes the plural and vice versa.
Affiliate
has the same meaning as given to that term in Rule 405 of the Securities
Act or any successor rule thereunder.
Authorized Officer
of a Person means any Person that is authorized to bind such
Person.
Book Entry Interest
means a beneficial interest in a Global Certificate, ownership
and transfers of which shall be maintained and made through book entries by a Clearing Agency as
described in Section 9.4.
Business Day
means any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York, New York are permitted or required by any applicable law to
close.
Capital Securities Guarantee
means the guarantee agreement dated as of
, 20 , of the Sponsor in respect of the Capital Securities.
Capital Security
has the meaning specified in Section 7.1.
Capital Security Beneficial Owner
means, with respect to a Book Entry Interest, a
Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
Capital Security Certificate
means a certificate representing a Capital Security
substantially in the form of Exhibit A-1.
2
Certificate
means a Common Security Certificate or a Capital Security Certificate.
Citigroup
means Citigroup Inc., a Delaware corporation.
Clearing Agency
means an organization registered as a Clearing Agency pursuant to
Section 17A of the Exchange Act that is acting as depositary for the Capital Securities and in
whose name or in the name of a nominee of that organization shall be registered a Global
Certificate and which shall undertake to effect book entry transfers and pledges of the Capital
Securities.
Clearing Agency Participant
means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency effects book entry
transfers and pledges of securities deposited with the Clearing Agency.
Closing Date
means, 20.
Code
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor legislation.
Commission
means the Securities and Exchange Commission.
Common Security
has the meaning specified in Section 7.1.
Common Security Certificate
means a definitive certificate in fully registered form
representing a Common Security substantially in the form of Exhibit A-2.
Company Indemnified Person
means (a) any Regular Trustee; (b) any Affiliate of any
Regular Trustee; (c) any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Regular Trustee; or (d) any officer, employee or agent of the
Trust or its Affiliates.
Corporate Trust Office
means the office of the Institutional Trustee at which the
corporate trust business of the Institutional Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Declaration is located at 101 Barclay
Street-8W, New York, New York 10286.
Covered Person
means: (a) any officer, director, shareholder, partner, member,
representative, employee or agent of (i) the Trust or (ii) the Trusts Affiliates; and (b) any
Holder of Securities.
Debenture Issuer
means Citigroup Inc. (or the Sponsor) in its capacity as issuer of
the Debentures under the Indenture.
Debenture Trustee
means The Bank of New York, as trustee under the Indenture until a
successor is appointed thereunder, and thereafter means such successor trustee.
3
Debentures
means the series of Debentures to be issued by the Debenture Issuer under
the Indenture to be held by the Institutional Trustee, a specimen certificate for such series of
Debentures being Exhibit B.
Default
in respect of the Securities means a Default (as defined in the Indenture)
has occurred and is continuing in respect of the Debentures.
Definitive Capital Security Certificates
has the meaning set forth in Section 9.4.
Delaware Trustee
has the meaning set forth in Section 5.2.
Distribution
has the meaning set forth in Section 6.1.
DTC
means the Depository Trust Company, the initial Clearing Agency.
Exchange Act
means the Securities Exchange Act of 1934, as amended from time to
time, or any successor legislation.
Fiduciary Indemnified Person
has the meaning set forth in Section 10.4(b).
Global Certificate
has the meaning set forth in Section 9.4.
Holder
means a Person in whose name a Certificate representing a Security is
registered, such Person being a beneficial owner within the meaning of the Statutory Trust Act.
Indemnified Person
means a Company Indemnified Person or a Fiduciary Indemnified
Person.
Indenture
means the Indenture, dated as of , 20 (as supplemented
from time to time), between the Debenture Issuer and the Debenture Trustee, pursuant to which the
Debentures are to be issued.
Institutional Trustee
means the Trustee meeting the eligibility requirements set
forth in Section 5.3.
Institutional Trustee Account
has the meaning set forth in Section 3.8(c).
Investment Company
means an investment company as defined in the Investment Company
Act.
Investment Company Act
means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.
Investment Company Event
has the meaning set forth in Annex I hereto.
Legal Action
has the meaning set forth in Section 3.6(g).
Majority in liquidation amount of the Securities
means, except as provided in the
terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding
4
Securities voting together as a single class or, as the context may require, Holders of
outstanding Capital Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of an aggregate liquidation amount representing more than 50% of
the aggregate liquidation amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
Officers Certificate
means, with respect to any Person, a certificate signed by two
Authorized Officers of such Person. Any Officers Certificate delivered with respect to compliance
with a condition or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers Certificate has read the covenant or
condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken
by each officer in rendering the Officers Certificate;
(c) a statement that each such officer has made such examination or investigation as, in such
officers opinion, is necessary to enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant
has been complied with.
Paying Agent
has the meaning specified in Section 3.8(h).
Payment Amount
has the meaning specified in Section 6.1.
Person
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or political subdivision thereof, or any
other entity of whatever nature.
Quorum
means any one Regular Trustee or, if there is only one Regular Trustee, such
Regular Trustee.
Regular Trustee
has the meaning specified in Section 5.1.
Regulatory Capital Event
has the meaning set forth in Annex I hereto.
Related Party
means, with respect to the Sponsor, any direct or indirect wholly
owned subsidiary of the Sponsor or any other Person that owns, directly or indirectly, 100% of the
outstanding voting securities of the Sponsor.
Responsible Officer
means, with respect to the Institutional Trustee, any officer
within the Corporate Trust Office of the Institutional Trustee with direct responsibility for the
administration of this Declaration and also means, with respect to a particular corporate trust
5
matter, any other officer to whom such matter is referred because of that officers knowledge
of and familiarity with the particular subject.
Rule 3a-5
means Rule 3a-5 under the Investment Company Act.
Securities
means the Common Securities and the Capital Securities.
Securities Act
means the Securities Act of 1933, as amended from time to time, or
any successor legislation.
Special Event
has the meaning set forth in Annex I hereto.
Sponsor
means Citigroup Inc. or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
Statutory Trust Act
means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code
§3801 et seq., as it may be amended from time to time, or any successor legislation.
Successor Delaware Trustee
has the meaning set forth in Section 5.6.
Successor Entity
has the meaning set forth in Section 3.15(b).
Successor Institutional Trustee
has the meaning set forth in Section 5.6.
Successor Securities
has the meaning set forth in Section 3.15(b).
Super Majority
has the meaning set forth in Section 2.6(a)(ii).
Tax Event
has the meaning set forth in Annex I hereto.
10% in liquidation amount of the Securities
means, except as provided in the terms
of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities voting
together as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a class, who are the
record owners of an aggregate liquidation amount representing 10% or more of the aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
Treasury Regulations
means the income tax regulations, including temporary and
proposed regulations, promulgated under the Code by the United States Treasury, as such regulations
may be amended from time to time (including corresponding provisions of succeeding regulations).
Trustee
or
Trustees
means each Person who has signed this Declaration as a
trustee, so long as such Person shall continue in office in accordance with the terms hereof, and
all other Persons who may from time to time be duly appointed, qualified and serving as Trustees
6
in accordance with the provisions hereof, and references herein to a Trustee or the Trustees
shall refer to such Person or Persons solely in their capacity as trustees hereunder.
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended from time to
time, or any successor legislation.
Underwriting
Agreement
means the Underwriting Agreement for the offering and sale of
Capital Securities in the form of Exhibit C.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1
Trust Indenture Act; Application
.
(a) This Declaration is subject to the provisions of the Trust Indenture Act that are required
to be part of this Declaration and shall, to the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee that is a Trustee for the purposes of
the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits, qualifies or conflicts
with the duties imposed by §§ 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
(d) The application of the Trust Indenture Act to this Declaration shall not affect the nature
of the Securities as equity securities representing undivided beneficial interests in the assets of
the Trust.
SECTION 2.2
Lists of Holders of Securities
.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide the
Institutional Trustee (i) within 14 days after each record date for payment of Distributions, a
list, in such form as the Institutional Trustee may reasonably require, of the names and addresses
of the Holders of the Securities (List of Holders) as of such record date, provided, that neither
the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to provide such List
of Holders at any time the List of Holders does not differ from the most recent List of Holders
given to the Institutional Trustee by the Sponsor and the Regular Trustees on behalf of the Trust,
and (ii) at any other time, within 30 days of receipt by the Trust of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is given to the
Institutional Trustee. The Institutional Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders given to it or which it
receives in the capacity as Paying Agent (if acting in such capacity), provided, that the
Institutional Trustee may destroy any List of Holders previously given to it on receipt of a new
List of Holders.
(b) The Institutional Trustee shall comply with its obligations under §§ 311(a), 311(b) and
312(b) of the Trust Indenture Act.
7
SECTION 2.3
Reports by the Institutional Trustee
.
Within 60 days after May 15 of each year, the Institutional Trustee shall provide to the
Holders of the Capital Securities such reports as are required by § 313 of the Trust Indenture Act,
if any, in the form and in the manner provided by § 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of § 313(d) of the Trust Indenture
Act.
SECTION 2.4
Periodic Reports to Institutional Trustee
.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Institutional Trustee such documents, reports and information as required by § 314 of the Trust
Indenture Act (if any) and the compliance certificate required by § 314 of the Trust Indenture Act
in the form, in the manner and at the times required by § 314 of the Trust Indenture Act.
SECTION 2.5
Evidence of Compliance with Conditions Precedent
.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Institutional Trustee such evidence of compliance with any conditions precedent provided for in
this Declaration that relate to any of the matters set forth in § 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to § 314(c)(1) of the
Trust Indenture Act may be given in the form of an Officers Certificate.
SECTION 2.6
Defaults; Waiver
.
(a) The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on
behalf of the Holders of all of the Capital Securities, waive any past Default in respect of the
Capital Securities and its consequences, provided, that if the underlying Default under the
Indenture:
(i) is not waivable under the Indenture, the Default under the Declaration shall also
not be waivable; or
(ii) is waivable only with the consent of holders of more than a majority in principal
amount of the Debentures (a Super Majority) affected thereby, only the Holders of at least
the proportion in aggregate liquidation amount of the Capital Securities that the relevant
Super Majority represents of the aggregate principal amount of the Debentures outstanding
may waive such Default in respect of the Capital Securities under the Declaration.
The foregoing provisions of this Section 2.6(a) shall be in lieu of § 316(a)(1)(B) of the Trust
Indenture Act and such § 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such default shall cease to exist, and any Default with respect to the Capital Securities
arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or a Default with respect to the
Capital Securities or impair any right consequent thereon. Any waiver by the
8
Holders of the Capital Securities of a Default with respect to the Capital Securities shall also be
deemed to constitute a waiver by the Holders of the Common Securities of any such Default with
respect to the Common Securities for all purposes of this Declaration without any further act,
vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common Securities may, by vote, on
behalf of the Holders of all of the Common Securities, waive any past Default with respect to the
Common Securities and its consequences, provided, that if the underlying Default under the
Indenture:
(i) is not waivable under the Indenture, except where the Holders of the Common
Securities are deemed to have waived such Default under the Declaration as provided in this
Section 2.6(b), the Default under the Declaration shall also not be waivable; or
(ii) is waivable only with the consent of a Super Majority, except where the Holders of
the Common Securities are deemed to have waived such Default under the Declaration as
provided in this Section 2.6(b), only the Holders of at least the proportion in aggregate
liquidation amount of the Common Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding may waive such Default in
respect of the Common Securities under the Declaration;
provided, further each Holder of Common Securities will be deemed to have waived any such Default
and all Defaults with respect to the Common Securities and its consequences until all Defaults with
respect to the Capital Securities have been cured, waived or otherwise eliminated, and until such
Defaults with respect to the Capital Securities have been so cured, waived or otherwise eliminated,
the Institutional Trustee will be deemed to be acting solely on behalf of the Holders of the
Capital Securities and only the Holders of the Capital Securities will have the right to direct the
Institutional Trustee in accordance with the terms of the Securities. The foregoing provisions of
this Section 2.6(b) shall be in lieu of §§ 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act
and such §§ 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded
from this Declaration and the Securities, as permitted by the Trust Indenture Act. Subject to the
foregoing provisions of this Section 2.6(b), upon the waiver of a Default by the Holders of a
Majority in liquidation amount of the Common Securities, any such default shall cease to exist and
any Default with respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or
other default or Default with respect to the Common Securities or impair any right consequent
thereon.
(c) A waiver of a Default under the Indenture by the Institutional Trustee at the direction of
the Holders of the Capital Securities, constitutes a waiver of the corresponding Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of § 316(a)(1)(B) of
the Trust Indenture Act and such § 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7
Default; Notice
.
9
(a) The Institutional Trustee shall, within 90 days after the occurrence of a Default,
transmit by mail, first class postage prepaid, to the Holders of the Securities, notices of (i) all
defaults with respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving of such notice (the
term defaults for the purposes of this Section 2.7(a) being hereby defined to be a Default as
defined in the Indenture, not including any periods of grace provided for therein and irrespective
of the giving of any notice provided therein) and (ii) any notice of default received from the
Indenture Trustee with respect to the Debentures, which notice from the Institutional Trustee to
the Holders shall state that a Default under the Indenture also constitutes a Default with respect
to the Securities; provided that, except for a default in the payment of principal of (or premium,
if any) or interest on any of the Debentures or in the payment of any sinking fund installment
established for the Debentures, the Institutional Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Institutional Trustee in good faith
determines that the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge of any default except:
(i) a default under Sections 5.7(b) and 5.7(c) of the Indenture; or
(ii) any default as to which the Institutional Trustee shall have received written
notice or of which a Responsible Officer of the Institutional Trustee charged with the
administration of the Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1
Name
.
The Trust is named Citigroup Capital XVIII, as such name may be modified from time to time
by the Regular Trustees following written notice to the Institutional Trustee, the Delaware Trustee
and the Holders of Securities. The Trusts activities may be conducted under the name of the Trust
or any other name deemed advisable by the Regular Trustees.
SECTION 3.2
Office
.
The address of the principal office of the Trust is c/o Citigroup Inc., 399 Park Avenue, New
York, NY 10043. On ten Business Days written notice to the Institutional Trustee, the Delaware
Trustee and the Holders of Securities, the Regular Trustees may designate another principal office.
SECTION 3.3
Purpose
.
The exclusive purposes and functions of the Trust are (a) to issue and sell Securities and use
the proceeds from such sale to acquire the Debentures, and (b) except as otherwise limited herein,
to engage in only those other activities necessary, or incidental thereto.
10
The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments,
pledge any of its assets, or otherwise undertake (or permit to be undertaken) any activity that
would cause the Trust not to be classified for United States federal income tax purposes as a
grantor trust.
SECTION 3.4
Authority
.
Subject to the limitations provided in this Declaration and to the specific duties of the
Institutional Trustee, the Regular Trustees shall have exclusive and complete authority to carry
out the purposes of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall constitute the act
of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no
person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees
as set forth in this Declaration.
SECTION 3.5
Title to Property of the Trust
.
Except as provided in Section 3.8 with respect to the Debentures and the Institutional Trustee
Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall
be vested in the Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6
Powers and Duties of the Regular Trustees
.
The Regular Trustees shall have the exclusive power, duty and authority to cause the Trust to
engage in the following activities:
(a) to issue and sell the Capital Securities and the Common Securities in accordance with this
Declaration;
provided, however
, that the Trust may issue no more than one series of Capital
Securities and no more than one series of Common Securities, and,
provided further
, that there
shall be no interests in the Trust other than the Securities, and the issuance of Securities shall
be limited to a simultaneous issuance of both Capital Securities and Common Securities on the
Closing Date;
(b) in connection with the issue and sale of the Capital Securities, at the direction of the
Sponsor, to:
(i) execute and file with the Commission on behalf of the Trust a registration
statement on Form S-3 or on another appropriate form, or a registration statement under Rule
462(b) of the Securities Act, in each case prepared by the Sponsor, including any
pre-effective or post-effective amendments thereto, relating to the registration under the
Securities Act of the Capital Securities;
(ii) execute and file any documents prepared by the Sponsor, or take any acts as
determined by the Sponsor to be necessary in order to qualify or register all or part of
11
the Capital Securities in any State in which the Sponsor has determined to qualify or
register such Capital Securities for sale;
(iii) execute and file an application, prepared by the Sponsor, to the New York Stock
Exchange, Inc., any other national stock exchange or the Nasdaq National Market for listing
upon notice of issuance of any Capital Securities;
(iv) execute and file with the Commission on behalf of the Trust a registration
statement on Form 8-A, prepared by the Sponsor, including any pre-effective or
post-effective amendments thereto, relating to the registration of the Capital Securities
under Section 12(b) of the Exchange Act; and
(v) deliver the Underwriting Agreement providing for the sale of the Capital
Securities;
(c) to acquire the Debentures with the proceeds of the sale of the Capital Securities and the
Common Securities; provided, however, that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Institutional Trustee for the benefit of the
Holders of the Capital Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written notice of the occurrence
of a Special Event; provided, that the Regular Trustees shall consult with the Sponsor and the
Institutional Trustee before taking or refraining from taking any ministerial action in relation to
a Special Event;
(e) to establish a record date with respect to all actions to be taken hereunder that require
a record date be established, including and with respect to, for the purposes of §316(c) of the
Trust Indenture Act, Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as to such actions
and applicable record dates;
(f) to take all actions and perform such duties as may be required of the Regular Trustees
pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or
otherwise adjust claims or demands of or against the Trust (Legal Action), unless pursuant to
Section 3.8(e), the Institutional Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be designated as officers with
titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for
such services;
(i) to cause the Trust to comply with the Trusts obligations under the Trust Indenture Act;
(j) to give the certificate required by § 314(a)(4) of the Trust Indenture Act to the
Institutional Trustee, which certificate may be executed by any Regular Trustee;
12
(k) to incur expenses that are necessary or incidental to carry out any of the purposes of the
Trust;
(l) to act as, or appoint another Person to act as, registrar and transfer agent for the
Securities;
(m) to give prompt written notice to the Holders of the Securities of any notice received from
the Debenture Issuer of its election to defer payments of interest on the Debentures by extending
the interest payment period under the Indenture;
(n) to take all action that may be necessary or appropriate for the preservation and the
continuation of the Trusts valid existence, rights, franchises and privileges as a statutory
statutory trust under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or with applicable law, that
the Regular Trustees determine in their discretion to be necessary or desirable in carrying out the
activities of the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company required to
be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal income tax
purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the Debentures will
be treated as indebtedness of the Debenture Issuer for United States federal income
tax purposes;
provided
, that any such action does not adversely affect the interests of Holders;
(p) to take all action necessary to cause all applicable tax returns and tax information
reports that are required to be filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust; and
(q) to execute all documents or instruments, perform all duties and powers, and do all things
for and on behalf of the Trust in all matters necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this Section 3.6 in a manner that
is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Regular
Trustees shall not take any action that is inconsistent with the purposes and functions of the
Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of the powers or the
authority of the Institutional Trustee set forth in Section 3.8.
13
Any expenses incurred by the Regular Trustees pursuant to this Section 3.6 shall be reimbursed
by the Debenture Issuer.
SECTION 3.7
Prohibition of Actions by the Trust and the Trustees
.
(a) The Trust shall not, and the Trustees (including the Institutional Trustee) shall not
cause the Trust to, engage in any activity other than as required or authorized by this
Declaration. In particular, the Trust shall not:
(i) invest any proceeds received by the Trust from holding the Debentures, but shall
promptly distribute all such proceeds to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to vary the Trust assets or the
terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership of, or beneficial
interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A) direct the time,
method and place of exercising any trust or power conferred upon the Debenture Trustee with
respect to the Debentures, (B) waive any past Default that is waivable under the Indenture,
(C) exercise any right to rescind or annul any declaration that the principal of all the
Debentures shall be due and payable or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be required unless
the Trust shall have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters to the effect that as a result of such action, the Trust will
not fail to be classified as a grantor trust for United States federal income tax purposes.
SECTION 3.8
Powers and Duties of the Institutional Trustee
.
(a) The legal title to the Debentures shall be owned by and held of record in the name of the
Institutional Trustee in trust for the benefit of the Holders of the Securities. The right, title
and interest of the Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with Section 5.6. Such
vesting and cessation of title shall be effective whether or not conveyancing documents with regard
to the Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its right, title and interest in the
Debentures to the Regular Trustees or to the Delaware Trustee (if the Institutional Trustee does
not also act as Delaware Trustee).
14
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust account (the
Institutional Trustee Account) in the name of and under the exclusive control of the
Institutional Trustee on behalf of the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Debentures held by the Institutional Trustee,
deposit such funds into the Institutional Trustee Account and make payments to the Holders
of the Capital Securities and Holders of the Common Securities from the Institutional
Trustee Account in accordance with Section 6.1. Funds in the Institutional Trustee Account
shall be held uninvested until disbursed in accordance with this Declaration. The
Institutional Trustee Account shall be an account that is maintained with a banking
institution the rating on whose long-term unsecured indebtedness assigned by a nationally
recognized statistical rating organization, as that term is defined for purposes of Rule
436(g)(2) under the Securities Act, is at least equal to the rating assigned to the Capital
Securities by a nationally recognized statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary or appropriate to
effect the redemption of the Capital Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the Regular Trustees in accordance
with the terms of the Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain Special Events or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform such duties as may be
specifically required of the Institutional Trustee pursuant to the terms of the Securities.
(e) Subject to Section 2.6, the Institutional Trustee shall take any Legal Action which arises
out of or in connection with a Default of which a Responsible Officer of the Institutional Trustee
has actual knowledge or the Institutional Trustees duties and obligations under this Declaration
or the Trust Indenture Act.
(f) The Institutional Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of the liquidation
distributed to the Holders of Securities pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has accepted that
appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise all of the rights, powers
and privileges of a holder of Debentures under the Indenture and, if a Default actually known to a
Responsible Officer of the Institutional Trustee occurs and is continuing, the Institutional
Trustee shall, for the benefit of Holders of the Securities, enforce its rights as holder
15
of the Debentures subject to the rights of the Holders pursuant to the terms of such
Securities, this Declaration, the Statutory Trust Act and the Trust Indenture Act.
(h) The Institutional Trustee may authorize one or more Persons (each, a Paying Agent) to
pay Distributions, redemption payments or liquidation payments on behalf of the Trust with respect
to all securities and any such Paying Agent shall comply with § 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Institutional Trustee at any time and a successor Paying
Agent or additional Paying Agents may be appointed at any time by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall have none of the duties,
liabilities, powers or the authority of the Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth in this Section 3.8 in a manner
that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the
Institutional Trustee shall not take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 3.3.
SECTION 3.9
Certain Duties and Responsibilities of the Institutional Trustee
.
(a) The Institutional Trustee, before the occurrence of any Default and after the curing of
all Defaults that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case a Default has occurred (that has not been
cured or waived pursuant to Section 2.6) of which a Responsible Officer of the Institutional
Trustee has actual knowledge, the Institutional Trustee shall exercise such of the rights and
powers vested in it by this Declaration, and use the same degree of care and skill in the exercise
of such rights and powers, as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the Institutional Trustee
from liability for its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of a Default and after the curing or waiving of all such
Defaults that may have occurred:
(A) the duties and obligations of the Institutional Trustee shall be determined
solely by the express provisions of this Declaration and the Institutional Trustee
shall not be liable except for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied covenants or obligations
shall be read into this Declaration against the Institutional Trustee; and
(B) in the absence of bad faith on the part of the Institutional Trustee, the
Institutional Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming to the requirements
16
of this Declaration; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to the
Institutional Trustee, the Institutional Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements of this
Declaration;
(ii) the Institutional Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer of the Institutional Trustee, unless it shall be proved
that the Institutional Trustee was negligent in ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the Holders of
not less than a Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the Institutional Trustee to expend
or risk its own funds or otherwise incur personal financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity reasonably
satisfactory to the Institutional Trustee against such risk or liability is not reasonably
assured to it;
(v) the Institutional Trustees sole duty with respect to the custody, safe keeping and
physical preservation of the Debentures and the Institutional Trustee Account shall be to
deal with such property in a similar manner as the Institutional Trustee deals with similar
property for its own account, subject to the protections and limitations on liability
afforded to the Institutional Trustee under this Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability for or with respect to
the value, genuineness, existence or sufficiency of the Debentures or the payment of any
taxes or assessments levied thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for any interest on any money
received by it except as it may otherwise agree with the Sponsor. Money held by the
Institutional Trustee need not be segregated from other funds held by it except in relation
to the Institutional Trustee Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible for monitoring the compliance
by the Regular Trustees or the Sponsor with their respective duties under this Declaration,
nor shall the Institutional Trustee be liable for any default or misconduct of the Regular
Trustees or the Sponsor.
SECTION 3.10
Certain Rights of Institutional Trustee
.
17
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees contemplated by this
Declaration shall be sufficiently evidenced by an Officers Certificate;
(iii) whenever in the administration of this Declaration, the Institutional Trustee
shall deem it desirable that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers Certificate which, upon receipt of such request, shall
be promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Institutional Trustee shall have no duty to see to any recording, filing or
registration of any instrument (including any financing or continuation statement or any
filing under tax or securities laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or other experts and the advice
or opinion of such counsel and experts with respect to legal matters or advice within the
scope of such experts area of expertise shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with such advice or opinion, such counsel may be counsel to the Sponsor or
any of its Affiliates, and may include any of its employees. The Institutional Trustee
shall have the right at any time to seek instructions concerning the administration of this
Declaration from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Institutional Trustee security and indemnity,
reasonably satisfactory to the Institutional Trustee, against the costs, expenses (including
attorneys fees and expenses and the expenses of the Institutional Trustees agents,
nominees or custodians) and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be requested by the
Institutional Trustee provided that nothing contained in this Section 3.10(a)(vi) shall be
taken to relieve the Institutional Trustee, upon the occurrence of a Default, of its
obligation to exercise the rights and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it may see fit;
18
(viii) the Institutional Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, custodians, nominees
or attorneys and the Institutional Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents hereunder shall bind
the Trust and the Holders of the Securities, and the signature of the Institutional Trustee
or its agents alone shall be sufficient and effective to perform any such action and no
third party shall be required to inquire as to the authority of the Institutional Trustee to
so act or as to its compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional Trustees or its agents
taking such action;
(x) whenever in the administration of this Declaration the Institutional Trustee shall
deem it desirable to receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Institutional Trustee (i) may request instructions
from the Holders of the Securities which instructions may only be given by the Holders of
the same proportion in liquidation amount of the Securities as would be entitled to direct
the Institutional Trustee under the terms of the Securities in respect of such remedy, right
or action, (ii) may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in conclusively relying
on or acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this Declaration, the Institutional
Trustee shall not be under any obligation to take any action that is discretionary under the
provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty or obligation on the
Institutional Trustee to perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the
Institutional Trustee shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Institutional Trustee shall be construed to be a
duty.
SECTION 3.11
Delaware Trustee
.
The Delaware Trustee is appointed to serve as the trustee of the Trust in the State of
Delaware for the sole purpose of satisfying the requirement of Section 3807(a) of the Statutory
Trust Act that the Trust have at least one trustee with a principal place of business in the State
of Delaware. It is understood and agreed by the parties hereto that the Delaware Trustee shall
have none of the duties or liabilities of the Regular Trustees or the Institutional Trustee. The
duties of the Delaware Trustee shall be limited to (i) accepting legal process served on the Trust
in the State of Delaware and (ii) the execution of any certificates required to be filed with the
Delaware Secretary of State which the Delaware Trustee is required to execute under Section 3811 of
the Statutory Trust Act. To the extent that, at law or in equity, the Delaware
19
Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust
or the Holders, it is hereby understood and agreed by the other parties hereto that such duties and
liabilities are replaced by the duties and liabilities of the Delaware Trustee expressly set forth
in this Declaration. The Delaware trustee shall have no liability for the acts or omissions of the
Regular Trustees or the Institutional Trustee. The Delaware Trustee shall be entitled to all of the
same rights, protections, indemnities and immunities under this Declaration and with respect to the
Trust as the Institutional Trustee.
SECTION 3.12
Execution of Documents
.
Unless otherwise determined by the Regular Trustees, and except as otherwise required by the
Statutory Trust Act, any Regular Trustee is authorized to execute on behalf of the Trust any
documents that the Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided, that the registration statement referred to in Section 3.6(b)(i), including any
amendments thereto, shall be signed by all of the Regular Trustees.
SECTION 3.13
Not Responsible for Recitals or Issuance of Securities
.
The recitals contained in this Declaration and the Securities shall be taken as the statements
of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The
Trustees make no representations as to the value or condition of the property of the Trust or any
part thereof. The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14
Duration of Trust
.
The Trust, unless dissolved and terminated pursuant to the provisions of Article VIII hereof,
shall have existence for sixty (60) years from the Closing Date.
SECTION 3.15
Mergers
.
(a) The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets substantially as an entirety to any corporation
or other body, except as described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if there are more than two, a
majority of the Regular Trustees and without the consent of the Holders of the Securities, the
Delaware Trustee or the Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided, that:
(i) such successor entity (the Successor Entity) either:
(A) expressly assumes all of the obligations of the Trust under the Securities;
or
(B) substitutes for the Securities other securities having substantially the
same terms as the Capital Securities (the Successor Securities) so long as
20
the Successor Securities rank the same as the Capital Securities rank with
respect to Distributions and payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the Successor Entity that
possesses the same powers and duties as the Institutional Trustee in its capacity as the
Holder of the Debentures;
(iii) the Capital Securities or any Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national securities exchange
or with any other organization on which the Capital Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement does not cause the Capital
Securities (including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or replacement does not adversely affect
the rights, preferences and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with respect to any dilution of
such Holders interests in the new entity as a result of such merger, consolidation,
amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation or replacement, the Trust has
received an opinion of a nationally recognized independent counsel to the Trust experienced
in such matters to the effect that:
(A) such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the Holders of the Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the Holders interest in the new entity); and
(B) following such merger, consolidation, amalgamation or replacement, neither
the Trust nor the Successor Entity will be required to register as an Investment
Company; and
(C) following such merger, consolidation, amalgamation or replacement, the
Trust (or the Successor Entity) will continue to be classified as a grantor trust
for United States federal income tax purposes; and
(viii) the Sponsor guarantees the obligations of such Successor Entity under the
Successor Securities at least to the extent provided by the Capital Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with the consent of Holders
of 100% in liquidation amount of the Securities, consolidate, amalgamate, merge with or into, or be
replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it, if in the opinion of a nationally recognized
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independent tax counsel experienced in such matters, such consolidation, amalgamation, merger
or replacement would cause the Trust or the Successor Entity to be classified as other than a
grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1
Sponsors Purchase of Common Securities
.
On the Closing Date, the Sponsor will purchase all of the Common Securities issued by the
Trust at the same time as the Capital Securities are sold.
SECTION 4.2
Responsibilities of the Sponsor
.
In connection with the issue and sale of the Capital Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a registration statement on Form
S-3 or on another appropriate form, or a registration statement under Rule 462(b) of the Securities
Act, including any pre-effective or post-effective amendments thereto, relating to the registration
under the Securities Act of the Capital Securities;
(b) to determine the States in which to take appropriate action to qualify or register for
sale all or part of the Capital Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New York Stock Exchange, any
other national stock exchange or the Nasdaq National Market for listing upon notice of issuance of
any Capital Securities;
(d) to prepare for filing by the Trust with the Commission a registration statement on Form
8-A, including any pre-effective or post-effective amendments thereto, relating to the registration
of the Capital Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing for the sale of the Capital
Securities.
ARTICLE V
TRUSTEES
SECTION 5.1
Number of Trustees
.
The number of Trustees initially shall be five (5), and:
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(a) at any time before the issuance of any Securities, the Sponsor may, by written instrument,
increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be increased or decreased
by vote of the Holders of a majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities,
provided, however
, that the number of Trustees shall in no event be less than two (2); provided
further that (1) one Trustee, in the case of a natural person, shall be a person who is a resident
of the State of Delaware or that, if not a natural person, shall be an entity which has its
principal place of business in the State of Delaware (the Delaware Trustee); (2) there shall be
at least one Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
Regular Trustee); and (3) one Trustee shall be the Institutional Trustee for so long as this
Declaration is required to qualify as an indenture under the Trust Indenture Act, and such Trustee
may also serve as Delaware Trustee if it meets the applicable requirements.
SECTION 5.2
Delaware Trustee
.
If required by the Statutory Trust Act, the Delaware Trustee shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of business in the State
of Delaware, and otherwise meets the requirements of applicable law,
provided
, that if the Institutional Trustee has its principal place of business in the State of
Delaware and otherwise meets the requirements of applicable law, then the Institutional Trustee
shall also be the Delaware Trustee and Section 3.11 shall have no application.
SECTION 5.3
Institutional Trustee; Eligibility
.
(a) There shall at all times be one Trustee that shall act as Institutional Trustee which
shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of the United States
of America or any State or Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published; and
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(iii) if the Trust is excluded from the definition of an Investment Company solely by
means of Rule 3a-7 and to the extent Rule 3a-7 requires a trustee having certain
qualifications to hold title to the eligible assets of the Trust, the Institutional
Trustee shall possess those qualifications.
(b) If at any time the Institutional Trustee shall cease to be eligible to so act under
Section 5.3(a), the Institutional Trustee shall immediately resign in the manner and with the
effect set forth in Section 5.6(c).
(c) If the Institutional Trustee has or shall acquire any conflicting interest within the
meaning of § 310(b) of the Trust Indenture Act, the Institutional Trustee and the Holders of the
Common Securities (as if such Holders were the obligor referred to in § 310(b) of the Trust
Indenture Act) shall in all respects comply with the provisions of § 310(b) of the Trust Indenture
Act.
(d) The Capital Securities Guarantee shall be deemed to be specifically described in this
Declaration for purposes of clause (i) of the first provision contained in Section 310(b) of the
Trust Indenture Act.
(e) The initial Institutional Trustee shall be as set forth in Section 5.5 hereof.
SECTION 5.4
Qualifications of Regular Trustees and Delaware Trustee Generally
.
Each Regular Trustee and the Delaware Trustee (unless the Institutional Trustee also acts as
Delaware Trustee) shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more Authorized Officers.
SECTION 5.5
Initial Trustees; Additional Powers of Regular Trustees
.
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(a)
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The initial Regular Trustees shall be:
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Saul Rosen
Eric L. Wentzel
John Gerspach
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The initial Delaware Trustee shall be:
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The Bank of New York (Delaware)
100 White Clay Center
Route 273
P. O. Box 6995
Newark, DE 19711
Attn: Corporate Trust Department
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The initial Institutional Trustee shall be:
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The Bank of New York
101 Barclay Street-8W
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New York, New York 10286
Attn: Global Trust Administration
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(b) Except as expressly set forth in this Declaration and except if a meeting of the Regular
Trustees is called with respect to any matter over which the Regular Trustees have power to act,
any power of the Regular Trustees may be exercised by, or with the consent of, any one such Regular
Trustee.
(c) Unless otherwise determined by the Regular Trustees, and except as otherwise required by
the Statutory Trust Act or applicable law, any Regular Trustee is authorized to execute on behalf
of the Trust any documents which the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6, provided, that the registration statement referred to in
Section 3.6, including any amendments thereto, shall be signed by all of the Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 his or her power for the purposes of signing any
documents which the Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6
Appointment, Removal and Resignation of Trustees
.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written instrument executed by the
Sponsor; and
(ii) in the case of the Regular Trustees, after the issuance of any Securities, by vote
of the Holders of a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities;
(iii) in the case of the Institutional Trustee and the Delaware Trustee, unless a
Default shall have occurred and be continuing after the issuance of any Securities, by a
vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; and
(iv) in the case of the Institutional Trustee and the Delaware Trustee, if a Default
shall have occurred and be continuing after the issuance of the Securities, by a vote of
the Holders of a Majority in liquidation amount of the Capital Securities voting as a class
at a meeting of the Holders of the Capital Securities.
(b) (i) The Trustee that acts as Institutional Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as Institutional
Trustee under Section 5.3 (a Successor Institutional Trustee) has been appointed and has accepted
such appointment by written instrument executed by such Successor Institutional Trustee and
delivered to the Regular Trustees and the Sponsor; and
25
(ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as Delaware
Trustee under Sections 5.2 and 5.4 (a Successor Delaware Trustee) has been appointed and
has accepted such appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor shall have been
appointed or until his death, removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect upon such delivery or
upon such later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Institutional Trustee shall be
effective:
(A) until a Successor Institutional Trustee has been appointed and has accepted
such appointment by instrument executed by such Successor Institutional Trustee and
delivered to the Trust, the Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely liquidated and the
proceeds thereof distributed to the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be
effective until a Successor Delaware Trustee has been appointed and has accepted such
appointment by instrument executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts to promptly appoint a
Successor Delaware Trustee or Successor Institutional Trustee as the case may be if the
Institutional Trustee or the Delaware Trustee delivers an instrument of resignation in accordance
with this Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware Trustee shall have been
appointed and accepted appointment as provided in this Section 5.6 within 60 days after delivery to
the Sponsor and the Trust of an instrument of resignation, the resigning Institutional Trustee or
Delaware Trustee, as applicable, may petition any court of competent jurisdiction for appointment
of a Successor Institutional Trustee or Successor Delaware Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper and prescribe, appoint a Successor
Institutional Trustee or Successor Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for the acts or omissions to
act of any Successor Institutional Trustee or Successor Delaware Trustee, as the case may be.
SECTION 5.7
Vacancies among Trustees
.
26
If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced
pursuant to Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of such vacancy by the Regular Trustees
or, if there are more than two, a majority of the Regular Trustees shall be conclusive evidence of
the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance
with Section 5.6.
SECTION 5.8
Effect of Vacancies
.
The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation,
incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust.
Whenever a vacancy in the number of Regular Trustees shall occur, until such vacancy is filled by
the appointment of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the Regular Trustees and
shall discharge all the duties imposed upon the Regular Trustees by this Declaration.
SECTION 5.9
Meetings
.
If there is more than one Regular Trustee, meetings of the Regular Trustees shall be held from
time to time upon the call of any Regular Trustee. Regular meetings of the Regular Trustees may be
held at a time and place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such
meeting. Notice of any telephonic meetings of the Regular Trustees or any committee thereof shall
be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting. The presence (whether in
person or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice of
such meeting except where a Regular Trustee attends a meeting for the express purpose of objecting
to the transaction of any activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the Regular Trustees may be
taken at a meeting by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a Quorum is present, or
without a meeting by the unanimous written consent of the Regular Trustees. In the event there is
only one Regular Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
SECTION 5.10
Delegation of Power
.
(a) Any Regular Trustee may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 his or her power for the purpose of executing any
documents contemplated in Section 3.6, including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing; and
27
(b) the Regular Trustees shall have power to delegate from time to time to such of their
number or to officers of the Trust the doing of such things and the execution of such instruments
either in the name of the Trust or the names of the Regular Trustees or otherwise as the Regular
Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 5.11
Merger, Conversion, Consolidation or Succession to Business
.
Any corporation into which the Institutional Trustee or the Delaware Trustee, as the case may
be, may be merged or converted or with which either may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Institutional Trustee or the
Delaware Trustee, as the case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Institutional Trustee or the Delaware
Trustee, as the case may be, hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1
Distributions
.
Holders shall receive Distributions (as defined herein) in accordance with the applicable
terms of the relevant Holders Securities. Distributions shall be made on the Capital Securities
and the Common Securities in accordance with the preferences set forth in their respective terms.
If and to the extent that the Debenture Issuer makes a payment of interest (including Compounded
Interest (as defined in the Indenture) and Additional Interest (as defined in the Indenture)),
premium and/or principal on the Debentures held by the Institutional Trustee (the amount of any
such payment being a Payment Amount), the Institutional Trustee shall and is directed to make a
distribution (a Distribution) of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1
General Provisions Regarding Securities
.
(a) The Regular Trustees shall on behalf of the Trust issue one class of capital securities
representing undivided beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the Capital Securities) and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as are set forth in
Annex I (the Common Securities). The Trust shall issue no securities or other interests in the
assets of the Trust other than the Capital Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by a Regular Trustee. Such
signature shall be the manual or facsimile signature of any present or any future Regular Trustee.
In case any Regular Trustee of the Trust who shall have signed any of the Securities shall cease to
be such Regular Trustee before the Certificates so signed shall be
28
delivered by the Trust, such Certificates nevertheless may be delivered as though the person
who signed such Certificates had not ceased to be such Regular Trustee; and any Certificate may be
signed on behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be the Regular Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such a Regular Trustee. Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such legends or endorsements
as the Regular Trustees may deem appropriate, or as may be required to comply with any law or with
any rule or regulation of any stock exchange on which Securities may be listed, or to conform to
usage.
(c) The consideration received by the Trust for the issuance of the Securities shall
constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration, the Securities so issued
shall be deemed to be validly issued, fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or a Capital Security Beneficial Owner
in accordance with the terms of this Declaration, shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by, this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1
Termination of Trust
.
(a) The Trust shall terminate:
(i) upon the bankruptcy of any Holder of the Common Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution or its equivalent with respect to
any Holder of the Common Securities or the Sponsor; the filing of a certificate of
cancellation with respect to the Trust or the revocation of the Holder of the Common
Securities or the Sponsors charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of any Holder of the Common
Securities, the Sponsor or the Trust;
(iv) Subject to obtaining any required regulatory approval, when all of the Securities
have been called for redemption and the amounts necessary for redemption thereof have been
paid to the Holders in accordance with the terms of the Securities;
(v) Subject to obtaining any required regulatory approval, when the Trust shall have
been dissolved in accordance with the terms of the Securities upon election by
29
the Sponsor of its right to terminate the Trust and distribute all of the Debentures to
the Holders of Securities in exchange for all of the Securities and all of the Debentures
shall have been distributed to the Holders of Securities in accordance with such election;
(vi) before the issuance of any Securities, with the consent of all of the Regular
Trustees and the Sponsor; or
(vii) upon the expiration of the term of the Trust set forth in Section 3.14.
(b) As soon as is practicable after the occurrence of an event referred to in Section 8.1(a),
and after satisfaction of liabilities to creditors of the Trust as required by applicable law,
including Section 3808 of the Statutory Trust Act, and subject to the terms set forth in Annex I,
the Delaware Trustee, when notified in writing of the completion of the winding up of the Trust in
accordance with the Statutory Trust Act, shall terminate the Trust by filing, at the expense of the
Sponsor, a certificate of cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1
Transfer of Securities
.
(a) Securities may only be transferred, in whole or in part, in accordance with the terms and
conditions set forth in this Declaration and in the terms of the Securities. Any transfer or
purported transfer of any Security not made in accordance with this Declaration shall be null and
void.
(b) Subject to this Article IX, Capital Securities shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party may only transfer Common
Securities to the Sponsor or a Related Party of the Sponsor; provided, that any such transfer is
subject to the condition precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such transfer would not cause more
than an insubstantial risk that:
(i) the Trust would not be classified for United States federal income tax purposes as
a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee would become an
Investment Company.
SECTION 9.2
Transfer of Certificates
.
The Regular Trustees shall provide for the registration of Certificates and of transfers of
Certificates, which will be effected without charge but only upon payment (with such
30
indemnity as the Regular Trustees may require) in respect of any tax or other government
charges that may be imposed in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be issued in the name
of the designated transferee or transferees. Every Certificate surrendered for registration of
transfer shall be accompanied by a written instrument of transfer in form satisfactory to the
Regular Trustees duly executed by the Holder or such Holders attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a Certificate. By
acceptance of a Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.3
Deemed Security Holders
.
The Trustees may treat the Person in whose name any Certificate shall be registered on the
books and records of the Trust as the sole holder of such Certificate and of the Securities
represented by such Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust shall have actual or other notice thereof.
SECTION 9.4
Book Entry Interests
.
Unless otherwise specified in the terms of the Capital Securities, the Capital Securities
Certificates, on original issuance, will be issued in the form of one or more, fully registered,
global Capital Security Certificates (each a Global Certificate), to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially
be registered on the books and records of the Trust in the name of Cede & Co., the nominee of DTC,
and no Capital Security Beneficial Owner will receive a definitive Capital Security Certificate
representing such Capital Security Beneficial Owners interests in such Global Certificates, except
as provided in Section 9.7. Unless and until definitive, fully registered Capital Security
Certificates (the Definitive Capital Security Certificates) have been issued to the Capital
Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and effect;
(b) the Trust and the Trustees shall be entitled to deal with the Clearing Agency for all
purposes of this Declaration (including the payment of Distributions on the Global Certificates and
receiving approvals, votes or consents hereunder) as the Holder of the Capital Securities and the
sole holder of the Global Certificates and shall have no obligation to the Capital Security
Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with any other provisions
of this Declaration, the provisions of this Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and agreements between such
Capital Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants
and receive and transmit payments of Distributions on the
31
Global Certificates to such Clearing Agency Participants. DTC will make book entry transfers
among the Clearing Agency Participants.
SECTION 9.5
Notices to Clearing Agency
.
Whenever a notice or other communication to the Capital Security Holders is required under
this Declaration, unless and until Definitive Capital Security Certificates shall have been issued
to the Capital Security Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give
all such notices and communications specified herein to be given to the Capital Security Holders to
the Clearing Agency, and shall have no notice obligations to the Capital Security Beneficial
Owners.
SECTION 9.6
Appointment of Successor Clearing Agency
.
If any Clearing Agency elects to discontinue its services as a securities depositary with
respect to the Capital Securities, the Regular Trustees may, in their sole discretion, appoint a
successor Clearing Agency with respect to such Capital Securities.
SECTION 9.7
Definitive Capital Security Certificates
.
If:
(a) a Clearing Agency elects to discontinue its services as a securities depositary with
respect to the Capital Securities and a successor Clearing Agency is not appointed within 90 days
after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to terminate the book entry
system through the Clearing Agency with respect to the Capital Securities,
then:
(c) Definitive Capital Security Certificates shall be prepared by the Regular Trustees on
behalf of the Trust with respect to such Capital Securities; and
(d) upon surrender of the Global Certificates by the Clearing Agency, accompanied by
registration instructions, the Regular Trustees shall cause Definitive Certificates to be delivered
to Capital Security Beneficial Owners in accordance with the instructions of the Clearing Agency.
Neither the Trustees nor the Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be protected in relying on, said instructions
of the Clearing Agency. The Definitive Capital Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and may have such letters, numbers or
other marks of identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock exchange on which
Capital Securities may be listed, or to conform to usage.
SECTION 9.8
Mutilated, Destroyed, Lost or Stolen Certificates
.
32
If:
(a) any mutilated Certificates should be surrendered to the Regular Trustees, or if the
Regular Trustees shall receive evidence to their satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or indemnity as may be
required by them to keep each of them harmless.
then, in the absence of notice that such Certificate shall have been acquired by a bona fide
purchaser, any Regular Trustee on behalf of the Trust shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this Section 9.8, the
Regular Trustees may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall
be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1
Liability
.
(a) Except as expressly set forth in this Declaration, the Capital Securities Guarantee and
the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital contributions (or
any return thereon) of the Holders of the Securities which shall be made solely from assets
of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any deficit upon
dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the debts and obligations
of the Trust (other than with respect to the Securities) to the extent not satisfied out of the
Trusts assets.
(c) Pursuant to § 3803(a) of the Statutory Trust Act, the Holders of the Capital Securities
shall be entitled to the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State of Delaware.
SECTION 10.2
Exculpation
.
(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Trust or any Covered Person for any loss, damage or claim incurred
33
by reason of any act or omission performed or omitted by such Indemnified Person in good faith
on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this Declaration or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of
such Indemnified Persons gross negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Trust and upon such information, opinions, reports or statements presented to the Trust by
any Person as to matters the Indemnified Person reasonably believes are within such other Persons
professional or expert competence and who has been selected with reasonable care by or on behalf of
the Trust, including information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be paid.
SECTION 10.3
Fiduciary Duty
.
(a) To the extent that, at law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other
Covered Person for its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified
Person otherwise existing at law or in equity (other than the duties imposed on the Institutional
Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated herein or therein
provides that an Indemnified Person shall act in a manner that is, or provides terms that
are, fair and reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action or provide such
terms, considering in each case the relative interest of each party (including its own interest) to
such conflict, agreement, transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable generally accepted
accounting practices or principles. In the absence of bad faith by the Indemnified Person, the
resolution, action or term so made, taken or provided by the Indemnified Person shall not
constitute a breach of this Declaration or any other agreement contemplated herein or of any duty
or obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or required to make a
decision:
34
(i) in its discretion or under a grant of similar authority, the Indemnified Person
shall be entitled to consider such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any consideration to any interest of
or factors affecting the Trust or any other Person; or
(ii) in its good faith or under another express standard, the Indemnified Person
shall act under such express standard and shall not be subject to any other or different
standard imposed by this Declaration or by applicable law.
SECTION 10.4
Indemnification
.
(a) (i) The Debenture Issuer shall indemnify, to the full extent permitted by law, any Company
Indemnified Person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason of the fact that he
is or was a Company Indemnified Person against expenses (including attorneys fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo
contendere
or its equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent permitted by law, any
Company Indemnified Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best interests of the
Trust and except that no such indemnification shall be made in respect of any claim, issue
or matter as to which such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which such Court of
Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be successful on the merits
or otherwise (including dismissal of an action without prejudice or the settlement of an
action without admission of liability) in defense of any action, suit or proceeding referred
to in paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any claim, issue or
matter therein, he shall be indemnified, to the full extent permitted by
35
law, against expenses (including attorneys fees) actually and reasonably incurred by
him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this Section 10.4(a) (unless
ordered by a court) shall be made by the Debenture Issuer only as authorized in the specific
case upon a determination that indemnification of the Company Indemnified Person is proper
in the circumstances because he has met the applicable standard of conduct set forth in
paragraphs (i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not parties to such
action, suit or proceeding, (2) if such a quorum is not obtainable, or, even if obtainable,
if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a
written opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be indemnified by the
Debenture Issuer as authorized in this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Regular Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security Holder at the time such determination is
made, such Company Indemnified Person acted in bad faith or in a manner that such person did
not believe to be in or not opposed to the best interests of the Trust, or, with respect to
any criminal proceeding, that such Company Indemnified Person believed or had reasonable
cause to believe his conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the Trust or its
Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided by, or granted pursuant
to, the other paragraphs of this Section 10.4(a) shall not be deemed exclusive of any other
rights to which those seeking indemnification and advancement of expenses may be entitled
under any agreement, vote of stockholders or disinterested directors of the Debenture Issuer
or Capital Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be provided by a contract
between the Debenture Issuer and each Company Indemnified Person who serves in such capacity
at any time while this Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then existing.
36
(vii) The Debenture Issuer may purchase and maintain insurance on behalf of any person
who is or was a Company Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such, whether or not
the Debenture Issuer would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to the Trust shall include, in
addition to the resulting or surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or merger, so that any person who
is or was a director, trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee, officer, employee
or agent of another entity, shall stand in the same position under the provisions of this
Section 10.4(a) with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or granted pursuant
to, this Section 10.4(a) shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Institutional Trustee, (ii) the Delaware
Trustee, (iii) any Affiliate of the Institutional Trustee and the Delaware Trustee, and (iv) any
officers, directors, shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee and the Delaware Trustee (each of the Persons in
(i) through (iv) being referred to as a Fiduciary Indemnified Person) for, and to hold each
Fiduciary Indemnified Person harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the acceptance or
administration or the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers or duties hereunder.
The obligation to indemnify as set forth in this Section 10.4(b) shall survive the resignation or
removal of the Institutional Trustee or the Delaware Trustee, as the case may be, and the
satisfaction and discharge of this Declaration.
SECTION 10.5
Outside Businesses
.
Any Covered Person, the Sponsor, the Delaware Trustee and the Institutional Trustee may engage
in or possess an interest in other business ventures of any nature or description, independently or
with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or improper. No Covered
Person, the Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if such opportunity is of
a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Institutional Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend to
37
others any such particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other obligations of the
Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1
Fiscal Year
.
The fiscal year (Fiscal Year) of the Trust shall be the calendar year, or such other year as
is required by the Code.
SECTION 11.2
Certain Accounting Matters
.
(a) At all times during the existence of the Trust, the Regular Trustees shall keep, or cause
to be kept, full books of account, records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for United States
federal income tax purposes. The books of account and the records of the Trust shall be examined
by and reported upon as of the end of each Fiscal Year of the Trust by a firm of independent
certified public accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to each of the Holders of
Securities, to the extent, if any, required by the Trust Indenture Act, within 90 days after the
end of each Fiscal Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements of income or loss;
(c) The Regular Trustees shall cause to be duly prepared and delivered to each of the Holders
of Securities, any annual United States federal income tax information statement required by the
Code, containing such information with regard to the Securities held by each Holder as is required
by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver all such statements
within 30 days after the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed with the appropriate taxing
authority, an annual United States federal income tax return, on a Form 1041 or such other form
required by United States federal income tax law, and any other annual income tax returns required
to be filed by the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3
Banking.
The Trust shall maintain one or more bank accounts in the name and for the sole benefit of the
Trust; provided, however, that all payments of funds in respect of the Debentures
38
held by the Institutional Trustee shall be made directly to the Institutional Trustee Account
and no other funds of the Trust shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees; provided, however, that
the Institutional Trustee shall designate the signatories for the Institutional Trustee Account.
SECTION 11.4
Withholding.
The Trust and the Regular Trustees shall comply with all withholding requirements under United
States federal, state and local law. The Trust shall request, and the Holders shall provide to the
Trust, such forms or certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be requested by the
Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations.
The Regular Trustees shall file required forms with applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder, shall remit amounts withheld with
respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions or allocations to
any Holder, the amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Holder. In the event of any claimed overwithholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be withheld was not
withheld from actual Distributions made, the Trust may reduce subsequent Distributions by the
amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1
Amendments.
(a) Except as otherwise provided in this Declaration or by any applicable terms of the
Securities, this Declaration may only be amended by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular Trustees a majority of
the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties, obligations or immunities of
the Institutional Trustee, the Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties, obligations or immunities of
the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment shall be void and
ineffective:
(i) unless, in the case of any proposed amendment, the Institutional Trustee shall have
first received an Officers Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration (including the
terms of the Securities);
39
(ii) unless, in the case of any proposed amendment which affects the rights, powers,
duties, obligations or immunities of the Institutional Trustee, the Institutional Trustee
shall have first received:
(A) an Officers Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or the Trust) that
such amendment is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for purposes of United
States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the Institutional
Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company required to be
registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that remain outstanding, any
amendment that would adversely affect the rights, privileges or preferences of any Holder of
Securities may be effected only with such additional requirements as may be set forth in the terms
of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without the consent of all of
the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities and;
(f) the rights of the Holders of the Common Securities under Article V to increase or decrease
the number of, and appoint and remove Trustees shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities; and
(g) subject to Section 12.1(c), this Declaration may be amended without the consent of the
Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that may be defective or
inconsistent with any other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of the Sponsor;
40
(iv) to conform to any change in Rule 3a-5 or written change in interpretation or
application of Rule 3a-5 by any legislative body, court, government agency or regulatory
authority which amendment does not have a material adverse effect on the right, preferences
or privileges of the Holders; and
(v) to modify, eliminate and add to any provision of the Declaration to such extent as
may be reasonably necessary to effectuate any of the foregoing or to otherwise comply with
applicable law.
SECTION 12.2
Meetings of the Holders of Securities; Action by Written Consent
.
(a) Meetings of the Holders of any class of Securities may be called at any time by the
Regular Trustees (or as provided in the terms of the Securities) to consider and act on any matter
on which Holders of such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Regular Trustees shall call a meeting of the
Holders of such class if directed to do so by the Holders of Securities representing at least 10%
in liquidation amount of such class of Securities. Such direction shall be given by delivering to
the Regular Trustees one or more calls in a writing stating that the signing Holders of Securities
wish to call a meeting and indicating the general or specific purpose for which the meeting is to
be called. Any Holders of Securities calling a meeting shall specify in writing the Security
Certificates held by the Holders of Securities exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the Securities, the following
provisions shall apply to meetings of Holders of Securities:
(i) notice of any such meeting shall be given to all the Holders of Securities having
a right to vote thereat at least 7 days and not more than 60 days before the date of such
meeting. Whenever a vote, consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, such vote, consent or approval may be given
at a meeting of the Holders of Securities. Any action that may be taken at a meeting of
the Holders of Securities may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary to authorize or
take such action at a meeting at which all Holders of Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders of Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting shall be returned to
the Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to act for it by proxy on all
matters in which a Holder of Securities is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. No proxy shall be valid
41
after the expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation Law of the State
of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust
were a Delaware corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be conducted by the Regular
Trustees or by such other Person that the Regular Trustees may designate; and
(iv) unless the Statutory Trust Act, this Declaration, the terms of the Securities,
the Trust Indenture Act or the listing rules of any stock exchange on which the Capital
Securities are then listed or trading, otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting at which any
matter is to be voted on by any Holders of Securities, waiver of any such notice, action by
consent without a meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1
Representations and Warranties of Institutional Trustee
.
The Trustee that acts as initial Institutional Trustee represents and warrants to the Trust
and to the Sponsor at the date of this Declaration, and each Successor Institutional Trustee
represents and warrants to the Trust and the Sponsor at the time of the Successor Institutional
Trustees acceptance of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a banking corporation with trust powers, duly organized,
validly existing and in good standing under the laws of the State of New York, with trust power and
authority to execute and deliver, and to carry out and perform its obligations under the terms of,
this Declaration;
(b) the execution, delivery and performance by the Institutional Trustee of the Declaration
has been duly authorized by all necessary corporate action on the part of the Institutional
Trustee. The Declaration has been duly executed and delivered by the Institutional Trustee, and it
constitutes a legal, valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors rights generally and to general principles
of equity and the discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
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(c) the execution, delivery and performance of the Declaration by the Institutional Trustee
does not conflict with or constitute a breach of the Articles of Organization or By-laws of the
Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with or notice to, any State or
Federal banking authority is required for the execution, delivery or performance by the
Institutional Trustee, of the Declaration.
SECTION 13.2
Representations and Warranties of Delaware Trustee
.
The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustees acceptance of
its appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation with trust powers, duly organized,
validly existing and in good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations under the terms of,
the Declaration.
(b) The Delaware Trustee has been authorized to perform its obligations under the Certificate
of Trust and the Declaration. The Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws
affecting creditors rights generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(c) No consent, approval or authorization of, or registration with or notice to, any State or
Federal banking authority is required for the execution, delivery or performance by the Delaware
Trustee, of the Declaration.
(d) The Delaware Trustee is an entity which maintains its principal place of business in the
State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1
Notices
.
All notices provided for in this Declaration shall be in writing, duly signed by the party
giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail,
as follows:
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(a) if given to the Trust, in care of the Regular Trustees at the Trusts mailing address set
forth below (or such other address as the Trust may give notice of to the Holders of the
Securities):
Citigroup Capital XVIII
c/o Citigroup Inc.
153 East 53rd Street
New York, NY 10043
Attention: Sallie Krawcheck
(b) if given to the Delaware Trustee, at the mailing address set forth below (or such other
address as Delaware Trustee may give notice of to the Holders of the Securities):
The Bank of New York (Delaware)
100 White Clay Center
Route 273
P. O. Box 6995
Newark, DE 19711
Attention: Corporate Trust Department
(c) if given to the Institutional Trustee, at the mailing address set forth below (or such
other address as the Institutional Trustee may give notice of to the Holders of the Securities):
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(d) if given to the Holder of the Common Securities, at the mailing address of the Sponsor set
forth below (or such other address as the Holder of the Common Securities may give notice of to the
Trust):
Citigroup Inc.
153 East 53rd Street
New York, NY 10043
Attention: Charles E. Wainhouse
(e) if given to any other Holder, at the address set forth on the books and records of the
Trust.
All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
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SECTION 14.2
Governing Law
.
This Declaration and the rights of the parties hereunder shall be governed by and interpreted
in accordance with the laws of the State of Delaware and all rights and remedies shall be governed
by such laws without regard to principles of conflict of laws.
SECTION 14.3
Intention of the Parties
.
It is the intention of the parties hereto that the Trust be classified for United States
federal income tax purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 14.4
Headings.
Headings contained in this Declaration are inserted for convenience of reference only and do
not affect the interpretation of this Declaration or any provision hereof.
SECTION 14.5
Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all covenants and agreements in this
Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6
Partial Enforceability.
If any provision of this Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or the application of such
provision to Persons or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7
Counterparts
.
This Declaration may contain more than one counterpart of the signature page and this
Declaration may be executed by the affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be read as though one,
and they shall have the same force and effect as though all of the signers had signed a single
signature page.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as of the day
and year first above written.
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Name: Eric L. Wentzel
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Title: Regular Trustee
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THE BANK OF NEW YORK(DELAWARE),
as Delaware Trustee
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By:
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Name:
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Title:
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THE BANK OF NEW YORK, as Institutional
Trustee
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By:
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Name:
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Title:
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CITIGROUP INC., as Sponsor
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By:
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Name: Charles E. Wainhouse
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Title: Assistant Treasurer
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ANNEX I
TERMS OF
% CAPITAL SECURITIES
% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust, dated as of , 20 (as amended from time to time, the Declaration), the designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in the Prospectus
referred to below):
1.
Designation and Number
.
(a)
Capital Securities
. Capital Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of dollars ($ ), and a liquidation amount with respect to the assets of the Trust of
$25 per capital security, are hereby designated for the purposes of identification only as %
Capital Securities (the Capital Securities). The Capital Security Certificates evidencing the
Capital Securities shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom
or practice or to conform to the rules of any stock exchange on which the Capital Securities are
listed.
(b)
Common Securities
. Common Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of dollars ($ ),
and a liquidation amount with respect to the assets of the Trust of $25 per common security, are
hereby designated for the purposes of identification only as % Common Securities (the
Common Securities). The Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or practice.
2.
Distributions
.
(a) Distributions payable on each Security will be fixed at a rate per annum of
% (the Coupon Rate) of the stated liquidation amount of $25 per Security, such
rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears beyond the first date such Distributions are payable (or would be payable,
if not for any Extension Period (as defined below) or default by the Debenture Issuer on the
Debentures) will bear interest thereon compounded quarterly at the Coupon Rate (to the extent
permitted by applicable law). The term Distributions as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly Distribution period
on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full
quarterly
I-1
Distribution period for which Distributions are computed, Distributions will be computed on
the basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue from and including , 20 , and will be payable quarterly in arrears, on , ,
, and of each year, commencing on , 20 . When, as and if
available for payment, Distributions will be made by the Institutional Trustee, except as otherwise
described below. The Debenture Issuer has the right under the Indenture to defer payments of
interest on the Debentures by extending the interest payment period from time to time on the
Debentures for a period not exceeding 40 consecutive quarters (each an Extension Period), during
which Extension Period no interest shall be due and payable on the Debentures, provided, that no
Extension Period may extend beyond the date of maturity of the Debentures. As a consequence of the
Debenture Issuers extension of the interest payment period, quarterly Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate compounded quarterly during
any such Extension Period. In the event that the Debenture Issuer exercises its right to extend
the interest payment period, then (a) the Debenture Issuer and any subsidiary of the Debenture
Issuer shall not declare or pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its capital stock or make
any guarantee payment with respect thereto (other than (i) purchases, redemptions or other
acquisitions of shares of capital stock of the Debenture Issuer in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) purchases of shares of common stock of the Debenture Issuer pursuant
to a contractually binding requirement to buy stock existing prior to the commencement of the
extension period, including under a contractually binding stock repurchase plan (iii) as a result
of an exchange or conversion of any class or series of the Debenture Issuers capital stock for any
other class or series of the Debenture Issuers capital stock, (iv) the purchase of fractional
interests in shares of the Debenture Issuers capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged), or (v) the purchase
of the Debenture Issuers capital stock in connection with the distribution thereof; and (b) the
Debenture Issuer and any subsidiary of the Debenture Issuer will not make any payment of interest,
principal or premium on, or repay, repurchase or redeem, any debt securities or guarantees issued
by the Debenture Issuer that rank pari passu with or junior to the Debentures (other than (i) any
payment of current or deferred interest on securities that rank pari passu with the Debentures that
is made pro rata to the amounts due on such securities (including the Debentures), provided that
any such payments of deferred interest are made in accordance with the Alternative Payment
Mechanism (as defined below) or (ii) any payments of deferred interest on securities that rank pari
passu with the Debentures that, if not made, would give rise to an event of default permitting
acceleration of such securities. The foregoing, however, will not apply to any stock dividends paid
by the Debenture Issuer where the dividend stock is the same stock as that on which the dividend is
being paid. In addition, the Debenture Issuer may pay current interest at any time with cash from
any source. Prior to the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided, that such Extension Period, together with all such previous
and further extensions thereof, may not exceed 40 consecutive quarters; provided further, that no
Extension Period may extend beyond the maturity of the Debentures. Payments of deferred
Distributions and accrued interest thereon will be payable to Holders
as they appear
I-2
on the books and records of the Trust on the first record date before the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to the above requirements. The
Regular Trustees will give notice to each Holder of any Extension Period upon their receipt of
notice thereof from the Debenture Issuer.
(c) If the Debenture Issuer does not pay all accrued and unpaid interest on the Debentures for
a period of 20 consecutive quarterly periods or if the Debenture Issuer pays current interest on
the Debentures during an Extension Period, it will be subject to the Alternative Payment
Mechanism, whereby the Debenture Issuer will be obliged to continuously use its commercially
reasonable efforts to sell shares of its common stock (including treasury shares). The Debenture
Issuer will notify the Board of Governors of the Federal Reserve Bank and the Federal Reserve Bank
of New York, or its successor as the Debenture Issuers primary federal banking regulator
(collectively, the Federal Reserve) (1) of the commencement of any Extension Period, (2) of the
fifth anniversary of the commencement of an Extension period or earlier payment of current interest
on the Debentures during an Extension Period and (3) of its intention to sell shares of its common
stock and/or Qualified Warrants (as defined below) and to apply the net proceeds from such sale to
pay deferred interest on the Debentures at least 25 Business Days in advance of the relevant
payment date (or such longer period as may be required by the Federal Reserve or by other
supervisory action). The Debenture Issuer may pay accrued and unpaid interest on the Debentures on
or prior to the next interest payment date using only the net proceeds (after underwriters or
placement agents fees, commissions or discounts and other expenses relating to the issuances) of
such sales received by the Debenture Issuer during the 180-day period prior to that interest
payment date, except that the Debenture Issuer may pay accrued and unpaid interest on the
Debentures with cash from any source (i) upon the maturity of the Debentures, (ii) during the
occurrence and continuation of a Supervisory Event (as defined in the Indenture) or (iii) if an
Event of Default and Acceleration under the Indenture shall have occurred and be continuing.
Corresponding Distributions will be made on the Securities. If (1) a Supervisory Event or (2) a
Market Disruption Event (as defined in the Indenture) shall have occurred and be continuing; then
the Debenture Issuer will be excused from its obligation to use its commercially reasonable efforts
to sell its common stock and apply the net proceeds of such sale to pay accrued and unpaid interest
on the Debentures. During the occurrence of a Supervisory Event, the Debenture Issuer will, no
later than 30 Business Days prior to each interest payment date, notify the Federal Reserve of its
intention to both (1) issue or sell shares of common stock and (2) to apply the net proceeds from
such sale to pay deferred interest on the Debentures, and shall only take any such actions if the
Federal Reserve does not disapprove of any such actions within ten (10) Business Days after the
Debenture Issuer gives such notice to the Federal Reserve. The obligation of the Debenture Issuer
to use commercially reasonable efforts to sell its common stock and apply the net proceeds of such
sale to pay accrued and unpaid interest on the Debentures shall resume at such time as no Market
Disruption Event or Supervisory Event exists or is continuing. The Debenture Issuer is not
permitted to sell shares of common stock in excess of a number of shares of common stock which at
, 20 is equal to (the Share Cap Amount), for the purpose of satisfying the
Alternative Payment Mechanism or otherwise paying deferred interest on the Debentures then
outstanding. If the issued and outstanding shares of common stock shall have been changed into a
different number of shares or a different class by reason of any stock split, reverse stock split,
stock dividend, reclassification, recapitalization, split-up,
combination,
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exchange of shares or other similar transaction, then the Share Cap Amount shall be
correspondingly adjusted. The Debenture Issuer shall increase the Share Cap Amount (including
through the increase of its authorized share capital, if necessary) to an amount that would allow
the Debenture Issuer to raise sufficient proceeds to satisfy its obligations to pay deferred
interest in full at the end of the first year of an Extension Period (and on each subsequent
anniversary of the end of the first year of an Extension Period to the extent that an Extension
Period would last more than one year), if the then-current Share Cap Amount would not allow the
Debenture Issuer to raise sufficient proceeds to satisfy its obligations to pay deferred interest
(including compounded interest to that date) assuming a price per share equal to the average
trading price of the Debenture Issuers common shares over the ten-trading-day period preceding
such date; provided that the Debenture Issuer will not be obligated to increase the Share Cap
Amount above shares. Until the tenth anniversary of the commencement of an Extension
Period, a Default will occur if the Debenture Issuer does not increase the Share Cap Amount to an
amount that is greater than shares when required to do so as described above; provided that
no Default will occur if the Debenture Issuer has increased the share cap amount to
shares. The Debenture Issuer will not be obligated to issue common stock prior to the fifth
anniversary of the commencement of an Extension Period if the gross proceeds of any issuance of
common stock and Qualified Warrants applied to pay deferred interest on the Debentures pursuant to
the Alternative Payment Mechanism, together with the gross proceeds of all prior issuances of
common stock and Qualified Warrants applied since the commencement of the Extension Period, would
exceed an amount equal to 2% of the product of (1) the average of the Current Stock Market Prices
(as defined in the Indenture) of the Debenture Issuers common stock on the 10 consecutive trading
days ending on the fourth trading day immediately preceding the date of issuance by the Debenture
Issuer of common stock applied to pay deferred interest on the Debentures pursuant to the
Alternative Payment Mechanism and (2) the total number of issued and outstanding shares of the
Debenture Issuers common stock as of the date of the Debenture Issuers publicly available
consolidated financial statements (the APM Maximum Obligation). Once the Debenture Issuer reaches
the APM Maximum Obligation for an Extension Period, the Debenture Issuer will not be obligated to
issue more common stock or Qualified Warrants in satisfaction of the Alternative Payment Mechanism
prior to the fifth anniversary of the commencement of an Extension Period even if the Current Stock
Market Price of the Debenture Issuers common stock or the number of outstanding shares of its
common stock subsequently increase. The APM Maximum Obligation will cease to apply following the
fifth anniversary of the commencement of an Extension Period, at which point the Debenture Issuer
must repay any deferred interest, regardless of the time at which it was deferred, using proceeds
from sales of the Debenture Issuers common stock, including treasury shares, subject to any Market
Disruption Event, Supervisory Event, and the Share Cap Amount. If the APM Maximum Obligation has
been reached during an Extension Period and the Debenture Issuer subsequently repays all deferred
interest, the APM Maximum Obligation will cease to apply at the termination of such Extension
Period and will not apply again unless and until the Debenture Issuer starts a new Extension
Period. Qualified Warrants means warrants for the Debenture Issuers common stock on their date
of issuance that (1) have an exercise price greater than the Current Stock Market Price of the
Debenture Issuers common stock, and (2) the Debenture Issuer is not entitled to redeem for cash
and the holders are not entitled to require the Debenture Issuer to repurchase for cash in any
circumstances.
I-4
(d) Distributions on the Securities will be payable to the Holders thereof as they appear on
the books and records of the Trust at the close of business on the relevant record dates. While
the Capital Securities remain in book-entry only form, the relevant record dates shall be one
Business Day prior to the relevant payment dates which payment dates shall correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Capital Securities will be made
as described under the heading Description of the Capital Securities Book-Entry Only Issuance
in the Prospectus dated , 20 (the Prospectus), of the Trust included in the
Registration Statement on Form S-3 of the Sponsor, the Trust and certain other statutory trusts.
The relevant record dates for the Common Securities shall be the same record date as for the
Capital Securities. If the Capital Securities shall not continue to remain in book-entry only
form, the relevant record dates for the Capital Securities shall conform to the rules of any
securities exchange on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be more than 14 days but less than 60 days prior to the
relevant payment dates, which payment dates shall correspond to the interest payment dates on the
Debentures. Distributions payable on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Debenture Issuer having failed to make a payment
under the Debentures, will cease to be payable to the Person in whose name such Securities are
registered on the relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on which Distributions are
payable on the Securities is not a Business Day, then payment of the Distribution payable on such
date will be made on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(e) In the event that there is any money or other property held by or for the Trust that is
not accounted for hereunder, such property shall be distributed Pro Rata (as defined herein) among
the Holders of the Securities.
3.
Liquidation Distribution Upon Dissolution
.
(a) In the event of any voluntary or involuntary dissolution, winding-up or termination of the
Trust, the Holders of the Securities on the date of the dissolution, winding-up or termination, as
the case may be, will be entitled to receive out of the assets of the Trust available for
distribution to Holders of Securities after satisfaction of liabilities of creditors, distributions
in an amount equal to the aggregate of the stated liquidation amount of $25 per Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount being the Liquidation
Distribution), unless, in connection with such dissolution, winding-up or termination, Debentures
in an aggregate principal amount equal to the aggregate stated liquidation amount of, with an
interest rate equal to the Coupon Rate, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on, such Securities outstanding at such time, have been
distributed on a Pro Rata basis to the Holders of the Securities in exchange for such Securities.
Prior to any such Liquidation Distribution, the Debenture Issuer will obtain any required
regulatory approval.
I-5
(b) If, upon any such dissolution, the Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on the Securities shall be paid on a
Pro Rata basis.
4.
Redemption and Distribution
.
(a) Upon the repayment of the Debentures in whole or in part, whether at maturity or upon
redemption (either at the option of the Debenture Issuer or pursuant to a Special Event as
described below), the proceeds from such repayment or payment shall be simultaneously applied to
redeem Securities having an aggregate liquidation amount equal to the aggregate principal amount of
the Debentures so repaid or redeemed at a redemption price of $25 per Security plus an amount equal
to accrued and unpaid Distributions thereon at the date of the redemption, payable in cash (the
Redemption Price). Holders shall be given not less than 30 nor more than 60 days notice of such
redemption. Prior to any such redemption, the Debenture Issuer will obtain any required regulatory
approval.
(b) If fewer than all the outstanding Securities are to be so redeemed, the Securities will be
redeemed Pro Rata and the Capital Securities to be redeemed will be as described in Section
4(f)(ii) below.
(c) Subject to obtaining any required regulatory approval, if, at any time, a Tax Event, an
Investment Company Event or a Regulatory Capital Event (each as defined below, and each a Special
Event) shall occur and be continuing, Citigroup shall have the right, upon not less than 30 nor
more than 60 days notice, to redeem the Debentures, in whole or in part, for cash within 90 days
following the occurrence of such Special Event, and, following such redemption, Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the Debentures so redeemed
shall be redeemed by the Trust at the Redemption Price on a Pro Rata basis; provided, however, that
if at the time there is available to Citigroup or the Trust the opportunity to eliminate, within
such 90-day period, the Special Event by taking some ministerial action, such as filing a form or
making an election or pursuing some other similar reasonable measure that will have no adverse
effect on the Trust, Citigroup or the holders of the Securities, then Citigroup or the Trust will
pursue such measure in lieu of redemption.
Tax Event means that the Regular Trustees shall have received an opinion of a nationally
recognized independent tax counsel experienced in such matters (a Tax Event Opinion) to the
effect that, as a result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination on or after the date of the
Prospectus), in either case after the date of the Prospectus, there is more than an insubstantial
risk that (i) the Trust would be subject to United States federal income tax with respect to
interest accrued or received on the Debentures, (ii) the Trust would be subject to more than a de
minimis amount of other taxes, duties or other governmental charges, or (iii) interest payable to
the Trust
I-6
on the Debentures would not be deductible, in whole or in part, by the Debenture Issuer for
United States federal income tax purposes.
Investment Company Event means that the Regular Trustees shall have received an opinion of a
nationally recognized independent counsel experienced in practice under the Investment Company Act
(an Investment Company Event Opinion) to the effect that, as a result of the occurrence of a
change in law or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory authority (a Change
in 1940 Act Law), there is a more than an insubstantial risk that the Trust is or will be
considered an Investment Company which is required to be registered under the Investment Company
Act, which Change in 1940 Act Law becomes effective on or after the date of the Prospectus.
Regulatory Capital Event means a determination by Citigroup, based on an opinion of counsel
experienced in such matters (who may be an employee of Citigroup or any of its affiliates), that,
as a result of (a) any amendment to, clarification of or change (including any announced
prospective change) in applicable laws or regulations or official interpretations thereof or
policies with respect thereto or (b) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment, clarification, change,
pronouncement or decision is announced or is effective after the date of the Prospectus, there is
more than an insubstantial risk that the Capital Securities will no longer constitute Tier I
Capital of Citigroup or any bank holding company of which Citigroup is a subsidiary (or its
equivalent) for purposes of the capital adequacy guidelines or policies of the Board of Governors
of the Federal Reserve System or its successor as Citigroups primary federal banking regulator,
provided, however that the distribution of the Debentures in connection with the liquidation of the
Trust shall not in and of itself constitute a Regulatory Capital Event unless such liquidation
shall have occurred in connection with a Tax Event or an Investment Company Event.
On and from the date fixed by the Regular Trustees for any distribution of the Debentures and
dissolution of the Trust: (i) the Securities will no longer be deemed to be outstanding, (ii) DTC
or its nominee (or any successor Clearing Agency or its nominee), as the record Holder of the
Capital Securities, will receive a registered global certificate or certificates representing the
Debentures to be delivered upon such distribution and (iii) any certificates representing
Securities, except for certificates representing Capital Securities held by DTC or its nominee (or
any successor Clearing Agency or its nominee), will be deemed to represent beneficial interests in
the Debentures having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such certificates are presented
to the Debenture Issuer or its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding Securities unless all accrued and
unpaid Distributions have been paid on all Securities for all quarterly Distribution periods
terminating on or before the date of redemption.
(e) If the Debentures are distributed to the Holders of the Securities, pursuant to the terms
of the Indenture, the Debenture Issuer will use its best efforts to cause the
I-7
Debentures to be listed on the New York Stock Exchange or on such other exchange as the
Capital Securities were listed immediately prior to the distribution of the Debentures.
(f) Redemption or Distribution procedures will be as follows:
(i) Notice of any redemption of, or notice of distribution of Debentures in exchange
for the Securities (a Redemption/Distribution Notice) will be given by the Trust by mail
to the Institutional Trustee and the Delaware Trustee and to each Holder of the Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed
for redemption or exchange thereof which, in the case of a redemption, will be the date
fixed for redemption of the Debentures. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to this Section
4(f)(i), a Redemption/ Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to the Holders of the
Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of the
Securities at the address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof
with respect to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are to be redeemed,
the Securities to be redeemed shall be redeemed Pro Rata from each Holder of Capital
Securities, it being understood that, in respect of Capital Securities registered in the
name of and held of record by DTC or its nominee (or any successor Clearing Agency or its
nominee), the distribution of the proceeds of such redemption will be made to each Clearing
Agency Participant (or Person on whose behalf such nominee holds such securities) in
accordance with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a Redemption/Distribution
Notice, which notice may only be issued if the Debentures are redeemed as set out in this
Section 4 (which notice will be irrevocable), then (A) while the Capital Securities are in
book-entry only form, with respect to the Capital Securities, by 12:00 noon, New York City
time, on the redemption date, provided, that the Debenture Issuer has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related redemption
or maturity of the Debentures, the Institutional Trustee will deposit irrevocably with DTC
or its nominee (or successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Capital Securities and will give DTC (or any
successor Clearing Agency) irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Capital Securities, and (B) with respect to Capital Securities
issued in definitive form and Common Securities, provided, that the Debenture Issuer has
paid the Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Institutional Trustee will pay the relevant
Redemption Price to the Holders of such Securities by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the redemption date. If
a Redemption/Distribution Notice shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of business on the date of such deposit, or
I-8
on the redemption date, as applicable, distributions will cease to accrue on the
Securities so called for redemption and all rights of the Holders of such Securities so
called for redemption will cease, except the right of the Holders of such Securities to
receive the Redemption Price, but without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to register or cause to be registered the
transfer of any Securities that have been so called for redemption. If any date fixed for
redemption of Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of any Securities is improperly
withheld or refused and not paid either by the Institutional Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions on such Securities
will continue to accrue from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular Trustees on behalf of
the Trust to (A) in respect of the Capital Securities, DTC or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been issued or, if
Definitive Capital Security Certificates have been issued, to the Holder thereof and (B) in
respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without limitation, United
States federal securities laws), the Debenture Issuer or its affiliates may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
5.
Voting Rights Capital Securities
.
(a) Except as provided under Sections 5(b) and 7 and as otherwise required by law and the
Declaration, the Holders of the Capital Securities will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the Holders of a Majority in
aggregate liquidation amount of the Capital Securities, voting separately as a class, may direct
the time, method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the Institutional
Trustee, as holder of the Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercise any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waive any past Default (as
defined in the Indenture) that is waivable under Section 5.6 of the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required; provided, however, that, where a consent or action
under the Indenture would require the consent or act of each holder of each Debenture
I-9
affected thereby, such consent or action under the Indenture shall not be effective until each
Holder of Capital Securities shall have consented to such action or provided such consent. The
Institutional Trustee shall not revoke any action previously authorized or approved by a vote of
the Holders of the Capital Securities. Except with respect to directing the time, method and place
of conducting a proceeding for a remedy available to the Institutional Trustee, the Institutional
Trustee, as holder of the Debentures, shall not take any of the actions described in clauses (i),
(ii), (iii) or (iv) above unless the Institutional Trustee has obtained an opinion of a nationally
recognized independent tax counsel experienced in such matters to the effect that as a result of
such action, the Trust will not fail to be classified as a grantor trust for United States federal
income tax purposes. If the Institutional Trustee fails to enforce its rights under the
Debentures, any Holder of Capital Securities may directly institute a legal proceeding against the
Debenture Issuer to enforce the Institutional Trustees rights under the Debentures without first
instituting a legal proceeding against the Institutional Trustee or any other Person or entity. If
a Default under the Declaration has occurred and is continuing and such event is attributable to
the failure of the Debenture Issuer to pay interest or principal on the Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the redemption date),
then a holder of Capital Securities may also directly institute a proceeding for enforcement of
payment to such holder (a Direct Action) of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Capital Securities of such
holder on or after the respective due date specified in the Debentures without first (i) directing
the Institutional Trustee to enforce the terms of the Debentures or (ii) instituting a legal
proceeding directly against the Debenture Issuer to enforce the Institutional Trustees rights
under the Debentures. Except as provided in the preceding sentence, the Holders of Capital
Securities will not be able to exercise directly any other remedy available to the holders of the
Debentures. In connection with such Direct Action, Citigroup will be subrogated to the rights of
such Holder of Capital Securities under the Declaration to the extent of any payment made by
Citigroup to such holder of Capital Securities in such Direct Action.
Any required approval or direction of Holders of Capital Securities may be given at a separate
meeting of Holders of Capital Securities convened for such purpose, at a meeting of all of the
Holders of Securities in the Trust or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Capital Securities. Each such notice will include a statement setting forth
(i) the date of such meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or
of such matter upon which written consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of the Capital Securities will be required for the Trust to
redeem and cancel Capital Securities or to distribute the Debentures in accordance with this
Declaration and the terms of the Securities.
Notwithstanding that Holders of Capital Securities are entitled to vote or consent under any
of the circumstances described above, any of the Capital Securities that are owned by the Sponsor
or any Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
I-10
6.
Voting Rights Common Securities
.
(a) Except as provided under Sections 6(b), (c) and 7 as otherwise required by law and the
Declaration, the Holders of the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance with and subject to
Article V of the Declaration, to vote to appoint, remove or replace any Trustee or to increase or
decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the Default with respect to the
Capital Securities has been cured, waived, or otherwise eliminated and subject to the requirements
of the second to last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional Trustee, or direct the
exercise of any trust or power conferred upon the Institutional Trustee under the Declaration,
including (i) directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waiving any past Default (as defined in the Indenture)
that is waivable under Section 5.6 of the Indenture, or (iii) exercising any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and payable, provided
that, where a consent or action under the Indenture would require the consent or act of the Holders
of greater than a majority in principal amount of Debentures affected thereby (a Super Majority),
the Institutional Trustee may only give such consent or take such action at the written direction
of the Holders of at least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 6(c), the Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital Securities. Other than with respect
to directing the time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of the Common Securities
under this paragraph unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Declaration, any Holder of Common Securities may institute a legal
proceeding directly against any Person to enforce the Institutional Trustees rights under the
Declaration, without first instituting a legal proceeding against the Institutional Trustee or any
other Person.
Any approval or direction of Holders of Common Securities may be given at a separate meeting
of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of
Securities in the Trust or pursuant to written consent. The Regular Trustees will cause a notice
of any meeting at which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to each Holder of
record of Common Securities. Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such
I-11
Holders are entitled to vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be required for the Trust to
redeem and cancel Common Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
7.
Amendments to Declaration and Indenture
.
(a) In addition to any requirements under Section 12.1 of the Declaration, if any proposed
amendment to the Declaration provides for, or the Regular Trustees otherwise propose to effect, (i)
any action that would adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up or
termination of the Trust, other than as described in Section 8.1 of the Declaration, then the
Holders of outstanding Securities as a class, will be entitled to vote on such amendment or
proposal (but not on any other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in liquidation amount of
the Securities, voting together as a single class; provided, however, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Capital Securities or only the
Common Securities, then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the approval of a
Majority in liquidation amount of such class of Securities.
(b) In the event the consent of the Institutional Trustee as the holder of the Debentures is
required under the Indenture with respect to any amendment, modification or termination on the
Indenture or the Debentures, the Institutional Trustee shall request the written direction of the
Holders of the Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by a Majority in
liquidation amount of the Securities voting together as a single class; provided, however, that
where a consent under the Indenture would require the consent of the holders of greater than a
majority in aggregate principal amount of the Debentures (a Super Majority), the Institutional
Trustee may only give such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding; provided, further, that the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of the Securities under
this Section 7(b) unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action.
8.
Pro Rata
.
A reference in these terms of the Securities to any payment, distribution or treatment as
being Pro Rata shall mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a payment, an a Default
under the Declaration has occurred and is continuing, in which case any funds available to make
such payment shall be paid first to each Holder of the Capital Securities pro rata
I-12
according to the aggregate liquidation amount of Capital Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Capital Securities outstanding, and only
after satisfaction of all amounts owed to the Holders of the Capital Securities, to each Holder of
Common Securities pro rata according to the aggregate liquidation amount of Common Securities held
by the relevant Holder relative to the aggregate liquidation amount of all Common Securities
outstanding.
9.
Ranking
.
The Capital Securities rank pari passu and payment thereon shall be made Pro Rata with the
Common Securities except that, where a Default (as defined in the Indenture) occurs and is
continuing under the Indenture in respect of the Debentures held by the Institutional Trustee, the
rights of Holders of the Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment of the Holders of
the Capital Securities.
10.
Listing
.
The Regular Trustees shall use their best efforts to cause the Capital Securities to be listed
on the New York Stock Exchange.
11.
Acceptance of Securities Guarantee and Indenture
.
Each Holder of Capital Securities and Common Securities, by the acceptance thereof, agrees to
the provisions of the Capital Securities Guarantee, including the subordination provisions therein
and to the provisions of the Indenture.
12.
No Preemptive Rights
.
The Holders of the Securities shall have no preemptive rights to subscribe for any additional
securities.
13.
Miscellaneous
.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration or the Capital Securities Guarantee, and
the Indenture to a Holder without charge on written request to the Sponsor at its principal place
of business.
I-13
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
THIS CAPITAL SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE DECLARATION
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE
DEPOSITARY) OR A NOMINEE OF THE DEPOSITARY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER
THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
(55 WATER STREET, NEW YORK, NEW YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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Certificate Number
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CUSIP NO.
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Certificate Evidencing Capital Securities
of
CITIGROUP CAPITAL XVIII
% Capital Securities
(Liquidation Amount $25 per Capital Security)
CITIGROUP CAPITAL XVIII, a statutory trust formed under the laws of the State of Delaware (the
Trust), hereby certifies that
(the Holder) is the registered owner of
(___) capital securities of the Trust representing undivided beneficial interests in the assets of
the Trust designated the % Capital Securities (the Capital Securities). The Capital
Securities are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities are set forth in, and this certificate and the Capital
Securities represented hereby are issued and shall in all respects be subject to, the provisions of
A1-1
the Amended and Restated Declaration of Trust of the Trust dated as of , 20 , as
the same may be amended from time to time (the Declaration), including the designation of the
terms of the Capital Securities as set forth in Annex I thereto. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Capital Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Capital Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Sponsor at its principal place of business.
The Holder of this certificate, by accepting this certificate, is deemed to have (i) agreed to
the terms of the Indenture and the Debentures, including that the Debentures are subordinate and
junior in right of payment to all Senior Indebtedness (as defined in the Indenture) and (ii) agreed
to the terms of the Capital Securities Guarantee, including that the Capital Securities Guarantee
is (A) subordinate and junior in right of payment to all other liabilities of Citigroup, (B) pari
passu with the most senior preferred or preference stock now or hereafter issued by Citigroup and
with any guarantee now or hereafter issued by Citigroup with respect to preferred or preference
stock of Citigroups affiliates and (C) senior to Citigroups common stock.
Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Capital Securities as evidence of indirect beneficial ownership
in the Debentures.
A1-2
IN WITNESS WHEREOF, the Trust has executed this certificate this ___day of
,___.
Name:
Title: Regular Trustee
A1-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security Certificate to:
(Insert assignees social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
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agent to transfer this
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Capital Security Certificate on the books of the Trust. The agent may substitute another to act for him or her.
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Date:
Signature:
(Sign exactly as your name appears on the other side of this Capital Security Certificate)
A1-4
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
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Certificate Number
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Certificate Evidencing Common Securities
of
CITIGROUP CAPITAL XVIII
% Common Securities
(Liquidation Amount $25 per Common Security)
CITIGROUP CAPITAL XVIII, a statutory trust formed under the laws of the State of Delaware (the
Trust), hereby certifies that Citigroup Inc., a Delaware corporation (the Holder), is the
registered owner of
(
) common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the % Common Securities (the
Common Securities). The Common Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer and satisfaction of the other conditions set forth in the
Declaration (as defined below), including, without limitation, Section 9.1 thereof. The
designation, rights, privileges, restrictions, preferences and other terms and provisions of the
Common Securities represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated as of ,
20 , as the same may be amended from time to time (the Declaration), including the designation
of the terms of the Common Securities as set forth in Annex I thereto. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration. The Sponsor will
provide a copy of the Declaration and the Indenture to a Holder without charge upon written request
to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
The Holder of this certificate, by accepting this certificate, is deemed to have agreed to the
terms of the Indenture and the Debentures, including that the Debentures are subordinate and junior
in right of payment to all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture.
A2-1
By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Common Securities as evidence of indirect beneficial ownership
in the Debentures.
A2-2
IN WITNESS WHEREOF, the Trust has executed this certificate this ___day of
, ___.
Name:
Title: Regular Trustee
A2-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
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(Insert assignees social security or tax identification number)
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(Insert address and zip code of assignee)
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and irrevocably appoints
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agent to transfer this
Common Security Certificate on the books of the Trust. The agent may substitute another to act for him or her.
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Date:
Signature:
(Sign exactly as your name appears on the other side of this Common Security Certificate)
A2-4
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
Exhibit 4.08
FORM OF
AMENDED AND RESTATED DECLARATION
OF TRUST
CITIGROUP CAPITAL XIX
Dated as of , 20
TABLE OF CONTENTS
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ARTICLE I INTERPRETATION AND DEFINITIONS
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SECTION 1.1 Definitions
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1
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ARTICLE II TRUST INDENTURE ACT
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SECTION 2.1 Trust Indenture Act; Application
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7
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SECTION 2.2 Lists of Holders of Securities
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7
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SECTION 2.3 Reports by the Institutional Trustee
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7
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SECTION 2.4 Periodic Reports to Institutional Trustee
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8
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SECTION 2.5 Evidence of Compliance with Conditions Precedent
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8
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SECTION 2.6 Defaults; Waiver
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8
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SECTION 2.7 Default; Notice
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9
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ARTICLE III ORGANIZATION
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SECTION 3.1 Name
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SECTION 3.2 Office
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10
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SECTION 3.3 Purpose
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SECTION 3.4 Authority.
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SECTION 3.5 Title to Property of the Trust
|
|
|
11
|
|
SECTION 3.6 Powers and Duties of the Regular Trustees
|
|
|
11
|
|
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees
|
|
|
13
|
|
SECTION 3.8 Powers and Duties of the Institutional Trustee
|
|
|
14
|
|
SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee
|
|
|
16
|
|
SECTION 3.10 Certain Rights of Institutional Trustee
|
|
|
17
|
|
SECTION 3.11 Delaware Trustee
|
|
|
19
|
|
SECTION 3.12 Execution of Documents
|
|
|
20
|
|
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities
|
|
|
20
|
|
SECTION 3.14 Duration of Trust
|
|
|
20
|
|
SECTION 3.15 Mergers
|
|
|
20
|
|
ARTICLE IV SPONSOR
|
|
|
|
|
SECTION 4.1 Sponsors Purchase of Common Securities
|
|
|
22
|
|
SECTION 4.2 Responsibilities of the Sponsor
|
|
|
22
|
|
ARTICLE V TRUSTEES
|
|
|
|
|
i
|
|
|
|
|
SECTION 5.1 Number of Trustees
|
|
|
22
|
|
SECTION 5.2 Delaware Trustee
|
|
|
23
|
|
SECTION 5.3 Institutional Trustee; Eligibility
|
|
|
23
|
|
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally
|
|
|
24
|
|
SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees
|
|
|
24
|
|
SECTION 5.6 Appointment, Removal and Resignation of Trustees
|
|
|
25
|
|
SECTION 5.7 Vacancies among Trustees
|
|
|
26
|
|
SECTION 5.8 Effect of Vacancies
|
|
|
27
|
|
SECTION 5.9 Meetings
|
|
|
27
|
|
SECTION 5.10 Delegation of Power
|
|
|
27
|
|
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business
|
|
|
28
|
|
|
ARTICLE VI DISTRIBUTIONS
|
|
|
|
|
SECTION 6.1 Distributions
|
|
|
28
|
|
|
ARTICLE VII ISSUANCE OF SECURITIES
|
|
|
|
|
|
SECTION 7.1 General Provisions Regarding Securities
|
|
|
28
|
|
|
ARTICLE VIII TERMINATION OF TRUST
|
|
|
|
|
|
SECTION 8.1 Termination of Trust
|
|
|
29
|
|
|
ARTICLE IX TRANSFER OF INTERESTS
|
|
|
|
|
|
SECTION 9.1 Transfer of Securities
|
|
|
30
|
|
SECTION 9.2 Transfer of Certificates
|
|
|
30
|
|
SECTION 9.3 Deemed Security Holders
|
|
|
31
|
|
SECTION 9.4 Book Entry Interests
|
|
|
31
|
|
SECTION 9.5 Notices to Clearing Agency
|
|
|
32
|
|
SECTION 9.6 Appointment of Successor Clearing Agency
|
|
|
32
|
|
SECTION 9.7 Definitive Capital Security Certificates
|
|
|
32
|
|
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates
|
|
|
32
|
|
|
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
|
|
|
|
|
|
SECTION 10.1 Liability
|
|
|
33
|
|
SECTION 10.2 Exculpation
|
|
|
33
|
|
SECTION 10.3 Fiduciary Duty
|
|
|
34
|
|
SECTION 10.4 Indemnification
|
|
|
35
|
|
SECTION 10.5 Outside Businesses
|
|
|
37
|
|
ii
|
|
|
|
|
ARTICLE XI ACCOUNTING
|
|
|
|
|
|
SECTION 11.1 Fiscal Year
|
|
|
|
38
|
SECTION 11.2 Certain Accounting Matters
|
|
|
|
38
|
SECTION 11.3 Banking
|
|
|
|
38
|
SECTION 11.4 Withholding
|
|
|
|
39
|
|
ARTICLE XII AMENDMENTS AND MEETINGS
|
|
|
|
|
|
SECTION 12.1 Amendments
|
|
|
|
39
|
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent
|
|
|
|
41
|
|
ARTICLE XIII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
|
|
|
|
|
|
SECTION 13.1 Representations and Warranties of Institutional Trustee
|
|
|
|
42
|
SECTION 13.2 Representations and Warranties of Delaware Trustee
|
|
|
|
43
|
|
ARTICLE XIV MISCELLANEOUS
|
|
|
|
|
|
SECTION 14.1 Notices
|
|
|
|
43
|
SECTION 14.2 Governing Law
|
|
|
|
45
|
SECTION 14.3 Intention of the Parties
|
|
|
|
45
|
SECTION 14.4 Headings
|
|
|
|
45
|
SECTION 14.5 Successors and Assigns
|
|
|
|
45
|
SECTION 14.6 Partial Enforceability
|
|
|
|
45
|
SECTION 14.7 Counterparts
|
|
|
|
45
|
|
|
|
|
|
ANNEX I
|
|
TERMS OF SECURITIES
|
|
I-1
|
EXHIBIT A-1
|
|
FORM OF CAPITAL SECURITY CERTIFICATE
|
|
A1-1
|
EXHIBIT A-2
|
|
FORM OF COMMON SECURITY CERTIFICATE
|
|
A2-1
|
EXHIBIT B
|
|
SPECIMEN OF DEBENTURE
|
|
B-1
|
EXHIBIT C
|
|
UNDERWRITING AGREEMENT
|
|
C-1
|
iii
CROSS-REFERENCE TABLE*
|
|
|
|
|
Section of
|
|
|
|
Trust Indenture Act
|
|
|
|
of 1939, as amended
|
|
Section of Declaration
|
|
|
310(a)
|
|
|
5.3
|
(a)
|
310(c)
|
|
Inapplicable
|
311(c)
|
|
Inapplicable
|
312(a)
|
|
|
2.2
|
(a)
|
312(b)
|
|
|
2.2
|
(b)
|
313
|
|
|
2.3
|
|
314(a)
|
|
|
2.4
|
|
314(b)
|
|
Inapplicable
|
314(c)
|
|
|
2.5
|
|
314(d)
|
|
Inapplicable
|
314(f)
|
|
Inapplicable
|
315(a)
|
|
|
3.9
|
(b)
|
315(c)
|
|
|
3.9
|
(a)
|
315(d)
|
|
|
3.9
|
(a)
|
316(a)
|
|
Annex I
|
316(c)
|
|
|
3.6
|
(e)
|
|
|
|
*
|
|
This Cross-Reference Table does not constitute part of the Declaration and shall not affect
the interpretation of any of its terms or provisions.
|
iv
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CITIGROUP CAPITAL XIX
, 20
AMENDED AND RESTATED DECLARATION OF TRUST (Declaration) dated and effective as of
, 20 , by the Trustees (as defined herein), the Sponsor (as defined herein) and by the
holders, from time to time, of undivided beneficial interests in the assets of the Trust to be
issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established Citigroup Capital XIX (the Trust), a trust
under the Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated as of [
], 2007 (the Original Declaration) and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on [ ], 2007, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of the Trust and
investing the proceeds thereof in certain Debentures of the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend and restate each and
every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a
statutory trust under the Statutory Trust Act and that this Declaration constitute the governing
instrument of such statutory trust, the Trustees declare that all assets contributed to the Trust
will be held in trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to
the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1
Definitions
.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning throughout;
(c) all references to the Declaration or this Declaration are to this Declaration as
modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and Annexes and Exhibits are
to Articles and Sections of and Annexes and Exhibits to this Declaration unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in this
Declaration unless otherwise defined in this Declaration or unless the context otherwise requires;
and
(f) a reference to the singular includes the plural and vice versa.
Affiliate
has the same meaning as given to that term in Rule 405 of the Securities
Act or any successor rule thereunder.
Authorized Officer
of a Person means any Person that is authorized to bind such
Person.
Book Entry Interest
means a beneficial interest in a Global Certificate, ownership
and transfers of which shall be maintained and made through book entries by a Clearing Agency as
described in Section 9.4.
Business Day
means any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York, New York are permitted or required by any applicable law to
close.
Capital Securities Guarantee
means the guarantee agreement dated as of
, 20 , of the Sponsor in respect of the Capital Securities.
Capital Security
has the meaning specified in Section 7.1.
Capital Security Beneficial Owner
means, with respect to a Book Entry Interest, a
Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
Capital Security Certificate
means a certificate representing a Capital Security
substantially in the form of Exhibit A-1.
Certificate
means a Common Security Certificate or a Capital Security Certificate.
Citigroup
means Citigroup Inc., a Delaware corporation.
2
Clearing Agency
means an organization registered as a Clearing Agency pursuant to
Section 17A of the Exchange Act that is acting as depositary for the Capital Securities and in
whose name or in the name of a nominee of that organization shall be registered a Global
Certificate and which shall undertake to effect book entry transfers and pledges of the Capital
Securities.
Clearing Agency Participant
means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency effects book entry
transfers and pledges of securities deposited with the Clearing Agency.
Closing Date
means , 20 .
Code
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor legislation.
Commission
means the Securities and Exchange Commission.
Common Security
has the meaning specified in Section 7.1.
Common Security Certificate
means a definitive certificate in fully registered form
representing a Common Security substantially in the form of Exhibit A-2.
Company Indemnified Person
means (a) any Regular Trustee; (b) any Affiliate of any
Regular Trustee; (c) any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Regular Trustee; or (d) any officer, employee or agent of the
Trust or its Affiliates.
Corporate Trust Office
means the office of the Institutional Trustee at which the
corporate trust business of the Institutional Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Declaration is located at 101 Barclay
Street-8W, New York, New York 10286.
Covered Person
means: (a) any officer, director, shareholder, partner, member,
representative, employee or agent of (i) the Trust or (ii) the Trusts Affiliates; and (b) any
Holder of Securities.
Debenture Issuer
means Citigroup Inc. (or the Sponsor) in its capacity as issuer of
the Debentures under the Indenture.
Debenture Trustee
means The Bank of New York, as trustee under the Indenture until a
successor is appointed thereunder, and thereafter means such successor trustee.
Debentures
means the series of Debentures to be issued by the Debenture Issuer under
the Indenture to be held by the Institutional Trustee, a specimen certificate for such series of
Debentures being Exhibit B.
Default
in respect of the Securities means a Default (as defined in the Indenture)
has occurred and is continuing in respect of the Debentures.
3
Definitive Capital Security Certificates
has the meaning set forth in Section 9.4.
Delaware Trustee
has the meaning set forth in Section 5.2.
Distribution
has the meaning set forth in Section 6.1.
DTC
means the Depository Trust Company, the initial Clearing Agency.
Exchange Act
means the Securities Exchange Act of 1934, as amended from time to
time, or any successor legislation.
Fiduciary Indemnified Person
has the meaning set forth in Section 10.4(b).
Global Certificate
has the meaning set forth in Section 9.4.
Holder
means a Person in whose name a Certificate representing a Security is
registered, such Person being a beneficial owner within the meaning of the Statutory Trust Act.
Indemnified Person
means a Company Indemnified Person or a Fiduciary Indemnified
Person.
Indenture
means the Indenture, dated as of , 20 (as supplemented
from time to time), between the Debenture Issuer and the Debenture Trustee, pursuant to which the
Debentures are to be issued.
Institutional Trustee
means the Trustee meeting the eligibility requirements set
forth in Section 5.3.
Institutional Trustee Account
has the meaning set forth in Section 3.8(c).
Investment Company
means an investment company as defined in the Investment Company
Act.
Investment Company Act
means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.
Investment Company Event
has the meaning set forth in Annex I hereto.
Legal Action
has the meaning set forth in Section 3.6(g).
Majority in liquidation amount of the Securities
means, except as provided in the
terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities
voting together as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a class, who are the
record owners of an aggregate liquidation amount representing more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
4
Officers Certificate
means, with respect to any Person, a certificate signed by two
Authorized Officers of such Person. Any Officers Certificate delivered with respect to compliance
with a condition or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers Certificate has read the covenant or
condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken
by each officer in rendering the Officers Certificate;
(c) a statement that each such officer has made such examination or investigation as, in such
officers opinion, is necessary to enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant
has been complied with.
Paying Agent
has the meaning specified in Section 3.8(h).
Payment Amount
has the meaning specified in Section 6.1.
Person
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or political subdivision thereof, or any
other entity of whatever nature.
Quorum
means any one Regular Trustee or, if there is only one Regular Trustee, such
Regular Trustee.
Regular Trustee
has the meaning specified in Section 5.1.
Regulatory Capital Event
has the meaning set forth in Annex I hereto.
Related Party
means, with respect to the Sponsor, any direct or indirect wholly
owned subsidiary of the Sponsor or any other Person that owns, directly or indirectly, 100% of the
outstanding voting securities of the Sponsor.
Responsible Officer
means, with respect to the Institutional Trustee, any officer
within the Corporate Trust Office of the Institutional Trustee with direct responsibility for the
administration of this Declaration and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that officers knowledge of
and familiarity with the particular subject.
Rule 3a-5
means Rule 3a-5 under the Investment Company Act.
Securities
means the Common Securities and the Capital Securities.
5
Securities Act
means the Securities Act of 1933, as amended from time to time, or
any successor legislation.
Special Event
has the meaning set forth in Annex I hereto.
Sponsor
means Citigroup Inc. or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
Statutory Trust Act
means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code
§3801 et seq., as it may be amended from time to time, or any successor legislation.
Successor Delaware Trustee
has the meaning set forth in Section 5.6.
Successor Entity
has the meaning set forth in Section 3.15(b).
Successor Institutional Trustee
has the meaning set forth in Section 5.6.
Successor Securities
has the meaning set forth in Section 3.15(b).
Super Majority
has the meaning set forth in Section 2.6(a)(ii).
Tax Event
has the meaning set forth in Annex I hereto.
10% in liquidation amount of the Securities
means, except as provided in the terms
of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities voting
together as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a class, who are the
record owners of an aggregate liquidation amount representing 10% or more of the aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
Treasury Regulations
means the income tax regulations, including temporary and
proposed regulations, promulgated under the Code by the United States Treasury, as such regulations
may be amended from time to time (including corresponding provisions of succeeding regulations).
Trustee
or
Trustees
means each Person who has signed this Declaration as a
trustee, so long as such Person shall continue in office in accordance with the terms hereof, and
all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended from time to
time, or any successor legislation.
Underwriting
Agreement
means the Underwriting Agreement for the offering and sale of
Capital Securities in the form of Exhibit C.
6
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1
Trust Indenture Act; Application
.
(a) This Declaration is subject to the provisions of the Trust Indenture Act that are required
to be part of this Declaration and shall, to the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee that is a Trustee for the purposes of
the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits, qualifies or conflicts
with the duties imposed by §§ 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
(d) The application of the Trust Indenture Act to this Declaration shall not affect the nature
of the Securities as equity securities representing undivided beneficial interests in the assets of
the Trust.
SECTION 2.2
Lists of Holders of Securities
.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide the
Institutional Trustee (i) within 14 days after each record date for payment of Distributions, a
list, in such form as the Institutional Trustee may reasonably require, of the names and addresses
of the Holders of the Securities (List of Holders) as of such record date, provided, that neither
the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to provide such List
of Holders at any time the List of Holders does not differ from the most recent List of Holders
given to the Institutional Trustee by the Sponsor and the Regular Trustees on behalf of the Trust,
and (ii) at any other time, within 30 days of receipt by the Trust of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is given to the
Institutional Trustee. The Institutional Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders given to it or which it
receives in the capacity as Paying Agent (if acting in such capacity), provided, that the
Institutional Trustee may destroy any List of Holders previously given to it on receipt of a new
List of Holders.
(b) The Institutional Trustee shall comply with its obligations under §§ 311(a), 311(b) and
312(b) of the Trust Indenture Act.
SECTION 2.3
Reports by the Institutional Trustee
.
Within 60 days after May 15 of each year, the Institutional Trustee shall provide to the
Holders of the Capital Securities such reports as are required by § 313 of the Trust Indenture Act,
if any, in the form and in the manner provided by § 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of § 313(d) of the Trust Indenture
Act.
7
SECTION 2.4
Periodic Reports to Institutional Trustee
.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Institutional Trustee such documents, reports and information as required by § 314 of the Trust
Indenture Act (if any) and the compliance certificate required by § 314 of the Trust Indenture Act
in the form, in the manner and at the times required by § 314 of the Trust Indenture Act.
SECTION 2.5
Evidence of Compliance with Conditions Precedent
.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Institutional Trustee such evidence of compliance with any conditions precedent provided for in
this Declaration that relate to any of the matters set forth in § 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to § 314(c)(1) of the
Trust Indenture Act may be given in the form of an Officers Certificate.
SECTION 2.6
Defaults; Waiver
.
(a) The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on
behalf of the Holders of all of the Capital Securities, waive any past Default in respect of the
Capital Securities and its consequences, provided, that if the underlying Default under the
Indenture:
(i) is not waivable under the Indenture, the Default under the Declaration shall also
not be waivable; or
(ii) is waivable only with the consent of holders of more than a majority in principal
amount of the Debentures (a Super Majority) affected thereby, only the Holders of at least
the proportion in aggregate liquidation amount of the Capital Securities that the relevant
Super Majority represents of the aggregate principal amount of the Debentures outstanding
may waive such Default in respect of the Capital Securities under the Declaration.
The foregoing provisions of this Section 2.6(a) shall be in lieu of § 316(a)(1)(B) of the Trust
Indenture Act and such § 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such default shall cease to exist, and any Default with respect to the Capital Securities
arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or a Default with respect to the
Capital Securities or impair any right consequent thereon. Any waiver by the Holders of the
Capital Securities of a Default with respect to the Capital Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of any such Default with respect to the
Common Securities for all purposes of this Declaration without any further act, vote, or consent of
the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common Securities may, by vote, on
behalf of the Holders of all of the Common Securities, waive any
8
past Default with respect to the Common Securities and its consequences, provided, that if the
underlying Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of the Common
Securities are deemed to have waived such Default under the Declaration as provided in this
Section 2.6(b), the Default under the Declaration shall also not be waivable; or
(ii) is waivable only with the consent of a Super Majority, except where the Holders of
the Common Securities are deemed to have waived such Default under the Declaration as
provided in this Section 2.6(b), only the Holders of at least the proportion in aggregate
liquidation amount of the Common Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding may waive such Default in
respect of the Common Securities under the Declaration;
provided, further each Holder of Common Securities will be deemed to have waived any such Default
and all Defaults with respect to the Common Securities and its consequences until all Defaults with
respect to the Capital Securities have been cured, waived or otherwise eliminated, and until such
Defaults with respect to the Capital Securities have been so cured, waived or otherwise eliminated,
the Institutional Trustee will be deemed to be acting solely on behalf of the Holders of the
Capital Securities and only the Holders of the Capital Securities will have the right to direct the
Institutional Trustee in accordance with the terms of the Securities. The foregoing provisions of
this Section 2.6(b) shall be in lieu of §§ 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act
and such §§ 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded
from this Declaration and the Securities, as permitted by the Trust Indenture Act. Subject to the
foregoing provisions of this Section 2.6(b), upon the waiver of a Default by the Holders of a
Majority in liquidation amount of the Common Securities, any such default shall cease to exist and
any Default with respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or
other default or Default with respect to the Common Securities or impair any right consequent
thereon.
(c) A waiver of a Default under the Indenture by the Institutional Trustee at the direction of
the Holders of the Capital Securities, constitutes a waiver of the corresponding Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of § 316(a)(1)(B) of
the Trust Indenture Act and such § 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7
Default; Notice
.
(a) The Institutional Trustee shall, within 90 days after the occurrence of a Default,
transmit by mail, first class postage prepaid, to the Holders of the Securities, notices of (i) all
defaults with respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving of such notice (the
term defaults for the purposes of this Section 2.7(a) being hereby defined to be a Default as
defined in the Indenture, not including any periods of grace provided for therein and irrespective
9
of the giving of any notice provided therein) and (ii) any notice of default received from the
Indenture Trustee with respect to the Debentures, which notice from the Institutional Trustee to
the Holders shall state that a Default under the Indenture also constitutes a Default with respect
to the Securities; provided that, except for a default in the payment of principal of (or premium,
if any) or interest on any of the Debentures or in the payment of any sinking fund installment
established for the Debentures, the Institutional Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Institutional Trustee in good faith
determines that the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge of any default except:
(i) a default under Sections 5.7(b) and 5.7(c) of the Indenture; or
(ii) any default as to which the Institutional Trustee shall have received written
notice or of which a Responsible Officer of the Institutional Trustee charged with the
administration of the Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1
Name
.
The Trust is named Citigroup Capital XIX, as such name may be modified from time to time by
the Regular Trustees following written notice to the Institutional Trustee, the Delaware Trustee
and the Holders of Securities. The Trusts activities may be conducted under the name of the Trust
or any other name deemed advisable by the Regular Trustees.
SECTION 3.2
Office
.
The address of the principal office of the Trust is c/o Citigroup Inc., 399 Park Avenue, New
York, NY 10043. On ten Business Days written notice to the Institutional Trustee, the Delaware
Trustee and the Holders of Securities, the Regular Trustees may designate another principal office.
SECTION 3.3
Purpose
.
The exclusive purposes and functions of the Trust are (a) to issue and sell Securities and use
the proceeds from such sale to acquire the Debentures, and (b) except as otherwise limited herein,
to engage in only those other activities necessary, or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets,
or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to
be classified for United States federal income tax purposes as a grantor trust.
SECTION 3.4
Authority
.
10
Subject to the limitations provided in this Declaration and to the specific duties of the
Institutional Trustee, the Regular Trustees shall have exclusive and complete authority to carry
out the purposes of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall constitute the act
of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no
person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees
as set forth in this Declaration.
SECTION 3.5
Title to Property of the Trust
.
Except as provided in Section 3.8 with respect to the Debentures and the Institutional Trustee
Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall
be vested in the Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6
Powers and Duties of the Regular Trustees
.
The Regular Trustees shall have the exclusive power, duty and authority to cause the Trust to
engage in the following activities:
(a) to issue and sell the Capital Securities and the Common Securities in accordance with this
Declaration;
provided, however
, that the Trust may issue no more than one series of Capital
Securities and no more than one series of Common Securities, and,
provided further
, that there
shall be no interests in the Trust other than the Securities, and the issuance of Securities shall
be limited to a simultaneous issuance of both Capital Securities and Common Securities on the
Closing Date;
(b) in connection with the issue and sale of the Capital Securities, at the direction of the
Sponsor, to:
(i) execute and file with the Commission on behalf of the Trust a registration
statement on Form S-3 or on another appropriate form, or a registration statement under Rule
462(b) of the Securities Act, in each case prepared by the Sponsor, including any
pre-effective or post-effective amendments thereto, relating to the registration under the
Securities Act of the Capital Securities;
(ii) execute and file any documents prepared by the Sponsor, or take any acts as
determined by the Sponsor to be necessary in order to qualify or register all or part of the
Capital Securities in any State in which the Sponsor has determined to qualify or register
such Capital Securities for sale;
(iii) execute and file an application, prepared by the Sponsor, to the New York Stock
Exchange, Inc., any other national stock exchange or the Nasdaq National Market for listing
upon notice of issuance of any Capital Securities;
11
(iv) execute and file with the Commission on behalf of the Trust a registration
statement on Form 8-A, prepared by the Sponsor, including any pre-effective or
post-effective amendments thereto, relating to the registration of the Capital Securities
under Section 12(b) of the Exchange Act; and
(v) deliver the Underwriting Agreement providing for the sale of the Capital
Securities;
(c) to acquire the Debentures with the proceeds of the sale of the Capital Securities and the
Common Securities; provided, however, that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Institutional Trustee for the benefit of the
Holders of the Capital Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written notice of the occurrence
of a Special Event; provided, that the Regular Trustees shall consult with the Sponsor and the
Institutional Trustee before taking or refraining from taking any ministerial action in relation to
a Special Event;
(e) to establish a record date with respect to all actions to be taken hereunder that require
a record date be established, including and with respect to, for the purposes of §316(c) of the
Trust Indenture Act, Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as to such actions
and applicable record dates;
(f) to take all actions and perform such duties as may be required of the Regular Trustees
pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or
otherwise adjust claims or demands of or against the Trust (Legal Action), unless pursuant to
Section 3.8(e), the Institutional Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be designated as officers with
titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for
such services;
(i) to cause the Trust to comply with the Trusts obligations under the Trust Indenture Act;
(j) to give the certificate required by § 314(a)(4) of the Trust Indenture Act to the
Institutional Trustee, which certificate may be executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out any of the purposes of the
Trust;
(l) to act as, or appoint another Person to act as, registrar and transfer agent for the
Securities;
12
(m) to give prompt written notice to the Holders of the Securities of any notice received from
the Debenture Issuer of its election to defer payments of interest on the Debentures by extending
the interest payment period under the Indenture;
(n) to take all action that may be necessary or appropriate for the preservation and the
continuation of the Trusts valid existence, rights, franchises and privileges as a statutory
statutory trust under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or with applicable law, that
the Regular Trustees determine in their discretion to be necessary or desirable in carrying out the
activities of the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company required to
be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal income tax
purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the Debentures will
be treated as indebtedness of the Debenture Issuer for United States federal income
tax purposes;
provided
, that any such action does not adversely affect the interests of Holders;
(p) to take all action necessary to cause all applicable tax returns and tax information
reports that are required to be filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust; and
(q) to execute all documents or instruments, perform all duties and powers, and do all things
for and on behalf of the Trust in all matters necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this Section 3.6 in a manner that
is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Regular
Trustees shall not take any action that is inconsistent with the purposes and functions of the
Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of the powers or the
authority of the Institutional Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section 3.6 shall be reimbursed
by the Debenture Issuer.
SECTION 3.7
Prohibition of Actions by the Trust and the Trustees
.
13
(a) The Trust shall not, and the Trustees (including the Institutional Trustee) shall not
cause the Trust to, engage in any activity other than as required or authorized by this
Declaration. In particular, the Trust shall not:
(i) invest any proceeds received by the Trust from holding the Debentures, but shall
promptly distribute all such proceeds to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to vary the Trust assets or the
terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership of, or beneficial
interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A) direct the time,
method and place of exercising any trust or power conferred upon the Debenture Trustee with
respect to the Debentures, (B) waive any past Default that is waivable under the Indenture,
(C) exercise any right to rescind or annul any declaration that the principal of all the
Debentures shall be due and payable or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be required unless
the Trust shall have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters to the effect that as a result of such action, the Trust will
not fail to be classified as a grantor trust for United States federal income tax purposes.
SECTION 3.8
Powers and Duties of the Institutional Trustee
.
(a) The legal title to the Debentures shall be owned by and held of record in the name of the
Institutional Trustee in trust for the benefit of the Holders of the Securities. The right, title
and interest of the Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with Section 5.6. Such
vesting and cessation of title shall be effective whether or not conveyancing documents with regard
to the Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its right, title and interest in the
Debentures to the Regular Trustees or to the Delaware Trustee (if the Institutional Trustee does
not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust account (the
Institutional Trustee Account) in the name of and under the exclusive control of the
14
Institutional Trustee on behalf of the Holders of the Securities and, upon the receipt
of payments of funds made in respect of the Debentures held by the Institutional Trustee,
deposit such funds into the Institutional Trustee Account and make payments to the Holders
of the Capital Securities and Holders of the Common Securities from the Institutional
Trustee Account in accordance with Section 6.1. Funds in the Institutional Trustee Account
shall be held uninvested until disbursed in accordance with this Declaration. The
Institutional Trustee Account shall be an account that is maintained with a banking
institution the rating on whose long-term unsecured indebtedness assigned by a nationally
recognized statistical rating organization, as that term is defined for purposes of Rule
436(g)(2) under the Securities Act, is at least equal to the rating assigned to the Capital
Securities by a nationally recognized statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary or appropriate to
effect the redemption of the Capital Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the Regular Trustees in accordance
with the terms of the Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain Special Events or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform such duties as may be
specifically required of the Institutional Trustee pursuant to the terms of the Securities.
(e) Subject to Section 2.6, the Institutional Trustee shall take any Legal Action which arises
out of or in connection with a Default of which a Responsible Officer of the Institutional Trustee
has actual knowledge or the Institutional Trustees duties and obligations under this Declaration
or the Trust Indenture Act.
(f) The Institutional Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of the liquidation
distributed to the Holders of Securities pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has accepted that
appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise all of the rights, powers
and privileges of a holder of Debentures under the Indenture and, if a Default actually known to a
Responsible Officer of the Institutional Trustee occurs and is continuing, the Institutional
Trustee shall, for the benefit of Holders of the Securities, enforce its rights as holder of the
Debentures subject to the rights of the Holders pursuant to the terms of such Securities, this
Declaration, the Statutory Trust Act and the Trust Indenture Act.
15
(h) The Institutional Trustee may authorize one or more Persons (each, a Paying Agent) to
pay Distributions, redemption payments or liquidation payments on behalf of the Trust with respect
to all securities and any such Paying Agent shall comply with § 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Institutional Trustee at any time and a successor Paying
Agent or additional Paying Agents may be appointed at any time by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall have none of the duties,
liabilities, powers or the authority of the Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth in this Section 3.8 in a manner
that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the
Institutional Trustee shall not take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 3.3.
SECTION 3.9
Certain Duties and Responsibilities of the Institutional Trustee
.
(a) The Institutional Trustee, before the occurrence of any Default and after the curing of
all Defaults that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case a Default has occurred (that has not been
cured or waived pursuant to Section 2.6) of which a Responsible Officer of the Institutional
Trustee has actual knowledge, the Institutional Trustee shall exercise such of the rights and
powers vested in it by this Declaration, and use the same degree of care and skill in the exercise
of such rights and powers, as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the Institutional Trustee
from liability for its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of a Default and after the curing or waiving of all such
Defaults that may have occurred:
(A) the duties and obligations of the Institutional Trustee shall be determined
solely by the express provisions of this Declaration and the Institutional Trustee
shall not be liable except for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied covenants or obligations
shall be read into this Declaration against the Institutional Trustee; and
(B) in the absence of bad faith on the part of the Institutional Trustee, the
Institutional Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Institutional
16
Trustee, the Institutional Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer of the Institutional Trustee, unless it shall be proved
that the Institutional Trustee was negligent in ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the Holders of
not less than a Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the Institutional Trustee to expend
or risk its own funds or otherwise incur personal financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity reasonably
satisfactory to the Institutional Trustee against such risk or liability is not reasonably
assured to it;
(v) the Institutional Trustees sole duty with respect to the custody, safe keeping and
physical preservation of the Debentures and the Institutional Trustee Account shall be to
deal with such property in a similar manner as the Institutional Trustee deals with similar
property for its own account, subject to the protections and limitations on liability
afforded to the Institutional Trustee under this Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability for or with respect to
the value, genuineness, existence or sufficiency of the Debentures or the payment of any
taxes or assessments levied thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for any interest on any money
received by it except as it may otherwise agree with the Sponsor. Money held by the
Institutional Trustee need not be segregated from other funds held by it except in relation
to the Institutional Trustee Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible for monitoring the compliance
by the Regular Trustees or the Sponsor with their respective duties under this Declaration,
nor shall the Institutional Trustee be liable for any default or misconduct of the Regular
Trustees or the Sponsor.
SECTION 3.10
Certain Rights of Institutional Trustee
.
(a) Subject to the provisions of Section 3.9:
17
(i) the Institutional Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees contemplated by this
Declaration shall be sufficiently evidenced by an Officers Certificate;
(iii) whenever in the administration of this Declaration, the Institutional Trustee
shall deem it desirable that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers Certificate which, upon receipt of such request, shall
be promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Institutional Trustee shall have no duty to see to any recording, filing or
registration of any instrument (including any financing or continuation statement or any
filing under tax or securities laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or other experts and the advice
or opinion of such counsel and experts with respect to legal matters or advice within the
scope of such experts area of expertise shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with such advice or opinion, such counsel may be counsel to the Sponsor or
any of its Affiliates, and may include any of its employees. The Institutional Trustee
shall have the right at any time to seek instructions concerning the administration of this
Declaration from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Institutional Trustee security and indemnity,
reasonably satisfactory to the Institutional Trustee, against the costs, expenses (including
attorneys fees and expenses and the expenses of the Institutional Trustees agents,
nominees or custodians) and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be requested by the
Institutional Trustee provided that nothing contained in this Section 3.10(a)(vi) shall be
taken to relieve the Institutional Trustee, upon the occurrence of a Default, of its
obligation to exercise the rights and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it may see fit;
18
(viii) the Institutional Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, custodians, nominees
or attorneys and the Institutional Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents hereunder shall bind
the Trust and the Holders of the Securities, and the signature of the Institutional Trustee
or its agents alone shall be sufficient and effective to perform any such action and no
third party shall be required to inquire as to the authority of the Institutional Trustee to
so act or as to its compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional Trustees or its agents
taking such action;
(x) whenever in the administration of this Declaration the Institutional Trustee shall
deem it desirable to receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Institutional Trustee (i) may request instructions
from the Holders of the Securities which instructions may only be given by the Holders of
the same proportion in liquidation amount of the Securities as would be entitled to direct
the Institutional Trustee under the terms of the Securities in respect of such remedy, right
or action, (ii) may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in conclusively relying
on or acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this Declaration, the Institutional
Trustee shall not be under any obligation to take any action that is discretionary under the
provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty or obligation on the
Institutional Trustee to perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the
Institutional Trustee shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Institutional Trustee shall be construed to be a
duty.
SECTION 3.11
Delaware Trustee
.
The Delaware Trustee is appointed to serve as the trustee of the Trust in the State of
Delaware for the sole purpose of satisfying the requirement of Section 3807(a) of the Statutory
Trust Act that the Trust have at least one trustee with a principal place of business in the State
of Delaware. It is understood and agreed by the parties hereto that the Delaware Trustee shall
have none of the duties or liabilities of the Regular Trustees or the Institutional Trustee. The
duties of the Delaware Trustee shall be limited to (i) accepting legal process served on the Trust
in the State of Delaware and (ii) the execution of any certificates required to be filed with the
Delaware Secretary of State which the Delaware Trustee is required to execute under Section 3811 of
the Statutory Trust Act. To the extent that, at law or in equity, the Delaware
19
Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust
or the Holders, it is hereby understood and agreed by the other parties hereto that such duties and
liabilities are replaced by the duties and liabilities of the Delaware Trustee expressly set forth
in this Declaration. The Delaware trustee shall have no liability for the acts or omissions of the
Regular Trustees or the Institutional Trustee. The Delaware Trustee shall be entitled to all of the
same rights, protections, indemnities and immunities under this Declaration and with respect to the
Trust as the Institutional Trustee.
SECTION 3.12
Execution of Documents
.
Unless otherwise determined by the Regular Trustees, and except as otherwise required by the
Statutory Trust Act, any Regular Trustee is authorized to execute on behalf of the Trust any
documents that the Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided, that the registration statement referred to in Section 3.6(b)(i), including any
amendments thereto, shall be signed by all of the Regular Trustees.
SECTION 3.13
Not Responsible for Recitals or Issuance of Securities
.
The recitals contained in this Declaration and the Securities shall be taken as the statements
of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The
Trustees make no representations as to the value or condition of the property of the Trust or any
part thereof. The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14
Duration of Trust
.
The Trust, unless dissolved and terminated pursuant to the provisions of Article VIII hereof,
shall have existence for sixty (60) years from the Closing Date.
SECTION 3.15
Mergers
.
(a) The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets substantially as an entirety to any corporation
or other body, except as described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if there are more than two, a
majority of the Regular Trustees and without the consent of the Holders of the Securities, the
Delaware Trustee or the Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided, that:
(i) such successor entity (the Successor Entity) either:
(A) expressly assumes all of the obligations of the Trust under the Securities;
or
(B) substitutes for the Securities other securities having substantially the
same terms as the Capital Securities (the Successor Securities) so long as
20
the Successor Securities rank the same as the Capital Securities rank with
respect to Distributions and payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the Successor Entity that
possesses the same powers and duties as the Institutional Trustee in its capacity as the
Holder of the Debentures;
(iii) the Capital Securities or any Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national securities exchange
or with any other organization on which the Capital Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement does not cause the Capital
Securities (including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or replacement does not adversely affect
the rights, preferences and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with respect to any dilution of
such Holders interests in the new entity as a result of such merger, consolidation,
amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation or replacement, the Trust has
received an opinion of a nationally recognized independent counsel to the Trust experienced
in such matters to the effect that:
(A) such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the Holders of the Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the Holders interest in the new entity); and
(B) following such merger, consolidation, amalgamation or replacement, neither
the Trust nor the Successor Entity will be required to register as an Investment
Company; and
(C) following such merger, consolidation, amalgamation or replacement, the
Trust (or the Successor Entity) will continue to be classified as a grantor trust
for United States federal income tax purposes; and
(viii) the Sponsor guarantees the obligations of such Successor Entity under the
Successor Securities at least to the extent provided by the Capital Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with the consent of Holders
of 100% in liquidation amount of the Securities, consolidate, amalgamate, merge with or into, or be
replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it, if in the opinion of a nationally recognized
21
independent tax counsel experienced in such matters, such consolidation, amalgamation, merger
or replacement would cause the Trust or the Successor Entity to be classified as other than a
grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1
Sponsors Purchase of Common Securities
.
On the Closing Date, the Sponsor will purchase all of the Common Securities issued by the
Trust at the same time as the Capital Securities are sold.
SECTION 4.2
Responsibilities of the Sponsor
.
In connection with the issue and sale of the Capital Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a registration statement on Form
S-3 or on another appropriate form, or a registration statement under Rule 462(b) of the Securities
Act, including any pre-effective or post-effective amendments thereto, relating to the registration
under the Securities Act of the Capital Securities;
(b) to determine the States in which to take appropriate action to qualify or register for
sale all or part of the Capital Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New York Stock Exchange, any
other national stock exchange or the Nasdaq National Market for listing upon notice of issuance of
any Capital Securities;
(d) to prepare for filing by the Trust with the Commission a registration statement on Form
8-A, including any pre-effective or post-effective amendments thereto, relating to the registration
of the Capital Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing for the sale of the Capital
Securities.
ARTICLE V
TRUSTEES
SECTION 5.1
Number of Trustees
.
The number of Trustees initially shall be five (5), and:
22
(a) at any time before the issuance of any Securities, the Sponsor may, by written instrument,
increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be increased or decreased
by vote of the Holders of a majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities,
provided, however
, that the number of Trustees shall in no event be less than two (2); provided
further that (1) one Trustee, in the case of a natural person, shall be a person who is a resident
of the State of Delaware or that, if not a natural person, shall be an entity which has its
principal place of business in the State of Delaware (the Delaware Trustee); (2) there shall be
at least one Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
Regular Trustee); and (3) one Trustee shall be the Institutional Trustee for so long as this
Declaration is required to qualify as an indenture under the Trust Indenture Act, and such Trustee
may also serve as Delaware Trustee if it meets the applicable requirements.
SECTION 5.2
Delaware Trustee
.
If required by the Statutory Trust Act, the Delaware Trustee shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of business in the State
of Delaware, and otherwise meets the requirements of applicable law,
provided
, that if the Institutional Trustee has its principal place of business in the State of
Delaware and otherwise meets the requirements of applicable law, then the Institutional Trustee
shall also be the Delaware Trustee and Section 3.11 shall have no application.
SECTION 5.3
Institutional Trustee; Eligibility
.
(a) There shall at all times be one Trustee that shall act as Institutional Trustee which
shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of the United States
of America or any State or Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published; and
23
(iii) if the Trust is excluded from the definition of an Investment Company solely by
means of Rule 3a-7 and to the extent Rule 3a-7 requires a trustee having certain
qualifications to hold title to the eligible assets of the Trust, the Institutional
Trustee shall possess those qualifications.
(b) If at any time the Institutional Trustee shall cease to be eligible to so act under
Section 5.3(a), the Institutional Trustee shall immediately resign in the manner and with the
effect set forth in Section 5.6(c).
(c) If the Institutional Trustee has or shall acquire any conflicting interest within the
meaning of § 310(b) of the Trust Indenture Act, the Institutional Trustee and the Holders of the
Common Securities (as if such Holders were the obligor referred to in § 310(b) of the Trust
Indenture Act) shall in all respects comply with the provisions of § 310(b) of the Trust Indenture
Act.
(d) The Capital Securities Guarantee shall be deemed to be specifically described in this
Declaration for purposes of clause (i) of the first provision contained in Section 310(b) of the
Trust Indenture Act.
(e) The initial Institutional Trustee shall be as set forth in Section 5.5 hereof.
SECTION 5.4
Qualifications of Regular Trustees and Delaware Trustee Generally
.
Each Regular Trustee and the Delaware Trustee (unless the Institutional Trustee also acts as
Delaware Trustee) shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more Authorized Officers.
SECTION 5.5
Initial Trustees; Additional Powers of Regular Trustees
.
(a) The initial Regular Trustees shall be:
Saul Rosen
Eric L. Wentzel
John Gerspach
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
100 White Clay Center
Route 273
P. O. Box 6995
Newark, DE 19711
Attn: Corporate Trust Department
The initial Institutional Trustee shall be:
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The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(b) Except as expressly set forth in this Declaration and except if a meeting of the Regular
Trustees is called with respect to any matter over which the Regular Trustees have power to act,
any power of the Regular Trustees may be exercised by, or with the consent of, any one such Regular
Trustee.
(c) Unless otherwise determined by the Regular Trustees, and except as otherwise required by
the Statutory Trust Act or applicable law, any Regular Trustee is authorized to execute on behalf
of the Trust any documents which the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6, provided, that the registration statement referred to in
Section 3.6, including any amendments thereto, shall be signed by all of the Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 his or her power for the purposes of signing any
documents which the Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6
Appointment, Removal and Resignation of Trustees
.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written instrument executed by the
Sponsor; and
(ii) in the case of the Regular Trustees, after the issuance of any Securities, by vote
of the Holders of a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities;
(iii) in the case of the Institutional Trustee and the Delaware Trustee, unless a
Default shall have occurred and be continuing after the issuance of any Securities, by a
vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; and
(iv) in the case of the Institutional Trustee and the Delaware Trustee, if a Default
shall have occurred and be continuing after the issuance of the Securities, by a vote of
the Holders of a Majority in liquidation amount of the Capital Securities voting as a class
at a meeting of the Holders of the Capital Securities.
(b) (i) The Trustee that acts as Institutional Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as Institutional
Trustee under Section 5.3 (a Successor Institutional Trustee) has been appointed and has accepted
such appointment by written instrument executed by such Successor Institutional Trustee and
delivered to the Regular Trustees and the Sponsor; and
25
(ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as Delaware
Trustee under Sections 5.2 and 5.4 (a Successor Delaware Trustee) has been appointed and
has accepted such appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor shall have been
appointed or until his death, removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect upon such delivery or
upon such later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Institutional Trustee shall be
effective:
(A) until a Successor Institutional Trustee has been appointed and has accepted
such appointment by instrument executed by such Successor Institutional Trustee and
delivered to the Trust, the Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely liquidated and the
proceeds thereof distributed to the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be
effective until a Successor Delaware Trustee has been appointed and has accepted such
appointment by instrument executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts to promptly appoint a
Successor Delaware Trustee or Successor Institutional Trustee as the case may be if the
Institutional Trustee or the Delaware Trustee delivers an instrument of resignation in accordance
with this Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware Trustee shall have been
appointed and accepted appointment as provided in this Section 5.6 within 60 days after delivery to
the Sponsor and the Trust of an instrument of resignation, the resigning Institutional Trustee or
Delaware Trustee, as applicable, may petition any court of competent jurisdiction for appointment
of a Successor Institutional Trustee or Successor Delaware Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper and prescribe, appoint a Successor
Institutional Trustee or Successor Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for the acts or omissions to
act of any Successor Institutional Trustee or Successor Delaware Trustee, as the case may be.
SECTION 5.7
Vacancies among Trustees
.
26
If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced
pursuant to Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of such vacancy by the Regular Trustees
or, if there are more than two, a majority of the Regular Trustees shall be conclusive evidence of
the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance
with Section 5.6.
SECTION 5.8
Effect of Vacancies
.
The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation,
incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust.
Whenever a vacancy in the number of Regular Trustees shall occur, until such vacancy is filled by
the appointment of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the Regular Trustees and
shall discharge all the duties imposed upon the Regular Trustees by this Declaration.
SECTION 5.9
Meetings
.
If there is more than one Regular Trustee, meetings of the Regular Trustees shall be held from
time to time upon the call of any Regular Trustee. Regular meetings of the Regular Trustees may be
held at a time and place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such
meeting. Notice of any telephonic meetings of the Regular Trustees or any committee thereof shall
be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting. The presence (whether in
person or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice of
such meeting except where a Regular Trustee attends a meeting for the express purpose of objecting
to the transaction of any activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the Regular Trustees may be
taken at a meeting by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a Quorum is present, or
without a meeting by the unanimous written consent of the Regular Trustees. In the event there is
only one Regular Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
SECTION 5.10
Delegation of Power
.
(a) Any Regular Trustee may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 his or her power for the purpose of executing any
documents contemplated in Section 3.6, including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing; and
27
(b) the Regular Trustees shall have power to delegate from time to time to such of their
number or to officers of the Trust the doing of such things and the execution of such instruments
either in the name of the Trust or the names of the Regular Trustees or otherwise as the Regular
Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 5.11
Merger, Conversion, Consolidation or Succession to Business
.
Any corporation into which the Institutional Trustee or the Delaware Trustee, as the case may
be, may be merged or converted or with which either may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Institutional Trustee or the
Delaware Trustee, as the case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Institutional Trustee or the Delaware
Trustee, as the case may be, hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1
Distributions
.
Holders shall receive Distributions (as defined herein) in accordance with the applicable
terms of the relevant Holders Securities. Distributions shall be made on the Capital Securities
and the Common Securities in accordance with the preferences set forth in their respective terms.
If and to the extent that the Debenture Issuer makes a payment of interest (including Compounded
Interest (as defined in the Indenture) and Additional Interest (as defined in the Indenture)),
premium and/or principal on the Debentures held by the Institutional Trustee (the amount of any
such payment being a Payment Amount), the Institutional Trustee shall and is directed to make a
distribution (a Distribution) of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1
General Provisions Regarding Securities
.
(a) The Regular Trustees shall on behalf of the Trust issue one class of capital securities
representing undivided beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the Capital Securities) and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as are set forth in
Annex I (the Common Securities). The Trust shall issue no securities or other interests in the
assets of the Trust other than the Capital Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by a Regular Trustee. Such
signature shall be the manual or facsimile signature of any present or any future Regular Trustee.
In case any Regular Trustee of the Trust who shall have signed any of the Securities shall cease to
be such Regular Trustee before the Certificates so signed shall be
28
delivered by the Trust, such Certificates nevertheless may be delivered as though the person
who signed such Certificates had not ceased to be such Regular Trustee; and any Certificate may be
signed on behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be the Regular Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such a Regular Trustee. Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such legends or endorsements
as the Regular Trustees may deem appropriate, or as may be required to comply with any law or with
any rule or regulation of any stock exchange on which Securities may be listed, or to conform to
usage.
(c) The consideration received by the Trust for the issuance of the Securities shall
constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration, the Securities so issued
shall be deemed to be validly issued, fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or a Capital Security Beneficial Owner
in accordance with the terms of this Declaration, shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by, this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1
Termination of Trust
.
(a) The Trust shall terminate:
(i) upon the bankruptcy of any Holder of the Common Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution or its equivalent with respect to
any Holder of the Common Securities or the Sponsor; the filing of a certificate of
cancellation with respect to the Trust or the revocation of the Holder of the Common
Securities or the Sponsors charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of any Holder of the Common
Securities, the Sponsor or the Trust;
(iv) Subject to obtaining any required regulatory approval, when all of the Securities
have been called for redemption and the amounts necessary for redemption thereof have been
paid to the Holders in accordance with the terms of the Securities;
(v) Subject to obtaining any required regulatory approval, when the Trust shall have
been dissolved in accordance with the terms of the Securities upon election by
29
the Sponsor of its right to terminate the Trust and distribute all of the Debentures to
the Holders of Securities in exchange for all of the Securities and all of the Debentures
shall have been distributed to the Holders of Securities in accordance with such election;
(vi) before the issuance of any Securities, with the consent of all of the Regular
Trustees and the Sponsor; or
(vii) upon the expiration of the term of the Trust set forth in Section 3.14.
(b) As soon as is practicable after the occurrence of an event referred to in Section 8.1(a),
and after satisfaction of liabilities to creditors of the Trust as required by applicable law,
including Section 3808 of the Statutory Trust Act, and subject to the terms set forth in Annex I,
the Delaware Trustee, when notified in writing of the completion of the winding up of the Trust in
accordance with the Statutory Trust Act, shall terminate the Trust by filing, at the expense of the
Sponsor, a certificate of cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1
Transfer of Securities
.
(a) Securities may only be transferred, in whole or in part, in accordance with the terms and
conditions set forth in this Declaration and in the terms of the Securities. Any transfer or
purported transfer of any Security not made in accordance with this Declaration shall be null and
void.
(b) Subject to this Article IX, Capital Securities shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party may only transfer Common
Securities to the Sponsor or a Related Party of the Sponsor; provided, that any such transfer is
subject to the condition precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such transfer would not cause more
than an insubstantial risk that:
(i) the Trust would not be classified for United States federal income tax purposes as
a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee would become an
Investment Company.
SECTION 9.2
Transfer of Certificates
.
The Regular Trustees shall provide for the registration of Certificates and of transfers of
Certificates, which will be effected without charge but only upon payment (with such
30
indemnity as the Regular Trustees may require) in respect of any tax or other government
charges that may be imposed in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be issued in the name
of the designated transferee or transferees. Every Certificate surrendered for registration of
transfer shall be accompanied by a written instrument of transfer in form satisfactory to the
Regular Trustees duly executed by the Holder or such Holders attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a Certificate. By
acceptance of a Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.3
Deemed Security Holders
.
The Trustees may treat the Person in whose name any Certificate shall be registered on the
books and records of the Trust as the sole holder of such Certificate and of the Securities
represented by such Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust shall have actual or other notice thereof.
SECTION 9.4
Book Entry Interests
.
Unless otherwise specified in the terms of the Capital Securities, the Capital Securities
Certificates, on original issuance, will be issued in the form of one or more, fully registered,
global Capital Security Certificates (each a Global Certificate), to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially
be registered on the books and records of the Trust in the name of Cede & Co., the nominee of DTC,
and no Capital Security Beneficial Owner will receive a definitive Capital Security Certificate
representing such Capital Security Beneficial Owners interests in such Global Certificates, except
as provided in Section 9.7. Unless and until definitive, fully registered Capital Security
Certificates (the Definitive Capital Security Certificates) have been issued to the Capital
Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and effect;
(b) the Trust and the Trustees shall be entitled to deal with the Clearing Agency for all
purposes of this Declaration (including the payment of Distributions on the Global Certificates and
receiving approvals, votes or consents hereunder) as the Holder of the Capital Securities and the
sole holder of the Global Certificates and shall have no obligation to the Capital Security
Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with any other provisions
of this Declaration, the provisions of this Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and agreements between such
Capital Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants
and receive and transmit payments of Distributions on the
31
Global Certificates to such Clearing Agency Participants. DTC will make book entry transfers
among the Clearing Agency Participants.
SECTION 9.5
Notices to Clearing Agency
.
Whenever a notice or other communication to the Capital Security Holders is required under
this Declaration, unless and until Definitive Capital Security Certificates shall have been issued
to the Capital Security Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give
all such notices and communications specified herein to be given to the Capital Security Holders to
the Clearing Agency, and shall have no notice obligations to the Capital Security Beneficial
Owners.
SECTION 9.6
Appointment of Successor Clearing Agency
.
If any Clearing Agency elects to discontinue its services as a securities depositary with
respect to the Capital Securities, the Regular Trustees may, in their sole discretion, appoint a
successor Clearing Agency with respect to such Capital Securities.
SECTION 9.7
Definitive Capital Security Certificates
.
If:
(a) a Clearing Agency elects to discontinue its services as a securities depositary with
respect to the Capital Securities and a successor Clearing Agency is not appointed within 90 days
after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to terminate the book entry
system through the Clearing Agency with respect to the Capital Securities,
then:
(c) Definitive Capital Security Certificates shall be prepared by the Regular Trustees on
behalf of the Trust with respect to such Capital Securities; and
(d) upon surrender of the Global Certificates by the Clearing Agency, accompanied by
registration instructions, the Regular Trustees shall cause Definitive Certificates to be delivered
to Capital Security Beneficial Owners in accordance with the instructions of the Clearing Agency.
Neither the Trustees nor the Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be protected in relying on, said instructions
of the Clearing Agency. The Definitive Capital Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and may have such letters, numbers or
other marks of identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock exchange on which
Capital Securities may be listed, or to conform to usage.
SECTION 9.8
Mutilated, Destroyed, Lost or Stolen Certificates
.
32
If:
(a) any mutilated Certificates should be surrendered to the Regular Trustees, or if the
Regular Trustees shall receive evidence to their satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or indemnity as may be
required by them to keep each of them harmless.
then, in the absence of notice that such Certificate shall have been acquired by a bona fide
purchaser, any Regular Trustee on behalf of the Trust shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this Section 9.8, the
Regular Trustees may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall
be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1
Liability
.
(a) Except as expressly set forth in this Declaration, the Capital Securities Guarantee and
the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital contributions (or
any return thereon) of the Holders of the Securities which shall be made solely from assets
of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any deficit upon
dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the debts and obligations
of the Trust (other than with respect to the Securities) to the extent not satisfied out of the
Trusts assets.
(c) Pursuant to § 3803(a) of the Statutory Trust Act, the Holders of the Capital Securities
shall be entitled to the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State of Delaware.
SECTION 10.2
Exculpation
.
(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Trust or any Covered Person for any loss, damage or claim incurred
33
by reason of any act or omission performed or omitted by such Indemnified Person in good faith
on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this Declaration or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of
such Indemnified Persons gross negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Trust and upon such information, opinions, reports or statements presented to the Trust by
any Person as to matters the Indemnified Person reasonably believes are within such other Persons
professional or expert competence and who has been selected with reasonable care by or on behalf of
the Trust, including information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be paid.
SECTION 10.3
Fiduciary Duty
.
(a) To the extent that, at law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other
Covered Person for its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified
Person otherwise existing at law or in equity (other than the duties imposed on the Institutional
Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated herein or therein
provides that an Indemnified Person shall act in a manner that is, or provides terms that
are, fair and reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action or provide such
terms, considering in each case the relative interest of each party (including its own interest) to
such conflict, agreement, transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable generally accepted
accounting practices or principles. In the absence of bad faith by the Indemnified Person, the
resolution, action or term so made, taken or provided by the Indemnified Person shall not
constitute a breach of this Declaration or any other agreement contemplated herein or of any duty
or obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or required to make a
decision:
34
(i) in its discretion or under a grant of similar authority, the Indemnified Person
shall be entitled to consider such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any consideration to any interest of
or factors affecting the Trust or any other Person; or
(ii) in its good faith or under another express standard, the Indemnified Person
shall act under such express standard and shall not be subject to any other or different
standard imposed by this Declaration or by applicable law.
SECTION 10.4
Indemnification
.
(a) (i) The Debenture Issuer shall indemnify, to the full extent permitted by law, any Company
Indemnified Person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason of the fact that he
is or was a Company Indemnified Person against expenses (including attorneys fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo
contendere
or its equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent permitted by law, any
Company Indemnified Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best interests of the
Trust and except that no such indemnification shall be made in respect of any claim, issue
or matter as to which such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which such Court of
Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be successful on the merits
or otherwise (including dismissal of an action without prejudice or the settlement of an
action without admission of liability) in defense of any action, suit or proceeding referred
to in paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any claim, issue or
matter therein, he shall be indemnified, to the full extent permitted by
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law, against expenses (including attorneys fees) actually and reasonably incurred by
him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this Section 10.4(a) (unless
ordered by a court) shall be made by the Debenture Issuer only as authorized in the specific
case upon a determination that indemnification of the Company Indemnified Person is proper
in the circumstances because he has met the applicable standard of conduct set forth in
paragraphs (i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not parties to such
action, suit or proceeding, (2) if such a quorum is not obtainable, or, even if obtainable,
if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a
written opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be indemnified by the
Debenture Issuer as authorized in this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Regular Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security Holder at the time such determination is
made, such Company Indemnified Person acted in bad faith or in a manner that such person did
not believe to be in or not opposed to the best interests of the Trust, or, with respect to
any criminal proceeding, that such Company Indemnified Person believed or had reasonable
cause to believe his conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the Trust or its
Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided by, or granted pursuant
to, the other paragraphs of this Section 10.4(a) shall not be deemed exclusive of any other
rights to which those seeking indemnification and advancement of expenses may be entitled
under any agreement, vote of stockholders or disinterested directors of the Debenture Issuer
or Capital Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be provided by a contract
between the Debenture Issuer and each Company Indemnified Person who serves in such capacity
at any time while this Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then existing.
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(vii) The Debenture Issuer may purchase and maintain insurance on behalf of any person
who is or was a Company Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such, whether or not
the Debenture Issuer would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to the Trust shall include,
in addition to the resulting or surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or merger, so that any person who
is or was a director, trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee, officer, employee
or agent of another entity, shall stand in the same position under the provisions of this
Section 10.4(a) with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or granted pursuant
to, this Section 10.4(a) shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Institutional Trustee, (ii) the Delaware
Trustee, (iii) any Affiliate of the Institutional Trustee and the Delaware Trustee, and (iv) any
officers, directors, shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee and the Delaware Trustee (each of the Persons in
(i) through (iv) being referred to as a Fiduciary Indemnified Person) for, and to hold each
Fiduciary Indemnified Person harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the acceptance or
administration or the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers or duties hereunder.
The obligation to indemnify as set forth in this Section 10.4(b) shall survive the resignation or
removal of the Institutional Trustee or the Delaware Trustee, as the case may be, and the
satisfaction and discharge of this Declaration.
SECTION 10.5
Outside Businesses
.
Any Covered Person, the Sponsor, the Delaware Trustee and the Institutional Trustee may engage
in or possess an interest in other business ventures of any nature or description, independently or
with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or improper. No Covered
Person, the Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if such opportunity is of
a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Institutional Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend to
37
others any such particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other obligations of the
Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1
Fiscal Year
.
The fiscal year (Fiscal Year) of the Trust shall be the calendar year, or such other year as
is required by the Code.
SECTION 11.2
Certain Accounting Matters
.
(a) At all times during the existence of the Trust, the Regular Trustees shall keep, or cause
to be kept, full books of account, records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for United States
federal income tax purposes. The books of account and the records of the Trust shall be examined
by and reported upon as of the end of each Fiscal Year of the Trust by a firm of independent
certified public accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to each of the Holders of
Securities, to the extent, if any, required by the Trust Indenture Act, within 90 days after the
end of each Fiscal Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements of income or loss;
(c) The Regular Trustees shall cause to be duly prepared and delivered to each of the Holders
of Securities, any annual United States federal income tax information statement required by the
Code, containing such information with regard to the Securities held by each Holder as is required
by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver all such statements
within 30 days after the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed with the appropriate taxing
authority, an annual United States federal income tax return, on a Form 1041 or such other form
required by United States federal income tax law, and any other annual income tax returns required
to be filed by the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3
Banking.
The Trust shall maintain one or more bank accounts in the name and for the sole benefit of the
Trust; provided, however, that all payments of funds in respect of the Debentures
38
held by the Institutional Trustee shall be made directly to the Institutional Trustee Account
and no other funds of the Trust shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees; provided, however, that
the Institutional Trustee shall designate the signatories for the Institutional Trustee Account.
SECTION 11.4
Withholding.
The Trust and the Regular Trustees shall comply with all withholding requirements under United
States federal, state and local law. The Trust shall request, and the Holders shall provide to the
Trust, such forms or certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be requested by the
Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations.
The Regular Trustees shall file required forms with applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder, shall remit amounts withheld with
respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions or allocations to
any Holder, the amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Holder. In the event of any claimed overwithholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be withheld was not
withheld from actual Distributions made, the Trust may reduce subsequent Distributions by the
amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1
Amendments.
(a) Except as otherwise provided in this Declaration or by any applicable terms of the
Securities, this Declaration may only be amended by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular Trustees a majority of
the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties, obligations or immunities of
the Institutional Trustee, the Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties, obligations or immunities of
the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment shall be void and
ineffective:
(i) unless, in the case of any proposed amendment, the Institutional Trustee shall have
first received an Officers Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration (including the
terms of the Securities);
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(ii) unless, in the case of any proposed amendment which affects the rights, powers,
duties, obligations or immunities of the Institutional Trustee, the Institutional Trustee
shall have first received:
(A) an Officers Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or the Trust) that
such amendment is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for purposes of United
States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the Institutional
Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company required to be
registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that remain outstanding, any
amendment that would adversely affect the rights, privileges or preferences of any Holder of
Securities may be effected only with such additional requirements as may be set forth in the terms
of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without the consent of all of
the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities and;
(f) the rights of the Holders of the Common Securities under Article V to increase or decrease
the number of, and appoint and remove Trustees shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities; and
(g) subject to Section 12.1(c), this Declaration may be amended without the consent of the
Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that may be defective or
inconsistent with any other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of the Sponsor;
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(iv) to conform to any change in Rule 3a-5 or written change in interpretation or
application of Rule 3a-5 by any legislative body, court, government agency or regulatory
authority which amendment does not have a material adverse effect on the right, preferences
or privileges of the Holders; and
(v) to modify, eliminate and add to any provision of the Declaration to such extent as
may be reasonably necessary to effectuate any of the foregoing or to otherwise comply with
applicable law.
SECTION 12.2
Meetings of the Holders of Securities; Action by Written Consent
.
(a) Meetings of the Holders of any class of Securities may be called at any time by the
Regular Trustees (or as provided in the terms of the Securities) to consider and act on any matter
on which Holders of such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Regular Trustees shall call a meeting of the
Holders of such class if directed to do so by the Holders of Securities representing at least 10%
in liquidation amount of such class of Securities. Such direction shall be given by delivering to
the Regular Trustees one or more calls in a writing stating that the signing Holders of Securities
wish to call a meeting and indicating the general or specific purpose for which the meeting is to
be called. Any Holders of Securities calling a meeting shall specify in writing the Security
Certificates held by the Holders of Securities exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the Securities, the following
provisions shall apply to meetings of Holders of Securities:
(i) notice of any such meeting shall be given to all the Holders of Securities having
a right to vote thereat at least 7 days and not more than 60 days before the date of such
meeting. Whenever a vote, consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, such vote, consent or approval may be given
at a meeting of the Holders of Securities. Any action that may be taken at a meeting of
the Holders of Securities may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary to authorize or
take such action at a meeting at which all Holders of Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders of Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting shall be returned to
the Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to act for it by proxy on all
matters in which a Holder of Securities is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. No proxy shall be valid
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after the expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation Law of the State
of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust
were a Delaware corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be conducted by the Regular
Trustees or by such other Person that the Regular Trustees may designate; and
(iv) unless the Statutory Trust Act, this Declaration, the terms of the Securities,
the Trust Indenture Act or the listing rules of any stock exchange on which the Capital
Securities are then listed or trading, otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting at which any
matter is to be voted on by any Holders of Securities, waiver of any such notice, action by
consent without a meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1
Representations and Warranties of Institutional Trustee
.
The Trustee that acts as initial Institutional Trustee represents and warrants to the Trust
and to the Sponsor at the date of this Declaration, and each Successor Institutional Trustee
represents and warrants to the Trust and the Sponsor at the time of the Successor Institutional
Trustees acceptance of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a banking corporation with trust powers, duly organized,
validly existing and in good standing under the laws of the State of New York, with trust power and
authority to execute and deliver, and to carry out and perform its obligations under the terms of,
this Declaration;
(b) the execution, delivery and performance by the Institutional Trustee of the Declaration
has been duly authorized by all necessary corporate action on the part of the Institutional
Trustee. The Declaration has been duly executed and delivered by the Institutional Trustee, and it
constitutes a legal, valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors rights generally and to general principles
of equity and the discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
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(c) the execution, delivery and performance of the Declaration by the Institutional Trustee
does not conflict with or constitute a breach of the Articles of Organization or By-laws of the
Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with or notice to, any State or
Federal banking authority is required for the execution, delivery or performance by the
Institutional Trustee, of the Declaration.
SECTION 13.2
Representations and Warranties of Delaware Trustee
.
The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustees acceptance of
its appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation with trust powers, duly organized,
validly existing and in good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations under the terms of,
the Declaration.
(b) The Delaware Trustee has been authorized to perform its obligations under the Certificate
of Trust and the Declaration. The Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws
affecting creditors rights generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(c) No consent, approval or authorization of, or registration with or notice to, any State or
Federal banking authority is required for the execution, delivery or performance by the Delaware
Trustee, of the Declaration.
(d) The Delaware Trustee is an entity which maintains its principal place of business in the
State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1
Notices
.
All notices provided for in this Declaration shall be in writing, duly signed by the party
giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail,
as follows:
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(a) if given to the Trust, in care of the Regular Trustees at the Trusts mailing address set
forth below (or such other address as the Trust may give notice of to the Holders of the
Securities):
Citigroup Capital XIX
c/o Citigroup Inc.
153 East 53rd Street
New York, NY 10043
Attention: Sallie Krawcheck
(b) if given to the Delaware Trustee, at the mailing address set forth below (or such other
address as Delaware Trustee may give notice of to the Holders of the Securities):
The Bank of New York (Delaware)
100 White Clay Center
Route 273
P. O. Box 6995
Newark, DE 19711
Attention: Corporate Trust Department
(c) if given to the Institutional Trustee, at the mailing address set forth below (or such
other address as the Institutional Trustee may give notice of to the Holders of the Securities):
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(d) if given to the Holder of the Common Securities, at the mailing address of the Sponsor set
forth below (or such other address as the Holder of the Common Securities may give notice of to the
Trust):
Citigroup Inc.
153 East 53rd Street
New York, NY 10043
Attention: Charles E. Wainhouse
(e) if given to any other Holder, at the address set forth on the books and records of the
Trust.
All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
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SECTION 14.2
Governing Law
.
This Declaration and the rights of the parties hereunder shall be governed by and interpreted
in accordance with the laws of the State of Delaware and all rights and remedies shall be governed
by such laws without regard to principles of conflict of laws.
SECTION 14.3
Intention of the Parties
.
It is the intention of the parties hereto that the Trust be classified for United States
federal income tax purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 14.4
Headings.
Headings contained in this Declaration are inserted for convenience of reference only and do
not affect the interpretation of this Declaration or any provision hereof.
SECTION 14.5
Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all covenants and agreements in this
Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6
Partial Enforceability.
If any provision of this Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or the application of such
provision to Persons or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7
Counterparts
.
This Declaration may contain more than one counterpart of the signature page and this
Declaration may be executed by the affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be read as though one,
and they shall have the same force and effect as though all of the signers had signed a single
signature page.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as of the day
and year first above written.
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Name: Gary Crittenden
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Title: Regular Trustee
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THE BANK OF NEW YORK (DELAWARE),
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as Delaware Trustee
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By:
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Name:
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Title:
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THE BANK OF NEW YORK, as Institutional Trustee
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By:
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Name:
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Title:
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CITIGROUP INC., as Sponsor
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By:
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Name: Charles E. Wainhouse
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Title: Assistant Treasurer
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ANNEX I
TERMS OF
% CAPITAL SECURITIES
% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust, dated as of
, 20 (as amended from time to time, the Declaration), the designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in the Prospectus
referred to below):
1.
Designation and Number
.
(a)
Capital Securities
. Capital Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of
dollars ($ ), and a liquidation amount with respect to the assets of the Trust of
$25 per capital security, are hereby designated for the purposes of identification only as %
Capital Securities (the Capital Securities). The Capital Security Certificates evidencing the
Capital Securities shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom
or practice or to conform to the rules of any stock exchange on which the Capital Securities are
listed.
(b)
Common Securities
. Common Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of dollars ($ ),
and a liquidation amount with respect to the assets of the Trust of $25 per common security, are
hereby designated for the purposes of identification only as % Common Securities (the
Common Securities). The Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or practice.
2.
Distributions
.
(a) Distributions payable on each Security will be fixed at a rate per annum of
% (the Coupon Rate) of the stated liquidation amount of $25 per Security, such
rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears beyond the first date such Distributions are payable (or would be payable,
if not for any Extension Period (as defined below) or default by the Debenture Issuer on the
Debentures) will bear interest thereon compounded quarterly at the Coupon Rate (to the extent
permitted by applicable law). The term Distributions as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly Distribution period
on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full
quarterly
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Distribution period for which Distributions are computed, Distributions will be computed on
the basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue from and including
, 20 , and will be payable quarterly in arrears, on , ,
, and of each year, commencing on , 20 . When, as and if
available for payment, Distributions will be made by the Institutional Trustee, except as otherwise
described below. The Debenture Issuer has the right under the Indenture to defer payments of
interest on the Debentures by extending the interest payment period from time to time on the
Debentures for a period not exceeding 40 consecutive quarters (each an Extension Period), during
which Extension Period no interest shall be due and payable on the Debentures, provided, that no
Extension Period may extend beyond the date of maturity of the Debentures. As a consequence of the
Debenture Issuers extension of the interest payment period, quarterly Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate compounded quarterly during
any such Extension Period. In the event that the Debenture Issuer exercises its right to extend
the interest payment period, then (a) the Debenture Issuer and any subsidiary of the Debenture
Issuer shall not declare or pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its capital stock or make
any guarantee payment with respect thereto (other than (i) purchases, redemptions or other
acquisitions of shares of capital stock of the Debenture Issuer in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) purchases of shares of common stock of the Debenture Issuer pursuant
to a contractually binding requirement to buy stock existing prior to the commencement of the
extension period, including under a contractually binding stock repurchase plan (iii) as a result
of an exchange or conversion of any class or series of the Debenture Issuers capital stock for any
other class or series of the Debenture Issuers capital stock, (iv) the purchase of fractional
interests in shares of the Debenture Issuers capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged), or (v) the purchase
of the Debenture Issuers capital stock in connection with the distribution thereof; and (b) the
Debenture Issuer and any subsidiary of the Debenture Issuer will not make any payment of interest,
principal or premium on, or repay, repurchase or redeem, any debt securities or guarantees issued
by the Debenture Issuer that rank pari passu with or junior to the Debentures (other than (i) any
payment of current or deferred interest on securities that rank pari passu with the Debentures that
is made pro rata to the amounts due on such securities (including the Debentures), provided that
any such payments of deferred interest are made in accordance with the Alternative Payment
Mechanism (as defined below) or (ii) any payments of deferred interest on securities that rank pari
passu with the Debentures that, if not made, would give rise to an event of default permitting
acceleration of such securities. The foregoing, however, will not apply to any stock dividends paid
by the Debenture Issuer where the dividend stock is the same stock as that on which the dividend is
being paid. In addition, the Debenture Issuer may pay
current interest at any time with cash from
any source. Prior to the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided, that such Extension Period, together with all such previous
and further extensions thereof, may not exceed 40 consecutive quarters; provided further, that no
Extension Period may extend beyond the maturity of the Debentures. Payments of deferred
Distributions and accrued interest thereon will be payable to Holders as they appear
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on the books and records of the Trust on the first record date before the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to the above requirements. The
Regular Trustees will give notice to each Holder of any Extension Period upon their receipt of
notice thereof from the Debenture Issuer.
(c) If the Debenture Issuer does not pay all accrued and unpaid interest on the Debentures for
a period of 20 consecutive quarterly periods or if the Debenture Issuer pays current interest on
the Debentures during an Extension Period, it will be subject to the Alternative Payment
Mechanism, whereby the Debenture Issuer will be obliged to continuously use its commercially
reasonable efforts to sell shares of its common stock (including treasury shares). The Debenture
Issuer will notify the Board of Governors of the Federal Reserve Bank and the Federal Reserve Bank
of New York, or its successor as the Debenture Issuers primary federal banking regulator
(collectively, the Federal Reserve) (1) of the commencement of any Extension Period, (2) of the
fifth anniversary of the commencement of an Extension period or earlier payment of current interest
on the Debentures during an Extension Period and (3) of its intention to sell shares of its common
stock and/or Qualified Warrants (as defined below) and to apply the net proceeds from such sale to
pay deferred interest on the Debentures at least 25 Business Days in advance of the relevant
payment date (or such longer period as may be required by the Federal Reserve or by other
supervisory action). The Debenture Issuer may pay accrued and unpaid interest on the Debentures on
or prior to the next interest payment date using only the net proceeds (after underwriters or
placement agents fees, commissions or discounts and other expenses relating to the issuances) of
such sales received by the Debenture Issuer during the 180-day period prior to that interest
payment date, except that the Debenture Issuer may pay accrued and unpaid interest on the
Debentures with cash from any source (i) upon the maturity of the Debentures, (ii) during the
occurrence and continuation of a Supervisory Event (as defined in the Indenture) or (iii) if an
Event of Default and Acceleration under the Indenture shall have occurred and be continuing.
Corresponding Distributions will be made on the Securities. If (1) a Supervisory Event or (2) a
Market Disruption Event (as defined in the Indenture) shall have occurred and be continuing; then
the Debenture Issuer will be excused from its obligation to use its commercially reasonable efforts
to sell its common stock and apply the net proceeds of such sale to pay accrued and unpaid interest
on the Debentures. During the occurrence of a Supervisory Event, the Debenture Issuer will, no
later than 30 Business Days prior to each interest payment date, notify the Federal Reserve of its
intention to both (1) issue or sell shares of common stock and (2) to apply the net proceeds from
such sale to pay deferred interest on the Debentures, and shall only take any such actions if the
Federal Reserve does not disapprove of any such actions within ten (10) Business Days after the
Debenture Issuer gives such notice to the Federal Reserve. The obligation of the Debenture Issuer
to use commercially reasonable efforts to sell its common stock and apply the net proceeds of such
sale to pay accrued and unpaid interest on the Debentures shall resume at such time as no Market
Disruption Event or Supervisory Event exists or is continuing. The Debenture Issuer is not
permitted to sell shares of common stock in excess of a number of shares of common stock which at
, 20 is equal to (the Share Cap Amount), for the purpose of satisfying the
Alternative Payment Mechanism or otherwise paying deferred interest on the Debentures then
outstanding. If the issued and outstanding shares of common stock shall have been changed into a
different number of shares or a different class by reason of any stock split, reverse stock split,
stock dividend, reclassification, recapitalization, split-up, combination,
I-3
exchange of shares or other similar transaction, then the Share Cap Amount shall be
correspondingly adjusted. The Debenture Issuer shall increase the Share Cap Amount (including
through the increase of its authorized share capital, if necessary) to an amount that would allow
the Debenture Issuer to raise sufficient proceeds to satisfy its obligations to pay deferred
interest in full at the end of the first year of an Extension Period (and on each subsequent
anniversary of the end of the first year of an Extension Period to the extent that an Extension
Period would last more than one year), if the then-current Share Cap Amount would not allow the
Debenture Issuer to raise sufficient proceeds to satisfy its obligations to pay deferred interest
(including compounded interest to that date) assuming a price per share equal to the average
trading price of the Debenture Issuers common shares over the ten-trading-day period preceding
such date; provided that the Debenture Issuer will not be obligated to increase the Share Cap
Amount above shares. Until the tenth anniversary of the commencement of an Extension
Period, a Default will occur if the Debenture Issuer does not increase the Share Cap Amount to an
amount that is greater than shares when required to do so as described above; provided that
no Default will occur if the Debenture Issuer has increased the share cap amount to
shares. The Debenture Issuer will not be obligated to issue common stock prior to the fifth
anniversary of the commencement of an Extension Period if the gross proceeds of any issuance of
common stock and Qualified Warrants applied to pay deferred interest on the Debentures pursuant to
the Alternative Payment Mechanism, together with the gross proceeds of all prior issuances of
common stock and Qualified Warrants applied since the commencement of the Extension Period, would
exceed an amount equal to 2% of the product of (1) the average of the Current Stock Market Prices
(as defined in the Indenture) of the Debenture Issuers common stock on the 10 consecutive trading
days ending on the fourth trading day immediately preceding the date of issuance by the Debenture
Issuer of common stock applied to pay deferred interest on the Debentures pursuant to the
Alternative Payment Mechanism and (2) the total number of issued and outstanding shares of the
Debenture Issuers common stock as of the date of the Debenture Issuers publicly available
consolidated financial statements (the APM Maximum Obligation). Once the Debenture Issuer reaches
the APM Maximum Obligation for an Extension Period, the Debenture Issuer will not be obligated to
issue more common stock or Qualified Warrants in satisfaction of the Alternative Payment Mechanism
prior to the fifth anniversary of the commencement of an Extension Period even if the Current Stock
Market Price of the Debenture Issuers common stock or the number of outstanding shares of its
common stock subsequently increase. The APM Maximum Obligation will cease to apply following the
fifth anniversary of the commencement of an Extension Period, at which point the Debenture Issuer
must repay any deferred interest, regardless of the time at which it was deferred, using proceeds
from sales of the Debenture Issuers common stock, including treasury shares, subject to any Market
Disruption Event, Supervisory Event, and the Share Cap Amount. If the APM Maximum Obligation has
been reached during an Extension Period and the Debenture Issuer subsequently repays all deferred
interest, the APM Maximum Obligation will cease to apply at the termination of such Extension
Period and will not apply again unless and until the Debenture Issuer starts a new Extension
Period. Qualified Warrants means warrants for the Debenture Issuers common stock on t
heir date
of issuance that (1) have an exercise price greater than the Current Stock Market Price of the
Debenture Issuers common stock, and (2) the Debenture Issuer is not entitled to redeem for cash
and the holders are not entitled to require the Debenture Issuer to repurchase for cash in any
circumstances.
I-4
(d) Distributions on the Securities will be payable to the Holders thereof as they appear on
the books and records of the Trust at the close of business on the relevant record dates. While
the Capital Securities remain in book-entry only form, the relevant record dates shall be one
Business Day prior to the relevant payment dates which payment dates shall correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Capital Securities will be made
as described under the heading Description of the Capital Securities Book-Entry Only Issuance
in the Prospectus dated , 20 (the Prospectus), of the Trust included in the
Registration Statement on Form S-3 of the Sponsor, the Trust and certain other statutory trusts.
The relevant record dates for the Common Securities shall be the same record date as for the
Capital Securities. If the Capital Securities shall not continue to remain in book-entry only
form, the relevant record dates for the Capital Securities shall conform to the rules of any
securities exchange on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be more than 14 days but less than 60 days prior to the
relevant payment dates, which payment dates shall correspond to the interest payment dates on the
Debentures. Distributions payable on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Debenture Issuer having failed to make a payment
under the Debentures, will cease to be payable to the Person in whose name such Securities are
registered on the relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on which Distributions are
payable on the Securities is not a Business Day, then payment of the Distribution payable on such
date will be made on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(e) In the event that there is any money or other property held by or for the Trust that is
not accounted for hereunder, such property shall be distributed Pro Rata (as defined herein) among
the Holders of the Securities.
3.
Liquidation Distribution Upon Dissolution
.
(a) In the event of any voluntary or involuntary dissolution, winding-up or termination of the
Trust, the Holders of the Securities on the date of the dissolution, winding-up or termination, as
the case may be, will be entitled to receive out of the assets of the Trust available for
distribution to Holders of Securities after satisfaction of liabilities of creditors, distributions
in an amount equal to the aggregate of the stated liquidation amount of $25 per Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount being the Liquidation
Distribution), unless, in connection with such dissolution, winding-up or termination, Debentures
in an aggregate principal amount equal to the aggregate stated liquidation amount of, with an
interest rate equal to the Coupon Rate, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on, such Securities outstanding at such time, have been
distributed on a Pro Rata basis to the Holders of the Securities in exchange for such Securities.
Prior to any such Liquidation Distribution, the Debenture Issuer will obtain any required
regulatory approval.
I-5
(b) If, upon any such dissolution, the Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on the Securities shall be paid on a
Pro Rata basis.
4.
Redemption and Distribution
.
(a) Upon the repayment of the Debentures in whole or in part, whether at maturity or upon
redemption (either at the option of the Debenture Issuer or pursuant to a Special Event as
described below), the proceeds from such repayment or payment shall be simultaneously applied to
redeem Securities having an aggregate liquidation amount equal to the aggregate principal amount of
the Debentures so repaid or redeemed at a redemption price of $25 per Security plus an amount equal
to accrued and unpaid Distributions thereon at the date of the redemption, payable in cash (the
Redemption Price). Holders shall be given not less than 30 nor more than 60 days notice of such
redemption. Prior to any such redemption, the Debenture Issuer will obtain any required regulatory
approval.
(b) If fewer than all the outstanding Securities are to be so redeemed, the Securities will be
redeemed Pro Rata and the Capital Securities to be redeemed will be as described in Section
4(f)(ii) below.
(c) Subject to obtaining any required regulatory approval, if, at any time, a Tax Event, an
Investment Company Event or a Regulatory Capital Event (each as defined below, and each a Special
Event) shall occur and be continuing, Citigroup shall have the right, upon not less than 30 nor
more than 60 days notice, to redeem the Debentures, in whole or in part, for cash within 90 days
following the occurrence of such Special Event, and, following such redemption, Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the Debentures so redeemed
shall be redeemed by the Trust at the Redemption Price on a Pro Rata basis; provided, however, that
if at the time there is available to Citigroup or the Trust the opportunity to eliminate, within
such 90-day period, the Special Event by taking some ministerial action, such as filing a form or
making an election or pursuing some other similar reasonable measure that will have no adverse
effect on the Trust, Citigroup or the holders of the Securities, then Citigroup or the Trust will
pursue such measure in lieu of redemption.
Tax Event means that the Regular Trustees shall have received an opinion of a nationally
recognized independent tax counsel experienced in such matters (a Tax Event Opinion) to the
effect that, as a result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination on or after the date of the
Prospectus), in either case after the date of the Prospectus, there is more than an insubstantial
risk that (i) the Trust would be subject to United States federal income tax with respect to
interest accrued or received on the Debentures, (ii) the Trust would be subject to more than a de
minimis amount of other taxes, duties or other governmental charges, or (iii) interest payable to
the Trust
I-6
on the Debentures would not be deductible, in whole or in part, by the Debenture Issuer for
United States federal income tax purposes.
Investment Company Event means that the Regular Trustees shall have received an opinion of a
nationally recognized independent counsel experienced in practice under the Investment Company Act
(an Investment Company Event Opinion) to the effect that, as a result of the occurrence of a
change in law or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory authority (a Change
in 1940 Act Law), there is a more than an insubstantial risk that the Trust is or will be
considered an Investment Company which is required to be registered under the Investment Company
Act, which Change in 1940 Act Law becomes effective on or after the date of the Prospectus.
Regulatory Capital Event means a determination by Citigroup, based on an opinion of counsel
experienced in such matters (who may be an employee of Citigroup or any of its affiliates), that,
as a result of (a) any amendment to, clarification of or change (including any announced
prospective change) in applicable laws or regulations or official interpretations thereof or
policies with respect thereto or (b) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment, clarification, change,
pronouncement or decision is announced or is effective after the date of the Prospectus, there is
more than an insubstantial risk that the Capital Securities will no longer constitute Tier I
Capital of Citigroup or any bank holding company of which Citigroup is a subsidiary (or its
equivalent) for purposes of the capital adequacy guidelines or policies of the Board of Governors
of the Federal Reserve System or its successor as Citigroups primary federal banking regulator,
provided, however that the distribution of the Debentures in connection with the liquidation of the
Trust shall not in and of itself constitute a Regulatory Capital Event unless such liquidation
shall have occurred in connection with a Tax Event or an Investment Company Event.
On and from the date fixed by the Regular Trustees for any distribution of the Debentures and
dissolution of the Trust: (i) the Securities will no longer be deemed to be outstanding, (ii) DTC
or its nominee (or any successor Clearing Agency or its nominee), as the record Holder of the
Capital Securities, will receive a registered global certificate or certificates representing the
Debentures to be delivered upon such distribution and (iii) any certificates representing
Securities, except for certificates representing Capital Securities held by DTC or its nominee (or
any successor Clearing Agency or its nominee), will be deemed to represent beneficial interests in
the Debentures having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such certificates are presented
to the Debenture Issuer or its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding Securities unless all accrued and
unpaid Distributions have been paid on all Securities for all quarterly Distribution periods
terminating on or before the date of redemption.
(e) If the Debentures are distributed to the Holders of the Securities, pursuant to the terms
of the Indenture, the Debenture Issuer will use its best efforts to cause the
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Debentures to be listed on the New York Stock Exchange or on such other exchange as the
Capital Securities were listed immediately prior to the distribution of the Debentures.
(f) Redemption or Distribution procedures will be as follows:
(i) Notice of any redemption of, or notice of distribution of Debentures in exchange
for the Securities (a Redemption/Distribution Notice) will be given by the Trust by mail
to the Institutional Trustee and the Delaware Trustee and to each Holder of the Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed
for redemption or exchange thereof which, in the case of a redemption, will be the date
fixed for redemption of the Debentures. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to this Section
4(f)(i), a Redemption/ Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to the Holders of the
Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of the
Securities at the address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof
with respect to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are to be redeemed,
the Securities to be redeemed shall be redeemed Pro Rata from each Holder of Capital
Securities, it being understood that, in respect of Capital Securities registered in the
name of and held of record by DTC or its nominee (or any successor Clearing Agency or its
nominee), the distribution of the proceeds of such redemption will be made to each Clearing
Agency Participant (or Person on whose behalf such nominee holds such securities) in
accordance with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a Redemption/Distribution
Notice, which notice may only be issued if the Debentures are redeemed as set out in this
Section 4 (which notice will be irrevocable), then (A) while the Capital Securities are in
book-entry only form, with respect to the Capital Securities, by 12:00 noon, New York City
time, on the redemption date, provided, that the Debenture Issuer has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related redemption
or maturity of the Debentures, the Institutional Trustee will deposit irrevocably with DTC
or its nominee (or successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Capital Securities and will give DTC (or any
successor Clearing Agency) irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Capital Securities, and (B) with respect to Capital Securities
issued in definitive form and Common Securities, provided, that the Debenture Issuer has
paid the Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Institutional Trustee will pay the relevant
Redemption Price to the Holders of such Securities by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the redemption date. If
a Redemption/Distribution Notice shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of business on the date of such deposit, or
I-8
on the redemption date, as applicable, distributions will cease to accrue on the
Securities so called for redemption and all rights of the Holders of such Securities so
called for redemption will cease, except the right of the Holders of such Securities to
receive the Redemption Price, but without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to register or cause to be registered the
transfer of any Securities that have been so called for redemption. If any date fixed for
redemption of Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of any Securities is improperly
withheld or refused and not paid either by the Institutional Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions on such Securities
will continue to accrue from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular Trustees on behalf of
the Trust to (A) in respect of the Capital Securities, DTC or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been issued or, if
Definitive Capital Security Certificates have been issued, to the Holder thereof and (B) in
respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without limitation, United
States federal securities laws), the Debenture Issuer or its affiliates may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
5.
Voting Rights Capital Securities
.
(a) Except as provided under Sections 5(b) and 7 and as otherwise required by law and the
Declaration, the Holders of the Capital Securities will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the Holders of a Majority in
aggregate liquidation amount of the Capital Securities, voting separately as a class, may direct
the time, method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the Institutional
Trustee, as holder of the Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercise any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waive any past Default (as
defined in the Indenture) that is waivable under Section 5.6 of the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required; provided, however, that, where a consent or action
under the Indenture would require the consent or act of each holder of each Debenture
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affected thereby, such consent or action under the Indenture shall not be effective until each
Holder of Capital Securities shall have consented to such action or provided such consent. The
Institutional Trustee shall not revoke any action previously authorized or approved by a vote of
the Holders of the Capital Securities. Except with respect to directing the time, method and place
of conducting a proceeding for a remedy available to the Institutional Trustee, the Institutional
Trustee, as holder of the Debentures, shall not take any of the actions described in clauses (i),
(ii), (iii) or (iv) above unless the Institutional Trustee has obtained an opinion of a nationally
recognized independent tax counsel experienced in such matters to the effect that as a result of
such action, the Trust will not fail to be classified as a grantor trust for United States federal
income tax purposes. If the Institutional Trustee fails to enforce its rights under the
Debentures, any Holder of Capital Securities may directly institute a legal proceeding against the
Debenture Issuer to enforce the Institutional Trustees rights under the Debentures without first
instituting a legal proceeding against the Institutional Trustee or any other Person or entity. If
a Default under the Declaration has occurred and is continuing and such event is attributable to
the failure of the Debenture Issuer to pay interest or principal on the Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the redemption date),
then a holder of Capital Securities may also directly institute a proceeding for enforcement of
payment to such holder (a Direct Action) of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Capital Securities of such
holder on or after the respective due date specified in the Debentures without first (i) directing
the Institutional Trustee to enforce the terms of the Debentures or (ii) instituting a legal
proceeding directly against the Debenture Issuer to enforce the Institutional Trustees rights
under the Debentures. Except as provided in the preceding sentence, the Holders of Capital
Securities will not be able to exercise directly any other remedy available to the holders of the
Debentures. In connection with such Direct Action, Citigroup will be subrogated to the rights of
such Holder of Capital Securities under the Declaration to the extent of any payment made by
Citigroup to such holder of Capital Securities in such Direct Action.
Any required approval or direction of Holders of Capital Securities may be given at a separate
meeting of Holders of Capital Securities convened for such purpose, at a meeting of all of the
Holders of Securities in the Trust or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Capital Securities. Each such notice will include a statement setting forth
(i) the date of such meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or
of such matter upon which written consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of the Capital Securities will be required for the Trust to
redeem and cancel Capital Securities or to distribute the Debentures in accordance with this
Declaration and the terms of the Securities.
Notwithstanding that Holders of Capital Securities are entitled to vote or consent under any
of the circumstances described above, any of the Capital Securities that are owned by the Sponsor
or any Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
I-10
6.
Voting Rights Common Securities
.
(a) Except as provided under Sections 6(b), (c) and 7 as otherwise required by law and the
Declaration, the Holders of the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance with and subject to
Article V of the Declaration, to vote to appoint, remove or replace any Trustee or to increase or
decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the Default with respect to the
Capital Securities has been cured, waived, or otherwise eliminated and subject to the requirements
of the second to last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional Trustee, or direct the
exercise of any trust or power conferred upon the Institutional Trustee under the Declaration,
including (i) directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waiving any past Default (as defined in the Indenture)
that is waivable under Section 5.6 of the Indenture, or (iii) exercising any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and payable, provided
that, where a consent or action under the Indenture would require the consent or act of the Holders
of greater than a majority in principal amount of Debentures affected thereby (a Super Majority),
the Institutional Trustee may only give such consent or take such action at the written direction
of the Holders of at least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 6(c), the Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital Securities. Other than with respect
to directing the time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of the Common Securities
under this paragraph unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Declaration, any Holder of Common Securities may institute a legal
proceeding directly against any Person to enforce the Institutional Trustees rights under the
Declaration, without first instituting a legal proceeding against the Institutional Trustee or any
other Person.
Any approval or direction of Holders of Common Securities may be given at a separate meeting
of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of
Securities in the Trust or pursuant to written consent. The Regular Trustees will cause a notice
of any meeting at which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to each Holder of
record of Common Securities. Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such
I-11
Holders are entitled to vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be required for the Trust to
redeem and cancel Common Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
7.
Amendments to Declaration and Indenture
.
(a) In addition to any requirements under Section 12.1 of the Declaration, if any proposed
amendment to the Declaration provides for, or the Regular Trustees otherwise propose to effect, (i)
any action that would adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up or
termination of the Trust, other than as described in Section 8.1 of the Declaration, then the
Holders of outstanding Securities as a class, will be entitled to vote on such amendment or
proposal (but not on any other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in liquidation amount of
the Securities, voting together as a single class; provided, however, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Capital Securities or only the
Common Securities, then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the approval of a
Majority in liquidation amount of such class of Securities.
(b) In the event the consent of the Institutional Trustee as the holder of the Debentures is
required under the Indenture with respect to any amendment, modification or termination on the
Indenture or the Debentures, the Institutional Trustee shall request the written direction of the
Holders of the Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by a Majority in
liquidation amount of the Securities voting together as a single class; provided, however, that
where a consent under the Indenture would require the consent of the holders of greater than a
majority in aggregate principal amount of the Debentures (a Super Majority), the Institutional
Trustee may only give such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding; provided, further, that the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of the Securities under
this Section 7(b) unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action.
8.
Pro Rata
.
A reference in these terms of the Securities to any payment, distribution or treatment as
being Pro Rata shall mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a payment, an a Default
under the Declaration has occurred and is continuing, in which case any funds available to make
such payment shall be paid first to each Holder of the Capital Securities pro rata
I-12
according to the aggregate liquidation amount of Capital Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Capital Securities outstanding, and only
after satisfaction of all amounts owed to the Holders of the Capital Securities, to each Holder of
Common Securities pro rata according to the aggregate liquidation amount of Common Securities held
by the relevant Holder relative to the aggregate liquidation amount of all Common Securities
outstanding.
9.
Ranking
.
The Capital Securities rank pari passu and payment thereon shall be made Pro Rata with the
Common Securities except that, where a Default (as defined in the Indenture) occurs and is
continuing under the Indenture in respect of the Debentures held by the Institutional Trustee, the
rights of Holders of the Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment of the Holders of
the Capital Securities.
10.
Listing
.
The Regular Trustees shall use their best efforts to cause the Capital Securities to be listed
on the New York Stock Exchange.
11.
Acceptance of Securities Guarantee and Indenture
.
Each Holder of Capital Securities and Common Securities, by the acceptance thereof, agrees to
the provisions of the Capital Securities Guarantee, including the subordination provisions therein
and to the provisions of the Indenture.
12.
No Preemptive Rights
.
The Holders of the Securities shall have no preemptive rights to subscribe for any additional
securities.
13.
Miscellaneous
.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration or the Capital Securities Guarantee, and
the Indenture to a Holder without charge on written request to the Sponsor at its principal place
of business.
I-13
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
THIS CAPITAL SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE DECLARATION
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE
DEPOSITARY) OR A NOMINEE OF THE DEPOSITARY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER
THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
(55 WATER STREET, NEW YORK, NEW YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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Certificate Number
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Number of Capital Securities
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CUSIP NO.
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Certificate Evidencing Capital Securities
of
CITIGROUP CAPITAL XIX
% Capital Securities
(Liquidation Amount $25 per Capital Security)
CITIGROUP CAPITAL XIX, a statutory trust formed under the laws of the State of Delaware (the
Trust), hereby certifies that
(the Holder) is the registered owner of
(
) capital securities of the Trust representing undivided beneficial interests in the assets of
the Trust designated the % Capital Securities (the Capital Securities). The Capital
Securities are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities are set forth in, and this certificate and the Capital
Securities represented hereby are issued and shall in all respects be subject to, the provisions of
A1-1
the Amended and Restated Declaration of Trust of the Trust dated as of , 20 , as
the same may be amended from time to time (the Declaration), including the designation of the
terms of the Capital Securities as set forth in Annex I thereto. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Capital Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Capital Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Sponsor at its principal place of business.
The Holder of this certificate, by accepting this certificate, is deemed to have (i) agreed to
the terms of the Indenture and the Debentures, including that the Debentures are subordinate and
junior in right of payment to all Senior Indebtedness (as defined in the Indenture) and (ii) agreed
to the terms of the Capital Securities Guarantee, including that the Capital Securities Guarantee
is (A) subordinate and junior in right of payment to all other liabilities of Citigroup, (B) pari
passu with the most senior preferred or preference stock now or hereafter issued by Citigroup and
with any guarantee now or hereafter issued by Citigroup with respect to preferred or preference
stock of Citigroups affiliates and (C) senior to Citigroups common stock.
Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Capital Securities as evidence of indirect beneficial ownership
in the Debentures.
A1-2
,
IN WITNESS WHEREOF, the Trust has executed this certificate this
day of
,
.
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Name:
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Title: Regular Trustee
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A1-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security Certificate to:
(Insert assignees social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Capital Security
Certificate on the books of the Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Capital Security Certificate)
A1-4
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
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Certificate Number
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Number of Common Securities
|
Certificate Evidencing Common Securities
of
CITIGROUP CAPITAL XIX
% Common Securities
(Liquidation Amount $25 per Common Security)
CITIGROUP CAPITAL XIX, a statutory trust formed under the laws of the State of Delaware (the
Trust), hereby certifies that Citigroup Inc., a Delaware corporation (the Holder), is the
registered owner of
(
) common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the % Common Securities (the
Common Securities). The Common Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer and satisfaction of the other conditions set forth in the
Declaration (as defined below), including, without limitation, Section 9.1 thereof. The
designation, rights, privileges, restrictions, preferences and other terms and provisions of the
Common Securities represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated as of ,
20 , as the same may be amended from time to time (the Declaration), including the designation
of the terms of the Common Securities as set forth in Annex I thereto. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration. The Sponsor will
provide a copy of the Declaration and the Indenture to a Holder without charge upon written request
to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
The Holder of this certificate, by accepting this certificate, is deemed to have agreed to the
terms of the Indenture and the Debentures, including that the Debentures are subordinate and junior
in right of payment to all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture.
A2-1
By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Common Securities as evidence of indirect beneficial ownership
in the Debentures.
A2-2
IN WITNESS WHEREOF, the Trust has executed this certificate this
day of
,
.
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Name:
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Title: Regular Trustee
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A2-3
ASSIGNMENT
FOR VALUE
RECEIVED, the undersigned assigns and transfers this Common Security Certificate to:
(Insert assignees social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Common Security Certificate)
A2-4
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
Exhibit 4.09
FORM OF
AMENDED AND RESTATED DECLARATION
OF TRUST
CITIGROUP CAPITAL XX
Dated as of , 20
TABLE OF CONTENTS
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ARTICLE I INTERPRETATION AND DEFINITIONS
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SECTION 1.1 Definitions
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1
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ARTICLE II TRUST INDENTURE ACT
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SECTION 2.1 Trust Indenture Act; Application
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7
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SECTION 2.2 Lists of Holders of Securities
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7
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SECTION 2.3 Reports by the Institutional Trustee
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7
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SECTION 2.4 Periodic Reports to Institutional Trustee
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8
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SECTION 2.5 Evidence of Compliance with Conditions Precedent
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8
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SECTION 2.6 Defaults; Waiver
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8
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SECTION 2.7 Default; Notice
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9
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ARTICLE III ORGANIZATION
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SECTION 3.1 Name
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10
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SECTION 3.2 Office
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10
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SECTION 3.3 Purpose
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10
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SECTION 3.4 Authority
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10
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SECTION 3.5 Title to Property of the Trust
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11
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SECTION 3.6 Powers and Duties of the Regular Trustees
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11
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SECTION 3.7 Prohibition of Actions by the Trust and the Trustees
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13
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SECTION 3.8 Powers and Duties of the Institutional Trustee
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14
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SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee
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16
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SECTION 3.10 Certain Rights of Institutional Trustee
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17
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SECTION 3.11 Delaware Trustee
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19
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SECTION 3.12 Execution of Documents
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20
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SECTION 3.13 Not Responsible for Recitals or Issuance of Securities
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20
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SECTION 3.14 Duration of Trust
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20
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SECTION 3.15 Mergers
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20
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ARTICLE IV SPONSOR
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SECTION 4.1 Sponsors Purchase of Common Securities
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22
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SECTION 4.2 Responsibilities of the Sponsor
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22
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i
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ARTICLE V TRUSTEES
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SECTION 5.1 Number of Trustees
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22
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SECTION 5.2 Delaware Trustee
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23
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SECTION 5.3 Institutional Trustee; Eligibility
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23
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SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally
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24
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SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees
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24
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SECTION 5.6 Appointment, Removal and Resignation of Trustees
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25
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SECTION 5.7 Vacancies among Trustees
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26
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SECTION 5.8 Effect of Vacancies
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27
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SECTION 5.9 Meetings
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27
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SECTION 5.10 Delegation of Power
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27
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SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business
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28
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ARTICLE VI DISTRIBUTIONS
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SECTION 6.1 Distributions
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28
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ARTICLE VII ISSUANCE OF SECURITIES
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SECTION 7.1 General Provisions Regarding Securities
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28
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ARTICLE VIII TERMINATION OF TRUST
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SECTION 8.1 Termination of Trust
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29
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ARTICLE IX TRANSFER OF INTERESTS
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SECTION 9.1 Transfer of Securities
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30
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SECTION 9.2 Transfer of Certificates
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30
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SECTION 9.3 Deemed Security Holders
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31
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SECTION 9.4 Book Entry Interests
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31
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SECTION 9.5 Notices to Clearing Agency
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32
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SECTION 9.6 Appointment of Successor Clearing Agency
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32
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SECTION 9.7 Definitive Capital Security Certificates
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32
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SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates
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32
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ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
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SECTION 10.1 Liability
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33
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SECTION 10.2 Exculpation
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33
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SECTION 10.3 Fiduciary Duty
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34
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SECTION 10.4 Indemnification
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35
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SECTION 10.5 Outside Businesses
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37
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ii
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ARTICLE XI ACCOUNTING
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SECTION 11.1 Fiscal Year
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38
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SECTION 11.2 Certain Accounting Matters
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38
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SECTION 11.3 Banking
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38
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SECTION 11.4 Withholding
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39
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ARTICLE XII AMENDMENTS AND MEETINGS
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SECTION 12.1 Amendments
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39
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SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent
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41
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ARTICLE XIII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
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SECTION 13.1 Representations and Warranties of Institutional Trustee
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42
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SECTION 13.2 Representations and Warranties of Delaware Trustee
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43
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ARTICLE XIV MISCELLANEOUS
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SECTION 14.1 Notices
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43
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SECTION 14.2 Governing Law
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45
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SECTION 14.3 Intention of the Parties
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45
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SECTION 14.4 Headings
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45
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SECTION 14.5 Successors and Assigns
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45
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SECTION 14.6 Partial Enforceability
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45
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SECTION 14.7 Counterparts
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45
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ANNEX I
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TERMS OF SECURITIES
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I-1
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EXHIBIT A-1
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FORM OF CAPITAL SECURITY CERTIFICATE
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A1-1
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EXHIBIT A-2
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FORM OF COMMON SECURITY CERTIFICATE
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A2-1
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EXHIBIT B
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SPECIMEN OF DEBENTURE
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B-1
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EXHIBIT C
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UNDERWRITING AGREEMENT
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C-1
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iii
CROSS-REFERENCE TABLE*
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Section of
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Trust Indenture Act
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of 1939, as amended
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Section of Declaration
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310(a)
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5.3
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(a)
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310(c)
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Inapplicable
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311(c)
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Inapplicable
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312(a)
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2.2
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(a)
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312(b)
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2.2
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(b)
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313
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2.3
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314(a)
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2.4
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314(b)
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Inapplicable
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314(c)
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2.5
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314(d)
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Inapplicable
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314(f)
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Inapplicable
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315(a)
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3.9
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(b)
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315(c)
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3.9
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(a)
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315(d)
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3.9
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(a)
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316(a)
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Annex I
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316(c)
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3.6
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(e)
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*
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This Cross-Reference Table does not constitute part of the Declaration and shall not affect
the interpretation of any of its terms or provisions.
|
iv
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CITIGROUP CAPITAL XX
, 20
AMENDED AND RESTATED DECLARATION OF TRUST (Declaration) dated and effective as of
, 20 , by the Trustees (as defined herein), the Sponsor (as defined herein) and by the
holders, from time to time, of undivided beneficial interests in the assets of the Trust to be
issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established Citigroup Capital XX (the Trust), a trust
under the Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated as of [ ], 2007 (the Original Declaration) and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on [ ], 2007, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of the Trust and
investing the proceeds thereof in certain Debentures of the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend and restate each and
every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a
statutory trust under the Statutory Trust Act and that this Declaration constitute the governing
instrument of such statutory trust, the Trustees declare that all assets contributed to the Trust
will be held in trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to
the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1
Definitions
.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning throughout;
(c) all references to the Declaration or this Declaration are to this Declaration as
modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and Annexes and Exhibits are
to Articles and Sections of and Annexes and Exhibits to this Declaration unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in this
Declaration unless otherwise defined in this Declaration or unless the context otherwise requires;
and
(f) a reference to the singular includes the plural and vice versa.
Affiliate
has the same meaning as given to that term in Rule 405 of the Securities
Act or any successor rule thereunder.
Authorized Officer
of a Person means any Person that is authorized to bind such
Person.
Book Entry Interest
means a beneficial interest in a Global Certificate, ownership
and transfers of which shall be maintained and made through book entries by a Clearing Agency as
described in Section 9.4.
Business Day
means any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York, New York are permitted or required by any applicable law to
close.
Capital Securities Guarantee
means the guarantee agreement dated as of
, 20 , of the Sponsor in respect of the Capital Securities.
Capital Security
has the meaning specified in Section 7.1.
Capital Security Beneficial Owner
means, with respect to a Book Entry Interest, a
Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
Capital Security Certificate
means a certificate representing a Capital Security
substantially in the form of Exhibit A-1.
Certificate
means a Common Security Certificate or a Capital Security Certificate.
Citigroup
means Citigroup Inc., a Delaware corporation.
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Clearing Agency
means an organization registered as a Clearing Agency pursuant to
Section 17A of the Exchange Act that is acting as depositary for the Capital Securities and in
whose name or in the name of a nominee of that organization shall be registered a Global
Certificate and which shall undertake to effect book entry transfers and pledges of the Capital
Securities.
Clearing Agency Participant
means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency effects book entry
transfers and pledges of securities deposited with the Clearing Agency.
Closing Date
means , 20 .
Code
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor legislation.
Commission
means the Securities and Exchange Commission.
Common Security
has the meaning specified in Section 7.1.
Common Security Certificate
means a definitive certificate in fully registered form
representing a Common Security substantially in the form of Exhibit A-2.
Company Indemnified Person
means (a) any Regular Trustee; (b) any Affiliate of any
Regular Trustee; (c) any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Regular Trustee; or (d) any officer, employee or agent of the
Trust or its Affiliates.
Corporate Trust Office
means the office of the Institutional Trustee at which the
corporate trust business of the Institutional Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Declaration is located at 101 Barclay
Street-8W, New York, New York 10286.
Covered Person
means: (a) any officer, director, shareholder, partner, member,
representative, employee or agent of (i) the Trust or (ii) the Trusts Affiliates; and (b) any
Holder of Securities.
Debenture Issuer
means Citigroup Inc. (or the Sponsor) in its capacity as issuer of
the Debentures under the Indenture.
Debenture Trustee
means The Bank of New York, as trustee under the Indenture until a
successor is appointed thereunder, and thereafter means such successor trustee.
Debentures
means the series of Debentures to be issued by the Debenture Issuer under
the Indenture to be held by the Institutional Trustee, a specimen certificate for such series of
Debentures being Exhibit B.
Default
in respect of the Securities means a Default (as defined in the Indenture)
has occurred and is continuing in respect of the Debentures.
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Definitive Capital Security Certificates
has the meaning set forth in Section 9.4.
Delaware Trustee
has the meaning set forth in Section 5.2.
Distribution
has the meaning set forth in Section 6.1.
DTC
means the Depository Trust Company, the initial Clearing Agency.
Exchange Act
means the Securities Exchange Act of 1934, as amended from time to
time, or any successor legislation.
Fiduciary Indemnified Person
has the meaning set forth in Section 10.4(b).
Global Certificate
has the meaning set forth in Section 9.4.
Holder
means a Person in whose name a Certificate representing a Security is
registered, such Person being a beneficial owner within the meaning of the Statutory Trust Act.
Indemnified Person
means a Company Indemnified Person or a Fiduciary Indemnified
Person.
Indenture
means the Indenture, dated as of , 20 (as supplemented
from time to time), between the Debenture Issuer and the Debenture Trustee, pursuant to which the
Debentures are to be issued.
Institutional Trustee
means the Trustee meeting the eligibility requirements set
forth in Section 5.3.
Institutional Trustee Account
has the meaning set forth in Section 3.8(c).
Investment Company
means an investment company as defined in the Investment Company
Act.
Investment Company Act
means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.
Investment Company Event
has the meaning set forth in Annex I hereto.
Legal Action
has the meaning set forth in Section 3.6(g).
Majority in liquidation amount of the Securities
means, except as provided in the
terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities
voting together as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a class, who are the
record owners of an aggregate liquidation amount representing more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
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Officers Certificate
means, with respect to any Person, a certificate signed by two
Authorized Officers of such Person. Any Officers Certificate delivered with respect to compliance
with a condition or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers Certificate has read the covenant or
condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken
by each officer in rendering the Officers Certificate;
(c) a statement that each such officer has made such examination or investigation as, in such
officers opinion, is necessary to enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant
has been complied with.
Paying Agent
has the meaning specified in Section 3.8(h).
Payment Amount
has the meaning specified in Section 6.1.
Person
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or political subdivision thereof, or any
other entity of whatever nature.
Quorum
means any one Regular Trustee or, if there is only one Regular Trustee, such
Regular Trustee.
Regular Trustee
has the meaning specified in Section 5.1.
Regulatory Capital Event
has the meaning set forth in Annex I hereto.
Related Party
means, with respect to the Sponsor, any direct or indirect wholly
owned subsidiary of the Sponsor or any other Person that owns, directly or indirectly, 100% of the
outstanding voting securities of the Sponsor.
Responsible Officer
means, with respect to the Institutional Trustee, any officer
within the Corporate Trust Office of the Institutional Trustee with direct responsibility for the
administration of this Declaration and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that officers knowledge of
and familiarity with the particular subject.
Rule 3a-5
means Rule 3a-5 under the Investment Company Act.
Securities
means the Common Securities and the Capital Securities.
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Securities Act
means the Securities Act of 1933, as amended from time to time, or
any successor legislation.
Special Event
has the meaning set forth in Annex I hereto.
Sponsor
means Citigroup Inc. or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
Statutory Trust Act
means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code
§3801 et seq., as it may be amended from time to time, or any successor legislation.
Successor Delaware Trustee
has the meaning set forth in Section 5.6.
Successor Entity
has the meaning set forth in Section 3.15(b).
Successor Institutional Trustee
has the meaning set forth in Section 5.6.
Successor Securities
has the meaning set forth in Section 3.15(b).
Super Majority
has the meaning set forth in Section 2.6(a)(ii).
Tax Event
has the meaning set forth in Annex I hereto.
10% in liquidation amount of the Securities
means, except as provided in the terms
of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities voting
together as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a class, who are the
record owners of an aggregate liquidation amount representing 10% or more of the aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
Treasury Regulations
means the income tax regulations, including temporary and
proposed regulations, promulgated under the Code by the United States Treasury, as such regulations
may be amended from time to time (including corresponding provisions of succeeding regulations).
Trustee
or
Trustees
means each Person who has signed this Declaration as a
trustee, so long as such Person shall continue in office in accordance with the terms hereof, and
all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended from time to
time, or any successor legislation.
Underwriting
Agreement
means the Underwriting Agreement for the offering and sale of
Capital Securities in the form of Exhibit C.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1
Trust Indenture Act; Application
.
(a) This Declaration is subject to the provisions of the Trust Indenture Act that are required
to be part of this Declaration and shall, to the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee that is a Trustee for the purposes of
the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits, qualifies or conflicts
with the duties imposed by §§ 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
(d) The application of the Trust Indenture Act to this Declaration shall not affect the nature
of the Securities as equity securities representing undivided beneficial interests in the assets of
the Trust.
SECTION 2.2
Lists of Holders of Securities
.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide the
Institutional Trustee (i) within 14 days after each record date for payment of Distributions, a
list, in such form as the Institutional Trustee may reasonably require, of the names and addresses
of the Holders of the Securities (List of Holders) as of such record date, provided, that neither
the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to provide such List
of Holders at any time the List of Holders does not differ from the most recent List of Holders
given to the Institutional Trustee by the Sponsor and the Regular Trustees on behalf of the Trust,
and (ii) at any other time, within 30 days of receipt by the Trust of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is given to the
Institutional Trustee. The Institutional Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders given to it or which it
receives in the capacity as Paying Agent (if acting in such capacity), provided, that the
Institutional Trustee may destroy any List of Holders previously given to it on receipt of a new
List of Holders.
(b) The Institutional Trustee shall comply with its obligations under §§ 311(a), 311(b) and
312(b) of the Trust Indenture Act.
SECTION 2.3
Reports by the Institutional Trustee
.
Within 60 days after May 15 of each year, the Institutional Trustee shall provide to the
Holders of the Capital Securities such reports as are required by § 313 of the Trust Indenture Act,
if any, in the form and in the manner provided by § 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of § 313(d) of the Trust Indenture
Act.
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SECTION 2.4
Periodic Reports to Institutional Trustee
.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Institutional Trustee such documents, reports and information as required by § 314 of the Trust
Indenture Act (if any) and the compliance certificate required by § 314 of the Trust Indenture Act
in the form, in the manner and at the times required by § 314 of the Trust Indenture Act.
SECTION 2.5
Evidence of Compliance with Conditions Precedent
.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Institutional Trustee such evidence of compliance with any conditions precedent provided for in
this Declaration that relate to any of the matters set forth in § 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to § 314(c)(1) of the
Trust Indenture Act may be given in the form of an Officers Certificate.
SECTION 2.6
Defaults; Waiver
.
(a) The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on
behalf of the Holders of all of the Capital Securities, waive any past Default in respect of the
Capital Securities and its consequences, provided, that if the underlying Default under the
Indenture:
(i) is not waivable under the Indenture, the Default under the Declaration shall also
not be waivable; or
(ii) is waivable only with the consent of holders of more than a majority in principal
amount of the Debentures (a Super Majority) affected thereby, only the Holders of at least
the proportion in aggregate liquidation amount of the Capital Securities that the relevant
Super Majority represents of the aggregate principal amount of the Debentures outstanding
may waive such Default in respect of the Capital Securities under the Declaration.
The foregoing provisions of this Section 2.6(a) shall be in lieu of § 316(a)(1)(B) of the Trust
Indenture Act and such § 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such default shall cease to exist, and any Default with respect to the Capital Securities
arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or a Default with respect to the
Capital Securities or impair any right consequent thereon. Any waiver by the Holders of the
Capital Securities of a Default with respect to the Capital Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of any such Default with respect to the
Common Securities for all purposes of this Declaration without any further act, vote, or consent of
the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common Securities may, by vote, on
behalf of the Holders of all of the Common Securities, waive any
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past Default with respect to the Common Securities and its consequences, provided, that if the
underlying Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of the Common
Securities are deemed to have waived such Default under the Declaration as provided in this
Section 2.6(b), the Default under the Declaration shall also not be waivable; or
(ii) is waivable only with the consent of a Super Majority, except where the Holders of
the Common Securities are deemed to have waived such Default under the Declaration as
provided in this Section 2.6(b), only the Holders of at least the proportion in aggregate
liquidation amount of the Common Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding may waive such Default in
respect of the Common Securities under the Declaration;
provided, further each Holder of Common Securities will be deemed to have waived any such Default
and all Defaults with respect to the Common Securities and its consequences until all Defaults with
respect to the Capital Securities have been cured, waived or otherwise eliminated, and until such
Defaults with respect to the Capital Securities have been so cured, waived or otherwise eliminated,
the Institutional Trustee will be deemed to be acting solely on behalf of the Holders of the
Capital Securities and only the Holders of the Capital Securities will have the right to direct the
Institutional Trustee in accordance with the terms of the Securities. The foregoing provisions of
this Section 2.6(b) shall be in lieu of §§ 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act
and such §§ 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded
from this Declaration and the Securities, as permitted by the Trust Indenture Act. Subject to the
foregoing provisions of this Section 2.6(b), upon the waiver of a Default by the Holders of a
Majority in liquidation amount of the Common Securities, any such default shall cease to exist and
any Default with respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or
other default or Default with respect to the Common Securities or impair any right consequent
thereon.
(c) A waiver of a Default under the Indenture by the Institutional Trustee at the direction of
the Holders of the Capital Securities, constitutes a waiver of the corresponding Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of § 316(a)(1)(B) of
the Trust Indenture Act and such § 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7
Default; Notice
.
(a) The Institutional Trustee shall, within 90 days after the occurrence of a Default,
transmit by mail, first class postage prepaid, to the Holders of the Securities, notices of (i) all
defaults with respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving of such notice (the
term defaults for the purposes of this Section 2.7(a) being hereby defined to be a Default as
defined in the Indenture, not including any periods of grace provided for therein and irrespective
9
of the giving of any notice provided therein) and (ii) any notice of default received from the
Indenture Trustee with respect to the Debentures, which notice from the Institutional Trustee to
the Holders shall state that a Default under the Indenture also constitutes a Default with respect
to the Securities; provided that, except for a default in the payment of principal of (or premium,
if any) or interest on any of the Debentures or in the payment of any sinking fund installment
established for the Debentures, the Institutional Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Institutional Trustee in good faith
determines that the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge of any default except:
(i) a default under Sections 5.7(b) and 5.7(c) of the Indenture; or
(ii) any default as to which the Institutional Trustee shall have received written
notice or of which a Responsible Officer of the Institutional Trustee charged with the
administration of the Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1
Name
.
The Trust is named Citigroup Capital XX, as such name may be modified from time to time by
the Regular Trustees following written notice to the Institutional Trustee, the Delaware Trustee
and the Holders of Securities. The Trusts activities may be conducted under the name of the Trust
or any other name deemed advisable by the Regular Trustees.
SECTION 3.2
Office
.
The address of the principal office of the Trust is c/o Citigroup Inc., 399 Park Avenue, New
York, NY 10043. On ten Business Days written notice to the Institutional Trustee, the Delaware
Trustee and the Holders of Securities, the Regular Trustees may designate another principal office.
SECTION 3.3
Purpose
.
The exclusive purposes and functions of the Trust are (a) to issue and sell Securities and use
the proceeds from such sale to acquire the Debentures, and (b) except as otherwise limited herein,
to engage in only those other activities necessary, or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets,
or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to
be classified for United States federal income tax purposes as a grantor trust.
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SECTION 3.4
Authority
.
Subject to the limitations provided in this Declaration and to the specific duties of the
Institutional Trustee, the Regular Trustees shall have exclusive and complete authority to carry
out the purposes of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall constitute the act
of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no
person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees
as set forth in this Declaration.
SECTION 3.5
Title to Property of the Trust
.
Except as provided in Section 3.8 with respect to the Debentures and the Institutional Trustee
Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall
be vested in the Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6
Powers and Duties of the Regular Trustees
.
The Regular Trustees shall have the exclusive power, duty and authority to cause the Trust to
engage in the following activities:
(a) to issue and sell the Capital Securities and the Common Securities in accordance with this
Declaration;
provided, however
, that the Trust may issue no more than one series of Capital
Securities and no more than one series of Common Securities, and,
provided further
, that there
shall be no interests in the Trust other than the Securities, and the issuance of Securities shall
be limited to a simultaneous issuance of both Capital Securities and Common Securities on the
Closing Date;
(b) in connection with the issue and sale of the Capital Securities, at the direction of the
Sponsor, to:
(i) execute and file with the Commission on behalf of the Trust a registration
statement on Form S-3 or on another appropriate form, or a registration statement under Rule
462(b) of the Securities Act, in each case prepared by the Sponsor, including any
pre-effective or post-effective amendments thereto, relating to the registration under the
Securities Act of the Capital Securities;
(ii) execute and file any documents prepared by the Sponsor, or take any acts as
determined by the Sponsor to be necessary in order to qualify or register all or part of the
Capital Securities in any State in which the Sponsor has determined to qualify or register
such Capital Securities for sale;
(iii) execute and file an application, prepared by the Sponsor, to the New York Stock
Exchange, Inc., any other national stock exchange or the Nasdaq National Market for listing
upon notice of issuance of any Capital Securities;
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(iv) execute and file with the Commission on behalf of the Trust a registration
statement on Form 8-A, prepared by the Sponsor, including any pre-effective or
post-effective amendments thereto, relating to the registration of the Capital Securities
under Section 12(b) of the Exchange Act; and
(v) deliver the Underwriting Agreement providing for the sale of the Capital
Securities;
(c) to acquire the Debentures with the proceeds of the sale of the Capital Securities and the
Common Securities; provided, however, that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Institutional Trustee for the benefit of the
Holders of the Capital Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written notice of the occurrence
of a Special Event; provided, that the Regular Trustees shall consult with the Sponsor and the
Institutional Trustee before taking or refraining from taking any ministerial action in relation to
a Special Event;
(e) to establish a record date with respect to all actions to be taken hereunder that require
a record date be established, including and with respect to, for the purposes of §316(c) of the
Trust Indenture Act, Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as to such actions
and applicable record dates;
(f) to take all actions and perform such duties as may be required of the Regular Trustees
pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or
otherwise adjust claims or demands of or against the Trust (Legal Action), unless pursuant to
Section 3.8(e), the Institutional Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be designated as officers with
titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for
such services;
(i) to cause the Trust to comply with the Trusts obligations under the Trust Indenture Act;
(j) to give the certificate required by § 314(a)(4) of the Trust Indenture Act to the
Institutional Trustee, which certificate may be executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out any of the purposes of the
Trust;
(l) to act as, or appoint another Person to act as, registrar and transfer agent for the
Securities;
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(m) to give prompt written notice to the Holders of the Securities of any notice received from
the Debenture Issuer of its election to defer payments of interest on the Debentures by extending
the interest payment period under the Indenture;
(n) to take all action that may be necessary or appropriate for the preservation and the
continuation of the Trusts valid existence, rights, franchises and privileges as a statutory
statutory trust under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or with applicable law, that
the Regular Trustees determine in their discretion to be necessary or desirable in carrying out the
activities of the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company required to
be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal income tax
purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the Debentures will
be treated as indebtedness of the Debenture Issuer for United States federal income
tax purposes;
provided
, that any such action does not adversely affect the interests of Holders;
(p) to take all action necessary to cause all applicable tax returns and tax information
reports that are required to be filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust; and
(q) to execute all documents or instruments, perform all duties and powers, and do all things
for and on behalf of the Trust in all matters necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this Section 3.6 in a manner that
is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Regular
Trustees shall not take any action that is inconsistent with the purposes and functions of the
Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of the powers or the
authority of the Institutional Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section 3.6 shall be reimbursed
by the Debenture Issuer.
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SECTION 3.7
Prohibition of Actions by the Trust and the Trustees
.
(a) The Trust shall not, and the Trustees (including the Institutional Trustee) shall not
cause the Trust to, engage in any activity other than as required or authorized by this
Declaration. In particular, the Trust shall not:
(i) invest any proceeds received by the Trust from holding the Debentures, but shall
promptly distribute all such proceeds to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to vary the Trust assets or the
terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership of, or beneficial
interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A) direct the time,
method and place of exercising any trust or power conferred upon the Debenture Trustee with
respect to the Debentures, (B) waive any past Default that is waivable under the Indenture,
(C) exercise any right to rescind or annul any declaration that the principal of all the
Debentures shall be due and payable or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be required unless
the Trust shall have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters to the effect that as a result of such action, the Trust will
not fail to be classified as a grantor trust for United States federal income tax purposes.
SECTION 3.8
Powers and Duties of the Institutional Trustee
.
(a) The legal title to the Debentures shall be owned by and held of record in the name of the
Institutional Trustee in trust for the benefit of the Holders of the Securities. The right, title
and interest of the Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with Section 5.6. Such
vesting and cessation of title shall be effective whether or not conveyancing documents with regard
to the Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its right, title and interest in the
Debentures to the Regular Trustees or to the Delaware Trustee (if the Institutional Trustee does
not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust account (the
Institutional Trustee Account) in the name of and under the exclusive control of the
14
Institutional Trustee on behalf of the Holders of the Securities and, upon the receipt
of payments of funds made in respect of the Debentures held by the Institutional Trustee,
deposit such funds into the Institutional Trustee Account and make payments to the Holders
of the Capital Securities and Holders of the Common Securities from the Institutional
Trustee Account in accordance with Section 6.1. Funds in the Institutional Trustee Account
shall be held uninvested until disbursed in accordance with this Declaration. The
Institutional Trustee Account shall be an account that is maintained with a banking
institution the rating on whose long-term unsecured indebtedness assigned by a nationally
recognized statistical rating organization, as that term is defined for purposes of Rule
436(g)(2) under the Securities Act, is at least equal to the rating assigned to the Capital
Securities by a nationally recognized statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary or appropriate to
effect the redemption of the Capital Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the Regular Trustees in accordance
with the terms of the Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain Special Events or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform such duties as may be
specifically required of the Institutional Trustee pursuant to the terms of the Securities.
(e) Subject to Section 2.6, the Institutional Trustee shall take any Legal Action which arises
out of or in connection with a Default of which a Responsible Officer of the Institutional Trustee
has actual knowledge or the Institutional Trustees duties and obligations under this Declaration
or the Trust Indenture Act.
(f) The Institutional Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of the liquidation
distributed to the Holders of Securities pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has accepted that
appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise all of the rights, powers
and privileges of a holder of Debentures under the Indenture and, if a Default actually known to a
Responsible Officer of the Institutional Trustee occurs and is continuing, the Institutional
Trustee shall, for the benefit of Holders of the Securities, enforce its rights as holder of the
Debentures subject to the rights of the Holders pursuant to the terms of such Securities, this
Declaration, the Statutory Trust Act and the Trust Indenture Act.
15
(h) The Institutional Trustee may authorize one or more Persons (each, a Paying Agent) to
pay Distributions, redemption payments or liquidation payments on behalf of the Trust with respect
to all securities and any such Paying Agent shall comply with § 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Institutional Trustee at any time and a successor Paying
Agent or additional Paying Agents may be appointed at any time by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall have none of the duties,
liabilities, powers or the authority of the Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth in this Section 3.8 in a manner
that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the
Institutional Trustee shall not take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 3.3.
SECTION 3.9
Certain Duties and Responsibilities of the Institutional Trustee
.
(a) The Institutional Trustee, before the occurrence of any Default and after the curing of
all Defaults that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case a Default has occurred (that has not been
cured or waived pursuant to Section 2.6) of which a Responsible Officer of the Institutional
Trustee has actual knowledge, the Institutional Trustee shall exercise such of the rights and
powers vested in it by this Declaration, and use the same degree of care and skill in the exercise
of such rights and powers, as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the Institutional Trustee
from liability for its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of a Default and after the curing or waiving of all such
Defaults that may have occurred:
(A) the duties and obligations of the Institutional Trustee shall be determined
solely by the express provisions of this Declaration and the Institutional Trustee
shall not be liable except for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied covenants or obligations
shall be read into this Declaration against the Institutional Trustee; and
(B) in the absence of bad faith on the part of the Institutional Trustee, the
Institutional Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Institutional
16
Trustee, the Institutional Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer of the Institutional Trustee, unless it shall be proved
that the Institutional Trustee was negligent in ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the Holders of
not less than a Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the Institutional Trustee to expend
or risk its own funds or otherwise incur personal financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity reasonably
satisfactory to the Institutional Trustee against such risk or liability is not reasonably
assured to it;
(v) the Institutional Trustees sole duty with respect to the custody, safe keeping and
physical preservation of the Debentures and the Institutional Trustee Account shall be to
deal with such property in a similar manner as the Institutional Trustee deals with similar
property for its own account, subject to the protections and limitations on liability
afforded to the Institutional Trustee under this Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability for or with respect to
the value, genuineness, existence or sufficiency of the Debentures or the payment of any
taxes or assessments levied thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for any interest on any money
received by it except as it may otherwise agree with the Sponsor. Money held by the
Institutional Trustee need not be segregated from other funds held by it except in relation
to the Institutional Trustee Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible for monitoring the compliance
by the Regular Trustees or the Sponsor with their respective duties under this Declaration,
nor shall the Institutional Trustee be liable for any default or misconduct of the Regular
Trustees or the Sponsor.
SECTION 3.10
Certain Rights of Institutional Trustee
.
(a) Subject to the provisions of Section 3.9:
17
(i) the Institutional Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees contemplated by this
Declaration shall be sufficiently evidenced by an Officers Certificate;
(iii) whenever in the administration of this Declaration, the Institutional Trustee
shall deem it desirable that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers Certificate which, upon receipt of such request, shall
be promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Institutional Trustee shall have no duty to see to any recording, filing or
registration of any instrument (including any financing or continuation statement or any
filing under tax or securities laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or other experts and the advice
or opinion of such counsel and experts with respect to legal matters or advice within the
scope of such experts area of expertise shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with such advice or opinion, such counsel may be counsel to the Sponsor or
any of its Affiliates, and may include any of its employees. The Institutional Trustee
shall have the right at any time to seek instructions concerning the administration of this
Declaration from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Institutional Trustee security and indemnity,
reasonably satisfactory to the Institutional Trustee, against the costs, expenses (including
attorneys fees and expenses and the expenses of the Institutional Trustees agents,
nominees or custodians) and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be requested by the
Institutional Trustee provided that nothing contained in this Section 3.10(a)(vi) shall be
taken to relieve the Institutional Trustee, upon the occurrence of a Default, of its
obligation to exercise the rights and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it may see fit;
18
(viii) the Institutional Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, custodians, nominees
or attorneys and the Institutional Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents hereunder shall bind
the Trust and the Holders of the Securities, and the signature of the Institutional Trustee
or its agents alone shall be sufficient and effective to perform any such action and no
third party shall be required to inquire as to the authority of the Institutional Trustee to
so act or as to its compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional Trustees or its agents
taking such action;
(x) whenever in the administration of this Declaration the Institutional Trustee shall
deem it desirable to receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Institutional Trustee (i) may request instructions
from the Holders of the Securities which instructions may only be given by the Holders of
the same proportion in liquidation amount of the Securities as would be entitled to direct
the Institutional Trustee under the terms of the Securities in respect of such remedy, right
or action, (ii) may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in conclusively relying
on or acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this Declaration, the Institutional
Trustee shall not be under any obligation to take any action that is discretionary under the
provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty or obligation on the
Institutional Trustee to perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the
Institutional Trustee shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Institutional Trustee shall be construed to be a
duty.
SECTION 3.11
Delaware Trustee
.
The Delaware Trustee is appointed to serve as the trustee of the Trust in the State of
Delaware for the sole purpose of satisfying the requirement of Section 3807(a) of the Statutory
Trust Act that the Trust have at least one trustee with a principal place of business in the State
of Delaware. It is understood and agreed by the parties hereto that the Delaware Trustee shall
have none of the duties or liabilities of the Regular Trustees or the Institutional Trustee. The
duties of the Delaware Trustee shall be limited to (i) accepting legal process served on the Trust
in the State of Delaware and (ii) the execution of any certificates required to be filed with the
Delaware Secretary of State which the Delaware Trustee is required to execute under Section 3811 of
the Statutory Trust Act. To the extent that, at law or in equity, the Delaware
19
Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust
or the Holders, it is hereby understood and agreed by the other parties hereto that such duties and
liabilities are replaced by the duties and liabilities of the Delaware Trustee expressly set forth
in this Declaration. The Delaware trustee shall have no liability for the acts or omissions of the
Regular Trustees or the Institutional Trustee. The Delaware Trustee shall be entitled to all of the
same rights, protections, indemnities and immunities under this Declaration and with respect to the
Trust as the Institutional Trustee.
SECTION 3.12
Execution of Documents
.
Unless otherwise determined by the Regular Trustees, and except as otherwise required by the
Statutory Trust Act, any Regular Trustee is authorized to execute on behalf of the Trust any
documents that the Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided, that the registration statement referred to in Section 3.6(b)(i), including any
amendments thereto, shall be signed by all of the Regular Trustees.
SECTION 3.13
Not Responsible for Recitals or Issuance of Securities
.
The recitals contained in this Declaration and the Securities shall be taken as the statements
of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The
Trustees make no representations as to the value or condition of the property of the Trust or any
part thereof. The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14
Duration of Trust
.
The Trust, unless dissolved and terminated pursuant to the provisions of Article VIII hereof,
shall have existence for sixty (60) years from the Closing Date.
SECTION 3.15
Mergers
.
(a) The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets substantially as an entirety to any corporation
or other body, except as described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if there are more than two, a
majority of the Regular Trustees and without the consent of the Holders of the Securities, the
Delaware Trustee or the Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided, that:
(i) such successor entity (the Successor Entity) either:
(A) expressly assumes all of the obligations of the Trust under the Securities;
or
(B) substitutes for the Securities other securities having substantially the
same terms as the Capital Securities (the Successor Securities) so long as
20
the Successor Securities rank the same as the Capital Securities rank with
respect to Distributions and payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the Successor Entity that
possesses the same powers and duties as the Institutional Trustee in its capacity as the
Holder of the Debentures;
(iii) the Capital Securities or any Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national securities exchange
or with any other organization on which the Capital Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement does not cause the Capital
Securities (including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or replacement does not adversely affect
the rights, preferences and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with respect to any dilution of
such Holders interests in the new entity as a result of such merger, consolidation,
amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation or replacement, the Trust has
received an opinion of a nationally recognized independent counsel to the Trust experienced
in such matters to the effect that:
(A) such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the Holders of the Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the Holders interest in the new entity); and
(B) following such merger, consolidation, amalgamation or replacement, neither
the Trust nor the Successor Entity will be required to register as an Investment
Company; and
(C) following such merger, consolidation, amalgamation or replacement, the
Trust (or the Successor Entity) will continue to be classified as a grantor trust
for United States federal income tax purposes; and
(viii) the Sponsor guarantees the obligations of such Successor Entity under the
Successor Securities at least to the extent provided by the Capital Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with the consent of Holders
of 100% in liquidation amount of the Securities, consolidate, amalgamate, merge with or into, or be
replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it, if in the opinion of a nationally recognized
21
independent tax counsel experienced in such matters, such consolidation, amalgamation, merger
or replacement would cause the Trust or the Successor Entity to be classified as other than a
grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1
Sponsors Purchase of Common Securities
.
On the Closing Date, the Sponsor will purchase all of the Common Securities issued by the
Trust at the same time as the Capital Securities are sold.
SECTION 4.2
Responsibilities of the Sponsor
.
In connection with the issue and sale of the Capital Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a registration statement on Form
S-3 or on another appropriate form, or a registration statement under Rule 462(b) of the Securities
Act, including any pre-effective or post-effective amendments thereto, relating to the registration
under the Securities Act of the Capital Securities;
(b) to determine the States in which to take appropriate action to qualify or register for
sale all or part of the Capital Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New York Stock Exchange, any
other national stock exchange or the Nasdaq National Market for listing upon notice of issuance of
any Capital Securities;
(d) to prepare for filing by the Trust with the Commission a registration statement on Form
8-A, including any pre-effective or post-effective amendments thereto, relating to the registration
of the Capital Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing for the sale of the Capital
Securities.
ARTICLE V
TRUSTEES
SECTION 5.1
Number of Trustees
.
The number of Trustees initially shall be five (5), and:
22
(a) at any time before the issuance of any Securities, the Sponsor may, by written instrument,
increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be increased or decreased
by vote of the Holders of a majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities,
provided, however
, that the number of Trustees shall in no event be less than two (2); provided
further that (1) one Trustee, in the case of a natural person, shall be a person who is a resident
of the State of Delaware or that, if not a natural person, shall be an entity which has its
principal place of business in the State of Delaware (the Delaware Trustee); (2) there shall be
at least one Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
Regular Trustee); and (3) one Trustee shall be the Institutional Trustee for so long as this
Declaration is required to qualify as an indenture under the Trust Indenture Act, and such Trustee
may also serve as Delaware Trustee if it meets the applicable requirements.
SECTION 5.2
Delaware Trustee
.
If required by the Statutory Trust Act, the Delaware Trustee shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of business in the State
of Delaware, and otherwise meets the requirements of applicable law,
provided
, that if the Institutional Trustee has its principal place of business in the State of
Delaware and otherwise meets the requirements of applicable law, then the Institutional Trustee
shall also be the Delaware Trustee and Section 3.11 shall have no application.
SECTION 5.3
Institutional Trustee; Eligibility
.
(a) There shall at all times be one Trustee that shall act as Institutional Trustee which
shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of the United States
of America or any State or Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published; and
23
(iii) if the Trust is excluded from the definition of an Investment Company solely by
means of Rule 3a-7 and to the extent Rule 3a-7 requires a trustee having certain
qualifications to hold title to the eligible assets of the Trust, the Institutional
Trustee shall possess those qualifications.
(b) If at any time the Institutional Trustee shall cease to be eligible to so act under
Section 5.3(a), the Institutional Trustee shall immediately resign in the manner and with the
effect set forth in Section 5.6(c).
(c) If the Institutional Trustee has or shall acquire any conflicting interest within the
meaning of § 310(b) of the Trust Indenture Act, the Institutional Trustee and the Holders of the
Common Securities (as if such Holders were the obligor referred to in § 310(b) of the Trust
Indenture Act) shall in all respects comply with the provisions of § 310(b) of the Trust Indenture
Act.
(d) The Capital Securities Guarantee shall be deemed to be specifically described in this
Declaration for purposes of clause (i) of the first provision contained in Section 310(b) of the
Trust Indenture Act.
(e) The initial Institutional Trustee shall be as set forth in Section 5.5 hereof.
SECTION 5.4
Qualifications of Regular Trustees and Delaware Trustee Generally
.
Each Regular Trustee and the Delaware Trustee (unless the Institutional Trustee also acts as
Delaware Trustee) shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more Authorized Officers.
SECTION 5.5
Initial Trustees; Additional Powers of Regular Trustees
.
(a) The initial Regular Trustees shall be:
Saul Rosen
Eric L. Wentzel
John Gerspach
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
100 White Clay Center
Route 273
P. O. Box 6995
Newark, DE 19711
Attn: Corporate Trust Department
The initial Institutional Trustee shall be:
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
24
(b) Except as expressly set forth in this Declaration and except if a meeting of the Regular
Trustees is called with respect to any matter over which the Regular Trustees have power to act,
any power of the Regular Trustees may be exercised by, or with the consent of, any one such Regular
Trustee.
(c) Unless otherwise determined by the Regular Trustees, and except as otherwise required by
the Statutory Trust Act or applicable law, any Regular Trustee is authorized to execute on behalf
of the Trust any documents which the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6, provided, that the registration statement referred to in
Section 3.6, including any amendments thereto, shall be signed by all of the Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 his or her power for the purposes of signing any
documents which the Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6
Appointment, Removal and Resignation of Trustees
.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written instrument executed by the
Sponsor; and
(ii) in the case of the Regular Trustees, after the issuance of any Securities, by vote
of the Holders of a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities;
(iii) in the case of the Institutional Trustee and the Delaware Trustee, unless a
Default shall have occurred and be continuing after the issuance of any Securities, by a
vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; and
(iv) in the case of the Institutional Trustee and the Delaware Trustee, if a Default
shall have occurred and be continuing after the issuance of the Securities, by a vote of
the Holders of a Majority in liquidation amount of the Capital Securities voting as a class
at a meeting of the Holders of the Capital Securities.
(b) (i) The Trustee that acts as Institutional Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as Institutional
Trustee under Section 5.3 (a Successor Institutional Trustee) has been appointed and has accepted
such appointment by written instrument executed by such Successor Institutional Trustee and
delivered to the Regular Trustees and the Sponsor; and
25
(ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as Delaware
Trustee under Sections 5.2 and 5.4 (a Successor Delaware Trustee) has been appointed and
has accepted such appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor shall have been
appointed or until his death, removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect upon such delivery or
upon such later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Institutional Trustee shall be
effective:
(A) until a Successor Institutional Trustee has been appointed and has accepted
such appointment by instrument executed by such Successor Institutional Trustee and
delivered to the Trust, the Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely liquidated and the
proceeds thereof distributed to the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be
effective until a Successor Delaware Trustee has been appointed and has accepted such
appointment by instrument executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts to promptly appoint a
Successor Delaware Trustee or Successor Institutional Trustee as the case may be if the
Institutional Trustee or the Delaware Trustee delivers an instrument of resignation in accordance
with this Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware Trustee shall have been
appointed and accepted appointment as provided in this Section 5.6 within 60 days after delivery to
the Sponsor and the Trust of an instrument of resignation, the resigning Institutional Trustee or
Delaware Trustee, as applicable, may petition any court of competent jurisdiction for appointment
of a Successor Institutional Trustee or Successor Delaware Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper and prescribe, appoint a Successor
Institutional Trustee or Successor Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for the acts or omissions to
act of any Successor Institutional Trustee or Successor Delaware Trustee, as the case may be.
26
SECTION 5.7
Vacancies among Trustees
.
If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced
pursuant to Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of such vacancy by the Regular Trustees
or, if there are more than two, a majority of the Regular Trustees shall be conclusive evidence of
the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance
with Section 5.6.
SECTION 5.8
Effect of Vacancies
.
The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation,
incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust.
Whenever a vacancy in the number of Regular Trustees shall occur, until such vacancy is filled by
the appointment of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the Regular Trustees and
shall discharge all the duties imposed upon the Regular Trustees by this Declaration.
SECTION 5.9
Meetings
.
If there is more than one Regular Trustee, meetings of the Regular Trustees shall be held from
time to time upon the call of any Regular Trustee. Regular meetings of the Regular Trustees may be
held at a time and place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such
meeting. Notice of any telephonic meetings of the Regular Trustees or any committee thereof shall
be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting. The presence (whether in
person or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice of
such meeting except where a Regular Trustee attends a meeting for the express purpose of objecting
to the transaction of any activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the Regular Trustees may be
taken at a meeting by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a Quorum is present, or
without a meeting by the unanimous written consent of the Regular Trustees. In the event there is
only one Regular Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
SECTION 5.10
Delegation of Power
.
(a) Any Regular Trustee may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 his or her power for the purpose of executing any
documents contemplated in Section 3.6, including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing; and
27
(b) the Regular Trustees shall have power to delegate from time to time to such of their
number or to officers of the Trust the doing of such things and the execution of such instruments
either in the name of the Trust or the names of the Regular Trustees or otherwise as the Regular
Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 5.11
Merger, Conversion, Consolidation or Succession to Business
.
Any corporation into which the Institutional Trustee or the Delaware Trustee, as the case may
be, may be merged or converted or with which either may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Institutional Trustee or the
Delaware Trustee, as the case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Institutional Trustee or the Delaware
Trustee, as the case may be, hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1
Distributions
.
Holders shall receive Distributions (as defined herein) in accordance with the applicable
terms of the relevant Holders Securities. Distributions shall be made on the Capital Securities
and the Common Securities in accordance with the preferences set forth in their respective terms.
If and to the extent that the Debenture Issuer makes a payment of interest (including Compounded
Interest (as defined in the Indenture) and Additional Interest (as defined in the Indenture)),
premium and/or principal on the Debentures held by the Institutional Trustee (the amount of any
such payment being a Payment Amount), the Institutional Trustee shall and is directed to make a
distribution (a Distribution) of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1
General Provisions Regarding Securities
.
(a) The Regular Trustees shall on behalf of the Trust issue one class of capital securities
representing undivided beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the Capital Securities) and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as are set forth in
Annex I (the Common Securities). The Trust shall issue no securities or other interests in the
assets of the Trust other than the Capital Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by a Regular Trustee. Such
signature shall be the manual or facsimile signature of any present or any future Regular Trustee.
In case any Regular Trustee of the Trust who shall have signed any of the Securities shall cease to
be such Regular Trustee before the Certificates so signed shall be
28
delivered by the Trust, such Certificates nevertheless may be delivered as though the person
who signed such Certificates had not ceased to be such Regular Trustee; and any Certificate may be
signed on behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be the Regular Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such a Regular Trustee. Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such legends or endorsements
as the Regular Trustees may deem appropriate, or as may be required to comply with any law or with
any rule or regulation of any stock exchange on which Securities may be listed, or to conform to
usage.
(c) The consideration received by the Trust for the issuance of the Securities shall
constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration, the Securities so issued
shall be deemed to be validly issued, fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or a Capital Security Beneficial Owner
in accordance with the terms of this Declaration, shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by, this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1
Termination of Trust
.
(a) The Trust shall terminate:
(i) upon the bankruptcy of any Holder of the Common Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution or its equivalent with respect to
any Holder of the Common Securities or the Sponsor; the filing of a certificate of
cancellation with respect to the Trust or the revocation of the Holder of the Common
Securities or the Sponsors charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of any Holder of the Common
Securities, the Sponsor or the Trust;
(iv) Subject to obtaining any required regulatory approval, when all of the Securities
have been called for redemption and the amounts necessary for redemption thereof have been
paid to the Holders in accordance with the terms of the Securities;
(v) Subject to obtaining any required regulatory approval, when the Trust shall have
been dissolved in accordance with the terms of the Securities upon election by
29
the Sponsor of its right to terminate the Trust and distribute all of the Debentures to
the Holders of Securities in exchange for all of the Securities and all of the Debentures
shall have been distributed to the Holders of Securities in accordance with such election;
(vi) before the issuance of any Securities, with the consent of all of the Regular
Trustees and the Sponsor; or
(vii) upon the expiration of the term of the Trust set forth in Section 3.14.
(b) As soon as is practicable after the occurrence of an event referred to in Section 8.1(a),
and after satisfaction of liabilities to creditors of the Trust as required by applicable law,
including Section 3808 of the Statutory Trust Act, and subject to the terms set forth in Annex I,
the Delaware Trustee, when notified in writing of the completion of the winding up of the Trust in
accordance with the Statutory Trust Act, shall terminate the Trust by filing, at the expense of the
Sponsor, a certificate of cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1
Transfer of Securities
.
(a) Securities may only be transferred, in whole or in part, in accordance with the terms and
conditions set forth in this Declaration and in the terms of the Securities. Any transfer or
purported transfer of any Security not made in accordance with this Declaration shall be null and
void.
(b) Subject to this Article IX, Capital Securities shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party may only transfer Common
Securities to the Sponsor or a Related Party of the Sponsor; provided, that any such transfer is
subject to the condition precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such transfer would not cause more
than an insubstantial risk that:
(i) the Trust would not be classified for United States federal income tax purposes as
a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee would become an
Investment Company.
SECTION 9.2
Transfer of Certificates
.
The Regular Trustees shall provide for the registration of Certificates and of transfers of
Certificates, which will be effected without charge but only upon payment (with such
30
indemnity as the Regular Trustees may require) in respect of any tax or other government
charges that may be imposed in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be issued in the name
of the designated transferee or transferees. Every Certificate surrendered for registration of
transfer shall be accompanied by a written instrument of transfer in form satisfactory to the
Regular Trustees duly executed by the Holder or such Holders attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a Certificate. By
acceptance of a Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.3
Deemed Security Holders
.
The Trustees may treat the Person in whose name any Certificate shall be registered on the
books and records of the Trust as the sole holder of such Certificate and of the Securities
represented by such Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust shall have actual or other notice thereof.
SECTION 9.4
Book Entry Interests
.
Unless otherwise specified in the terms of the Capital Securities, the Capital Securities
Certificates, on original issuance, will be issued in the form of one or more, fully registered,
global Capital Security Certificates (each a Global Certificate), to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially
be registered on the books and records of the Trust in the name of Cede & Co., the nominee of DTC,
and no Capital Security Beneficial Owner will receive a definitive Capital Security Certificate
representing such Capital Security Beneficial Owners interests in such Global Certificates, except
as provided in Section 9.7. Unless and until definitive, fully registered Capital Security
Certificates (the Definitive Capital Security Certificates) have been issued to the Capital
Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and effect;
(b) the Trust and the Trustees shall be entitled to deal with the Clearing Agency for all
purposes of this Declaration (including the payment of Distributions on the Global Certificates and
receiving approvals, votes or consents hereunder) as the Holder of the Capital Securities and the
sole holder of the Global Certificates and shall have no obligation to the Capital Security
Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with any other provisions
of this Declaration, the provisions of this Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and agreements between such
Capital Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants
and receive and transmit payments of Distributions on the
31
Global Certificates to such Clearing Agency Participants. DTC will make book entry transfers
among the Clearing Agency Participants.
SECTION 9.5
Notices to Clearing Agency
.
Whenever a notice or other communication to the Capital Security Holders is required under
this Declaration, unless and until Definitive Capital Security Certificates shall have been issued
to the Capital Security Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give
all such notices and communications specified herein to be given to the Capital Security Holders to
the Clearing Agency, and shall have no notice obligations to the Capital Security Beneficial
Owners.
SECTION 9.6
Appointment of Successor Clearing Agency
.
If any Clearing Agency elects to discontinue its services as a securities depositary with
respect to the Capital Securities, the Regular Trustees may, in their sole discretion, appoint a
successor Clearing Agency with respect to such Capital Securities.
SECTION 9.7
Definitive Capital Security Certificates
.
If:
(a) a Clearing Agency elects to discontinue its services as a securities depositary with
respect to the Capital Securities and a successor Clearing Agency is not appointed within 90 days
after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to terminate the book entry
system through the Clearing Agency with respect to the Capital Securities,
then:
(c) Definitive Capital Security Certificates shall be prepared by the Regular Trustees on
behalf of the Trust with respect to such Capital Securities; and
(d) upon surrender of the Global Certificates by the Clearing Agency, accompanied by
registration instructions, the Regular Trustees shall cause Definitive Certificates to be delivered
to Capital Security Beneficial Owners in accordance with the instructions of the Clearing Agency.
Neither the Trustees nor the Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be protected in relying on, said instructions
of the Clearing Agency. The Definitive Capital Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and may have such letters, numbers or
other marks of identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock exchange on which
Capital Securities may be listed, or to conform to usage.
32
SECTION 9.8
Mutilated, Destroyed, Lost or Stolen Certificates
.
If:
(a) any mutilated Certificates should be surrendered to the Regular Trustees, or if the
Regular Trustees shall receive evidence to their satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or indemnity as may be
required by them to keep each of them harmless.
then, in the absence of notice that such Certificate shall have been acquired by a bona fide
purchaser, any Regular Trustee on behalf of the Trust shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this Section 9.8, the
Regular Trustees may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall
be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1
Liability
.
(a) Except as expressly set forth in this Declaration, the Capital Securities Guarantee and
the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital contributions (or
any return thereon) of the Holders of the Securities which shall be made solely from assets
of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any deficit upon
dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the debts and obligations
of the Trust (other than with respect to the Securities) to the extent not satisfied out of the
Trusts assets.
(c) Pursuant to § 3803(a) of the Statutory Trust Act, the Holders of the Capital Securities
shall be entitled to the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State of Delaware.
SECTION 10.2
Exculpation
.
(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Trust or any Covered Person for any loss, damage or claim incurred
33
by reason of any act or omission performed or omitted by such Indemnified Person in good faith
on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this Declaration or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of
such Indemnified Persons gross negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Trust and upon such information, opinions, reports or statements presented to the Trust by
any Person as to matters the Indemnified Person reasonably believes are within such other Persons
professional or expert competence and who has been selected with reasonable care by or on behalf of
the Trust, including information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be paid.
SECTION 10.3
Fiduciary Duty
.
(a) To the extent that, at law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other
Covered Person for its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified
Person otherwise existing at law or in equity (other than the duties imposed on the Institutional
Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated herein or therein
provides that an Indemnified Person shall act in a manner that is, or provides terms that
are, fair and reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action or provide such
terms, considering in each case the relative interest of each party (including its own interest) to
such conflict, agreement, transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable generally accepted
accounting practices or principles. In the absence of bad faith by the Indemnified Person, the
resolution, action or term so made, taken or provided by the Indemnified Person shall not
constitute a breach of this Declaration or any other agreement contemplated herein or of any duty
or obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or required to make a
decision:
34
(i) in its discretion or under a grant of similar authority, the Indemnified Person
shall be entitled to consider such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any consideration to any interest of
or factors affecting the Trust or any other Person; or
(ii) in its good faith or under another express standard, the Indemnified Person
shall act under such express standard and shall not be subject to any other or different
standard imposed by this Declaration or by applicable law.
SECTION 10.4
Indemnification
.
(a) (i) The Debenture Issuer shall indemnify, to the full extent permitted by law, any Company
Indemnified Person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason of the fact that he
is or was a Company Indemnified Person against expenses (including attorneys fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo
contendere
or its equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent permitted by law, any
Company Indemnified Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best interests of the
Trust and except that no such indemnification shall be made in respect of any claim, issue
or matter as to which such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which such Court of
Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be successful on the merits
or otherwise (including dismissal of an action without prejudice or the settlement of an
action without admission of liability) in defense of any action, suit or proceeding referred
to in paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any claim, issue or
matter therein, he shall be indemnified, to the full extent permitted by
35
law, against expenses (including attorneys fees) actually and reasonably incurred by
him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this Section 10.4(a) (unless
ordered by a court) shall be made by the Debenture Issuer only as authorized in the specific
case upon a determination that indemnification of the Company Indemnified Person is proper
in the circumstances because he has met the applicable standard of conduct set forth in
paragraphs (i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not parties to such
action, suit or proceeding, (2) if such a quorum is not obtainable, or, even if obtainable,
if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a
written opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be indemnified by the
Debenture Issuer as authorized in this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Regular Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security Holder at the time such determination is
made, such Company Indemnified Person acted in bad faith or in a manner that such person did
not believe to be in or not opposed to the best interests of the Trust, or, with respect to
any criminal proceeding, that such Company Indemnified Person believed or had reasonable
cause to believe his conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the Trust or its
Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided by, or granted pursuant
to, the other paragraphs of this Section 10.4(a) shall not be deemed exclusive of any other
rights to which those seeking indemnification and advancement of expenses may be entitled
under any agreement, vote of stockholders or disinterested directors of the Debenture Issuer
or Capital Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be provided by a contract
between the Debenture Issuer and each Company Indemnified Person who serves in such capacity
at any time while this Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then existing.
36
(vii) The Debenture Issuer may purchase and maintain insurance on behalf of any person
who is or was a Company Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such, whether or not
the Debenture Issuer would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to the Trust shall include, in
addition to the resulting or surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or merger, so that any person who
is or was a director, trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee, officer, employee
or agent of another entity, shall stand in the same position under the provisions of this
Section 10.4(a) with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or granted pursuant
to, this Section 10.4(a) shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Institutional Trustee, (ii) the Delaware
Trustee, (iii) any Affiliate of the Institutional Trustee and the Delaware Trustee, and (iv) any
officers, directors, shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee and the Delaware Trustee (each of the Persons in
(i) through (iv) being referred to as a Fiduciary Indemnified Person) for, and to hold each
Fiduciary Indemnified Person harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the acceptance or
administration or the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers or duties hereunder.
The obligation to indemnify as set forth in this Section 10.4(b) shall survive the resignation or
removal of the Institutional Trustee or the Delaware Trustee, as the case may be, and the
satisfaction and discharge of this Declaration.
SECTION 10.5
Outside Businesses
.
Any Covered Person, the Sponsor, the Delaware Trustee and the Institutional Trustee may engage
in or possess an interest in other business ventures of any nature or description, independently or
with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or improper. No Covered
Person, the Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if such opportunity is of
a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Institutional Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend to
37
others any such particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other obligations of the
Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1
Fiscal Year
.
The fiscal year (Fiscal Year) of the Trust shall be the calendar year, or such other year as
is required by the Code.
SECTION 11.2
Certain Accounting Matters
.
(a) At all times during the existence of the Trust, the Regular Trustees shall keep, or cause
to be kept, full books of account, records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for United States
federal income tax purposes. The books of account and the records of the Trust shall be examined
by and reported upon as of the end of each Fiscal Year of the Trust by a firm of independent
certified public accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to each of the Holders of
Securities, to the extent, if any, required by the Trust Indenture Act, within 90 days after the
end of each Fiscal Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements of income or loss;
(c) The Regular Trustees shall cause to be duly prepared and delivered to each of the Holders
of Securities, any annual United States federal income tax information statement required by the
Code, containing such information with regard to the Securities held by each Holder as is required
by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver all such statements
within 30 days after the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed with the appropriate taxing
authority, an annual United States federal income tax return, on a Form 1041 or such other form
required by United States federal income tax law, and any other annual income tax returns required
to be filed by the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3
Banking.
The Trust shall maintain one or more bank accounts in the name and for the sole benefit of the
Trust; provided, however, that all payments of funds in respect of the Debentures
38
held by the Institutional Trustee shall be made directly to the Institutional Trustee Account
and no other funds of the Trust shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees; provided, however, that
the Institutional Trustee shall designate the signatories for the Institutional Trustee Account.
SECTION 11.4
Withholding.
The Trust and the Regular Trustees shall comply with all withholding requirements under United
States federal, state and local law. The Trust shall request, and the Holders shall provide to the
Trust, such forms or certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be requested by the
Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations.
The Regular Trustees shall file required forms with applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder, shall remit amounts withheld with
respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions or allocations to
any Holder, the amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Holder. In the event of any claimed overwithholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be withheld was not
withheld from actual Distributions made, the Trust may reduce subsequent Distributions by the
amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1
Amendments.
(a) Except as otherwise provided in this Declaration or by any applicable terms of the
Securities, this Declaration may only be amended by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular Trustees a majority of
the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties, obligations or immunities of
the Institutional Trustee, the Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties, obligations or immunities of
the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment shall be void and
ineffective:
(i) unless, in the case of any proposed amendment, the Institutional Trustee shall have
first received an Officers Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration (including the
terms of the Securities);
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(ii) unless, in the case of any proposed amendment which affects the rights, powers,
duties, obligations or immunities of the Institutional Trustee, the Institutional Trustee
shall have first received:
(A) an Officers Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or the Trust) that
such amendment is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for purposes of United
States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the Institutional
Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company required to be
registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that remain outstanding, any
amendment that would adversely affect the rights, privileges or preferences of any Holder of
Securities may be effected only with such additional requirements as may be set forth in the terms
of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without the consent of all of
the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities and;
(f) the rights of the Holders of the Common Securities under Article V to increase or decrease
the number of, and appoint and remove Trustees shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities; and
(g) subject to Section 12.1(c), this Declaration may be amended without the consent of the
Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that may be defective or
inconsistent with any other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of the Sponsor;
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(iv) to conform to any change in Rule 3a-5 or written change in interpretation or
application of Rule 3a-5 by any legislative body, court, government agency or regulatory
authority which amendment does not have a material adverse effect on the right, preferences
or privileges of the Holders; and
(v) to modify, eliminate and add to any provision of the Declaration to such extent as
may be reasonably necessary to effectuate any of the foregoing or to otherwise comply with
applicable law.
SECTION 12.2
Meetings of the Holders of Securities; Action by Written Consent
.
(a) Meetings of the Holders of any class of Securities may be called at any time by the
Regular Trustees (or as provided in the terms of the Securities) to consider and act on any matter
on which Holders of such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Regular Trustees shall call a meeting of the
Holders of such class if directed to do so by the Holders of Securities representing at least 10%
in liquidation amount of such class of Securities. Such direction shall be given by delivering to
the Regular Trustees one or more calls in a writing stating that the signing Holders of Securities
wish to call a meeting and indicating the general or specific purpose for which the meeting is to
be called. Any Holders of Securities calling a meeting shall specify in writing the Security
Certificates held by the Holders of Securities exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the Securities, the following
provisions shall apply to meetings of Holders of Securities:
(i) notice of any such meeting shall be given to all the Holders of Securities having
a right to vote thereat at least 7 days and not more than 60 days before the date of such
meeting. Whenever a vote, consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, such vote, consent or approval may be given
at a meeting of the Holders of Securities. Any action that may be taken at a meeting of
the Holders of Securities may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary to authorize or
take such action at a meeting at which all Holders of Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders of Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting shall be returned to
the Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to act for it by proxy on all
matters in which a Holder of Securities is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. No proxy shall be valid
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after the expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation Law of the State
of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust
were a Delaware corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be conducted by the Regular
Trustees or by such other Person that the Regular Trustees may designate; and
(iv) unless the Statutory Trust Act, this Declaration, the terms of the Securities,
the Trust Indenture Act or the listing rules of any stock exchange on which the Capital
Securities are then listed or trading, otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting at which any
matter is to be voted on by any Holders of Securities, waiver of any such notice, action by
consent without a meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1
Representations and Warranties of Institutional Trustee
.
The Trustee that acts as initial Institutional Trustee represents and warrants to the Trust
and to the Sponsor at the date of this Declaration, and each Successor Institutional Trustee
represents and warrants to the Trust and the Sponsor at the time of the Successor Institutional
Trustees acceptance of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a banking corporation with trust powers, duly organized,
validly existing and in good standing under the laws of the State of New York, with trust power and
authority to execute and deliver, and to carry out and perform its obligations under the terms of,
this Declaration;
(b) the execution, delivery and performance by the Institutional Trustee of the Declaration
has been duly authorized by all necessary corporate action on the part of the Institutional
Trustee. The Declaration has been duly executed and delivered by the Institutional Trustee, and it
constitutes a legal, valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors rights generally and to general principles
of equity and the discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
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(c) the execution, delivery and performance of the Declaration by the Institutional Trustee
does not conflict with or constitute a breach of the Articles of Organization or By-laws of the
Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with or notice to, any State or
Federal banking authority is required for the execution, delivery or performance by the
Institutional Trustee, of the Declaration.
SECTION 13.2
Representations and Warranties of Delaware Trustee
.
The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustees acceptance of
its appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation with trust powers, duly organized,
validly existing and in good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations under the terms of,
the Declaration.
(b) The Delaware Trustee has been authorized to perform its obligations under the Certificate
of Trust and the Declaration. The Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws
affecting creditors rights generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(c) No consent, approval or authorization of, or registration with or notice to, any State or
Federal banking authority is required for the execution, delivery or performance by the Delaware
Trustee, of the Declaration.
(d) The Delaware Trustee is an entity which maintains its principal place of business in the
State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1
Notices
.
All notices provided for in this Declaration shall be in writing, duly signed by the party
giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail,
as follows:
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(a) if given to the Trust, in care of the Regular Trustees at the Trusts mailing address set
forth below (or such other address as the Trust may give notice of to the Holders of the
Securities):
Citigroup Capital XX
c/o Citigroup Inc.
153 East 53rd Street
New York, NY 10043
Attention: Sallie Krawcheck
(b) if given to the Delaware Trustee, at the mailing address set forth below (or such other
address as Delaware Trustee may give notice of to the Holders of the Securities):
The Bank of New York (Delaware)
100 White Clay Center
Route 273
P. O. Box 6995
Newark, DE 19711
Attention: Corporate Trust Department
(c) if given to the Institutional Trustee, at the mailing address set forth below (or such
other address as the Institutional Trustee may give notice of to the Holders of the Securities):
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(d) if given to the Holder of the Common Securities, at the mailing address of the Sponsor set
forth below (or such other address as the Holder of the Common Securities may give notice of to the
Trust):
Citigroup Inc.
153 East 53rd Street
New York, NY 10043
Attention: Charles E. Wainhouse
(e) if given to any other Holder, at the address set forth on the books and records of the
Trust.
All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
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SECTION 14.2
Governing Law
.
This Declaration and the rights of the parties hereunder shall be governed by and interpreted
in accordance with the laws of the State of Delaware and all rights and remedies shall be governed
by such laws without regard to principles of conflict of laws.
SECTION 14.3
Intention of the Parties
.
It is the intention of the parties hereto that the Trust be classified for United States
federal income tax purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 14.4
Headings.
Headings contained in this Declaration are inserted for convenience of reference only and do
not affect the interpretation of this Declaration or any provision hereof.
SECTION 14.5
Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all covenants and agreements in this
Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6
Partial Enforceability.
If any provision of this Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or the application of such
provision to Persons or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7
Counterparts
.
This Declaration may contain more than one counterpart of the signature page and this
Declaration may be executed by the affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be read as though one,
and they shall have the same force and effect as though all of the signers had signed a single
signature page.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as of the day
and year first above written.
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Name: Gary Crittenden
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Title: Regular Trustee
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THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
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By:
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Name:
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Title:
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THE BANK OF NEW YORK, as Institutional Trustee
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By:
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Name:
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Title:
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CITIGROUP INC., as Sponsor
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By:
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Name: Charles E. Wainhouse
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Title: Assistant Treasurer
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ANNEX I
TERMS OF
% CAPITAL SECURITIES
% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust, dated as of
, 20 (as amended from time to time, the Declaration), the designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in the Prospectus
referred to below):
1.
Designation and Number
.
(a)
Capital Securities
. Capital Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of
dollars ($ ), and a liquidation amount with respect to the assets of the Trust of
$25 per capital security, are hereby designated for the purposes of identification only as %
Capital Securities (the Capital Securities). The Capital Security Certificates evidencing the
Capital Securities shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom
or practice or to conform to the rules of any stock exchange on which the Capital Securities are
listed.
(b)
Common Securities
. Common Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of dollars ($ ),
and a liquidation amount with respect to the assets of the Trust of $25 per common security, are
hereby designated for the purposes of identification only as % Common Securities (the
Common Securities). The Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or practice.
2.
Distributions
.
(a) Distributions payable on each Security will be fixed at a rate per annum of
% (the Coupon Rate) of the stated liquidation amount of $25 per Security, such
rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears beyond the first date such Distributions are payable (or would be payable,
if not for any Extension Period (as defined below) or default by the Debenture Issuer on the
Debentures) will bear interest thereon compounded quarterly at the Coupon Rate (to the extent
permitted by applicable law). The term Distributions as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly Distribution period
on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full
quarterly
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Distribution period for which Distributions are computed, Distributions will be computed on
the basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue from and including
, 20 , and will be payable quarterly in arrears, on , ,
, and of each year, commencing on , 20 . When, as and if
available for payment, Distributions will be made by the Institutional Trustee, except as otherwise
described below. The Debenture Issuer has the right under the Indenture to defer payments of
interest on the Debentures by extending the interest payment period from time to time on the
Debentures for a period not exceeding 40 consecutive quarters (each an Extension Period), during
which Extension Period no interest shall be due and payable on the Debentures, provided, that no
Extension Period may extend beyond the date of maturity of the Debentures. As a consequence of the
Debenture Issuers extension of the interest payment period, quarterly Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate compounded quarterly during
any such Extension Period. In the event that the Debenture Issuer exercises its right to extend
the interest payment period, then (a) the Debenture Issuer and any subsidiary of the Debenture
Issuer shall not declare or pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its capital stock or make
any guarantee payment with respect thereto (other than (i) purchases, redemptions or other
acquisitions of shares of capital stock of the Debenture Issuer in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) purchases of shares of common stock of the Debenture Issuer pursuant
to a contractually binding requirement to buy stock existing prior to the commencement of the
extension period, including under a contractually binding stock repurchase plan (iii) as a result
of an exchange or conversion of any class or series of the Debenture Issuers capital stock for any
other class or series of the Debenture Issuers capital stock, (iv) the purchase of fractional
interests in shares of the Debenture Issuers capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged), or (v) the purchase
of the Debenture Issuers capital stock in connection with the distribution thereof; and (b) the
Debenture Issuer and any subsidiary of the Debenture Issuer will not make any payment of interest,
principal or premium on, or repay, repurchase or redeem, any debt securities or guarantees issued
by the Debenture Issuer that rank pari passu with or junior to the Debentures (other than (i) any
payment of current or deferred interest on securities that rank pari passu with the Debentures that
is made pro rata to the amounts due on such securities (including the Debentures), provided that
any such payments of deferred interest are made in accordance with the Alternative Payment
Mechanism (as defined below) or (ii) any payments of deferred interest on securities that rank pari
passu with the Debentures that, if not made, would give rise to an event of default permitting
acceleration of such securities. The foregoing, however, will not apply to any stock dividends paid
by the Debenture Issuer where the dividend stock is the same stock as that on which the dividend is
being paid. In addition, the Debenture Issuer may pay
current interest at any time with cash from
any source. Prior to the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided, that such Extension Period, together with all such previous
and further extensions thereof, may not exceed 40 consecutive quarters; provided further, that no
Extension Period may extend beyond the maturity of the Debentures. Payments of deferred
Distributions and accrued interest thereon will be payable to Holders as they appear
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on the books and records of the Trust on the first record date before the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to the above requirements. The
Regular Trustees will give notice to each Holder of any Extension Period upon their receipt of
notice thereof from the Debenture Issuer.
(c) If the Debenture Issuer does not pay all accrued and unpaid interest on the Debentures for
a period of 20 consecutive quarterly periods or if the Debenture Issuer pays current interest on
the Debentures during an Extension Period, it will be subject to the Alternative Payment
Mechanism, whereby the Debenture Issuer will be obliged to continuously use its commercially
reasonable efforts to sell shares of its common stock (including treasury shares). The Debenture
Issuer will notify the Board of Governors of the Federal Reserve Bank and the Federal Reserve Bank
of New York, or its successor as the Debenture Issuers primary federal banking regulator
(collectively, the Federal Reserve) (1) of the commencement of any Extension Period, (2) of the
fifth anniversary of the commencement of an Extension period or earlier payment of current interest
on the Debentures during an Extension Period and (3) of its intention to sell shares of its common
stock and/or Qualified Warrants (as defined below) and to apply the net proceeds from such sale to
pay deferred interest on the Debentures at least 25 Business Days in advance of the relevant
payment date (or such longer period as may be required by the Federal Reserve or by other
supervisory action). The Debenture Issuer may pay accrued and unpaid interest on the Debentures on
or prior to the next interest payment date using only the net proceeds (after underwriters or
placement agents fees, commissions or discounts and other expenses relating to the issuances) of
such sales received by the Debenture Issuer during the 180-day period prior to that interest
payment date, except that the Debenture Issuer may pay accrued and unpaid interest on the
Debentures with cash from any source (i) upon the maturity of the Debentures, (ii) during the
occurrence and continuation of a Supervisory Event (as defined in the Indenture) or (iii) if an
Event of Default and Acceleration under the Indenture shall have occurred and be continuing.
Corresponding Distributions will be made on the Securities. If (1) a Supervisory Event or (2) a
Market Disruption Event (as defined in the Indenture) shall have occurred and be continuing; then
the Debenture Issuer will be excused from its obligation to use its commercially reasonable efforts
to sell its common stock and apply the net proceeds of such sale to pay accrued and unpaid interest
on the Debentures. During the occurrence of a Supervisory Event, the Debenture Issuer will, no
later than 30 Business Days prior to each interest payment date, notify the Federal Reserve of its
intention to both (1) issue or sell shares of common stock and (2) to apply the net proceeds from
such sale to pay deferred interest on the Debentures, and shall only take any such actions if the
Federal Reserve does not disapprove of any such actions within ten (10) Business Days after the
Debenture Issuer gives such notice to the Federal Reserve. The obligation of the Debenture Issuer
to use commercially reasonable efforts to sell its common stock and apply the net proceeds of such
sale to pay accrued and unpaid interest on the Debentures shall resume at such time as no Market
Disruption Event or Supervisory Event exists or is continuing. The Debenture Issuer is not
permitted to sell shares of common stock in excess of a number of shares of common stock which at
, 20
is equal to
(the Share Cap Amount), for the purpose of satisfying the
Alternative Payment Mechanism or otherwise paying deferred interest on the Debentures then
outstanding. If the issued and outstanding shares of common stock shall have been changed into a
different number of shares or a different class by reason of any stock split, reverse stock split,
stock dividend, reclassification, recapitalization, split-up, combination,
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exchange of shares or other similar transaction, then the Share Cap Amount shall be
correspondingly adjusted. The Debenture Issuer shall increase the Share Cap Amount (including
through the increase of its authorized share capital, if necessary) to an amount that would allow
the Debenture Issuer to raise sufficient proceeds to satisfy its obligations to pay deferred
interest in full at the end of the first year of an Extension Period (and on each subsequent
anniversary of the end of the first year of an Extension Period to the extent that an Extension
Period would last more than one year), if the then-current Share Cap Amount would not allow the
Debenture Issuer to raise sufficient proceeds to satisfy its obligations to pay deferred interest
(including compounded interest to that date) assuming a price per share equal to the average
trading price of the Debenture Issuers common shares over the ten-trading-day period preceding
such date; provided that the Debenture Issuer will not be obligated to increase the Share Cap
Amount above shares. Until the tenth anniversary of the commencement of an Extension
Period, a Default will occur if the Debenture Issuer does not increase the Share Cap Amount to an
amount that is greater than shares when required to do so as described above; provided that
no Default will occur if the Debenture Issuer has increased the share cap amount to
shares. The Debenture Issuer will not be obligated to issue common stock prior to the fifth
anniversary of the commencement of an Extension Period if the gross proceeds of any issuance of
common stock and Qualified Warrants applied to pay deferred interest on the Debentures pursuant to
the Alternative Payment Mechanism, together with the gross proceeds of all prior issuances of
common stock and Qualified Warrants applied since the commencement of the Extension Period, would
exceed an amount equal to 2% of the product of (1) the average of the Current Stock Market Prices
(as defined in the Indenture) of the Debenture Issuers common stock on the 10 consecutive trading
days ending on the fourth trading day immediately preceding the date of issuance by the Debenture
Issuer of common stock applied to pay deferred interest on the Debentures pursuant to the
Alternative Payment Mechanism and (2) the total number of issued and outstanding shares of the
Debenture Issuers common stock as of the date of the Debenture Issuers publicly available
consolidated financial statements (the APM Maximum Obligation). Once the Debenture Issuer reaches
the APM Maximum Obligation for an Extension Period, the Debenture Issuer will not be obligated to
issue more common stock or Qualified Warrants in satisfaction of the Alternative Payment Mechanism
prior to the fifth anniversary of the commencement of an Extension Period even if the Current Stock
Market Price of the Debenture Issuers common stock or the number of outstanding shares of its
common stock subsequently increase. The APM Maximum Obligation will cease to apply following the
fifth anniversary of the commencement of an Extension Period, at which point the Debenture Issuer
must repay any deferred interest, regardless of the time at which it was deferred, using proceeds
from sales of the Debenture Issuers common stock, including treasury shares, subject to any Market
Disruption Event, Supervisory Event, and the Share Cap Amount. If the APM Maximum Obligation has
been reached during an Extension Period and the Debenture Issuer subsequently repays all deferred
interest, the APM Maximum Obligation will cease to apply at the termination of such Extension
Period and will not apply again unless and until the Debenture Issuer starts a new Extension
Period. Qualified Warrants means warrants for the Debenture Issuers common stock on t
heir date
of issuance that (1) have an exercise price greater than the Current Stock Market Price of the
Debenture Issuers common stock, and (2) the Debenture Issuer is not entitled to redeem for cash
and the holders are not entitled to require the Debenture Issuer to repurchase for cash in any
circumstances.
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(d) Distributions on the Securities will be payable to the Holders thereof as they appear on
the books and records of the Trust at the close of business on the relevant record dates. While
the Capital Securities remain in book-entry only form, the relevant record dates shall be one
Business Day prior to the relevant payment dates which payment dates shall correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Capital Securities will be made
as described under the heading Description of the Capital Securities Book-Entry Only Issuance
in the Prospectus dated , 20 (the Prospectus), of the Trust included in the
Registration Statement on Form S-3 of the Sponsor, the Trust and certain other statutory trusts.
The relevant record dates for the Common Securities shall be the same record date as for the
Capital Securities. If the Capital Securities shall not continue to remain in book-entry only
form, the relevant record dates for the Capital Securities shall conform to the rules of any
securities exchange on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be more than 14 days but less than 60 days prior to the
relevant payment dates, which payment dates shall correspond to the interest payment dates on the
Debentures. Distributions payable on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Debenture Issuer having failed to make a payment
under the Debentures, will cease to be payable to the Person in whose name such Securities are
registered on the relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on which Distributions are
payable on the Securities is not a Business Day, then payment of the Distribution payable on such
date will be made on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(e) In the event that there is any money or other property held by or for the Trust that is
not accounted for hereunder, such property shall be distributed Pro Rata (as defined herein) among
the Holders of the Securities.
3.
Liquidation Distribution Upon Dissolution
.
(a) In the event of any voluntary or involuntary dissolution, winding-up or termination of the
Trust, the Holders of the Securities on the date of the dissolution, winding-up or termination, as
the case may be, will be entitled to receive out of the assets of the Trust available for
distribution to Holders of Securities after satisfaction of liabilities of creditors, distributions
in an amount equal to the aggregate of the stated liquidation amount of $25 per Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount being the Liquidation
Distribution), unless, in connection with such dissolution, winding-up or termination, Debentures
in an aggregate principal amount equal to the aggregate stated liquidation amount of, with an
interest rate equal to the Coupon Rate, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on, such Securities outstanding at such time, have been
distributed on a Pro Rata basis to the Holders of the Securities in exchange for such Securities.
Prior to any such Liquidation Distribution, the Debenture Issuer will obtain any required
regulatory approval.
I-5
(b) If, upon any such dissolution, the Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on the Securities shall be paid on a
Pro Rata basis.
4.
Redemption and Distribution
.
(a) Upon the repayment of the Debentures in whole or in part, whether at maturity or upon
redemption (either at the option of the Debenture Issuer or pursuant to a Special Event as
described below), the proceeds from such repayment or payment shall be simultaneously applied to
redeem Securities having an aggregate liquidation amount equal to the aggregate principal amount of
the Debentures so repaid or redeemed at a redemption price of $25 per Security plus an amount equal
to accrued and unpaid Distributions thereon at the date of the redemption, payable in cash (the
Redemption Price). Holders shall be given not less than 30 nor more than 60 days notice of such
redemption. Prior to any such redemption, the Debenture Issuer will obtain any required regulatory
approval.
(b) If fewer than all the outstanding Securities are to be so redeemed, the Securities will be
redeemed Pro Rata and the Capital Securities to be redeemed will be as described in Section
4(f)(ii) below.
(c) Subject to obtaining any required regulatory approval, if, at any time, a Tax Event, an
Investment Company Event or a Regulatory Capital Event (each as defined below, and each a Special
Event) shall occur and be continuing, Citigroup shall have the right, upon not less than 30 nor
more than 60 days notice, to redeem the Debentures, in whole or in part, for cash within 90 days
following the occurrence of such Special Event, and, following such redemption, Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the Debentures so redeemed
shall be redeemed by the Trust at the Redemption Price on a Pro Rata basis; provided, however, that
if at the time there is available to Citigroup or the Trust the opportunity to eliminate, within
such 90-day period, the Special Event by taking some ministerial action, such as filing a form or
making an election or pursuing some other similar reasonable measure that will have no adverse
effect on the Trust, Citigroup or the holders of the Securities, then Citigroup or the Trust will
pursue such measure in lieu of redemption.
Tax Event means that the Regular Trustees shall have received an opinion of a nationally
recognized independent tax counsel experienced in such matters (a Tax Event Opinion) to the
effect that, as a result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination on or after the date of the
Prospectus), in either case after the date of the Prospectus, there is more than an insubstantial
risk that (i) the Trust would be subject to United States federal income tax with respect to
interest accrued or received on the Debentures, (ii) the Trust would be subject to more than a de
minimis amount of other taxes, duties or other governmental charges, or (iii) interest payable to
the Trust
I-6
on the Debentures would not be deductible, in whole or in part, by the Debenture Issuer for
United States federal income tax purposes.
Investment Company Event means that the Regular Trustees shall have received an opinion of a
nationally recognized independent counsel experienced in practice under the Investment Company Act
(an Investment Company Event Opinion) to the effect that, as a result of the occurrence of a
change in law or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory authority (a Change
in 1940 Act Law), there is a more than an insubstantial risk that the Trust is or will be
considered an Investment Company which is required to be registered under the Investment Company
Act, which Change in 1940 Act Law becomes effective on or after the date of the Prospectus.
Regulatory Capital Event means a determination by Citigroup, based on an opinion of counsel
experienced in such matters (who may be an employee of Citigroup or any of its affiliates), that,
as a result of (a) any amendment to, clarification of or change (including any announced
prospective change) in applicable laws or regulations or official interpretations thereof or
policies with respect thereto or (b) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment, clarification, change,
pronouncement or decision is announced or is effective after the date of the Prospectus, there is
more than an insubstantial risk that the Capital Securities will no longer constitute Tier I
Capital of Citigroup or any bank holding company of which Citigroup is a subsidiary (or its
equivalent) for purposes of the capital adequacy guidelines or policies of the Board of Governors
of the Federal Reserve System or its successor as Citigroups primary federal banking regulator,
provided, however that the distribution of the Debentures in connection with the liquidation of the
Trust shall not in and of itself constitute a Regulatory Capital Event unless such liquidation
shall have occurred in connection with a Tax Event or an Investment Company Event.
On and from the date fixed by the Regular Trustees for any distribution of the Debentures and
dissolution of the Trust: (i) the Securities will no longer be deemed to be outstanding, (ii) DTC
or its nominee (or any successor Clearing Agency or its nominee), as the record Holder of the
Capital Securities, will receive a registered global certificate or certificates representing the
Debentures to be delivered upon such distribution and (iii) any certificates representing
Securities, except for certificates representing Capital Securities held by DTC or its nominee (or
any successor Clearing Agency or its nominee), will be deemed to represent beneficial interests in
the Debentures having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such certificates are presented
to the Debenture Issuer or its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding Securities unless all accrued and
unpaid Distributions have been paid on all Securities for all quarterly Distribution periods
terminating on or before the date of redemption.
(e) If the Debentures are distributed to the Holders of the Securities, pursuant to the terms
of the Indenture, the Debenture Issuer will use its best efforts to cause the
I-7
Debentures to be listed on the New York Stock Exchange or on such other exchange as the
Capital Securities were listed immediately prior to the distribution of the Debentures.
(f) Redemption or Distribution procedures will be as follows:
(i) Notice of any redemption of, or notice of distribution of Debentures in exchange
for the Securities (a Redemption/Distribution Notice) will be given by the Trust by mail
to the Institutional Trustee and the Delaware Trustee and to each Holder of the Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed
for redemption or exchange thereof which, in the case of a redemption, will be the date
fixed for redemption of the Debentures. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to this Section
4(f)(i), a Redemption/ Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to the Holders of the
Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of the
Securities at the address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof
with respect to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are to be redeemed,
the Securities to be redeemed shall be redeemed Pro Rata from each Holder of Capital
Securities, it being understood that, in respect of Capital Securities registered in the
name of and held of record by DTC or its nominee (or any successor Clearing Agency or its
nominee), the distribution of the proceeds of such redemption will be made to each Clearing
Agency Participant (or Person on whose behalf such nominee holds such securities) in
accordance with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a Redemption/Distribution
Notice, which notice may only be issued if the Debentures are redeemed as set out in this
Section 4 (which notice will be irrevocable), then (A) while the Capital Securities are in
book-entry only form, with respect to the Capital Securities, by 12:00 noon, New York City
time, on the redemption date, provided, that the Debenture Issuer has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related redemption
or maturity of the Debentures, the Institutional Trustee will deposit irrevocably with DTC
or its nominee (or successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Capital Securities and will give DTC (or any
successor Clearing Agency) irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Capital Securities, and (B) with respect to Capital Securities
issued in definitive form and Common Securities, provided, that the Debenture Issuer has
paid the Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Institutional Trustee will pay the relevant
Redemption Price to the Holders of such Securities by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the redemption date. If
a Redemption/Distribution Notice shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of business on the date of such deposit, or
I-8
on the redemption date, as applicable, distributions will cease to accrue on the
Securities so called for redemption and all rights of the Holders of such Securities so
called for redemption will cease, except the right of the Holders of such Securities to
receive the Redemption Price, but without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to register or cause to be registered the
transfer of any Securities that have been so called for redemption. If any date fixed for
redemption of Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of any Securities is improperly
withheld or refused and not paid either by the Institutional Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions on such Securities
will continue to accrue from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular Trustees on behalf of
the Trust to (A) in respect of the Capital Securities, DTC or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been issued or, if
Definitive Capital Security Certificates have been issued, to the Holder thereof and (B) in
respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without limitation, United
States federal securities laws), the Debenture Issuer or its affiliates may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
5.
Voting Rights Capital Securities
.
(a) Except as provided under Sections 5(b) and 7 and as otherwise required by law and the
Declaration, the Holders of the Capital Securities will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the Holders of a Majority in
aggregate liquidation amount of the Capital Securities, voting separately as a class, may direct
the time, method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the Institutional
Trustee, as holder of the Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercise any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waive any past Default (as
defined in the Indenture) that is waivable under Section 5.6 of the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required; provided, however, that, where a consent or action
under the Indenture would require the consent or act of each holder of each Debenture
I-9
affected thereby, such consent or action under the Indenture shall not be effective until each
Holder of Capital Securities shall have consented to such action or provided such consent. The
Institutional Trustee shall not revoke any action previously authorized or approved by a vote of
the Holders of the Capital Securities. Except with respect to directing the time, method and place
of conducting a proceeding for a remedy available to the Institutional Trustee, the Institutional
Trustee, as holder of the Debentures, shall not take any of the actions described in clauses (i),
(ii), (iii) or (iv) above unless the Institutional Trustee has obtained an opinion of a nationally
recognized independent tax counsel experienced in such matters to the effect that as a result of
such action, the Trust will not fail to be classified as a grantor trust for United States federal
income tax purposes. If the Institutional Trustee fails to enforce its rights under the
Debentures, any Holder of Capital Securities may directly institute a legal proceeding against the
Debenture Issuer to enforce the Institutional Trustees rights under the Debentures without first
instituting a legal proceeding against the Institutional Trustee or any other Person or entity. If
a Default under the Declaration has occurred and is continuing and such event is attributable to
the failure of the Debenture Issuer to pay interest or principal on the Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the redemption date),
then a holder of Capital Securities may also directly institute a proceeding for enforcement of
payment to such holder (a Direct Action) of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Capital Securities of such
holder on or after the respective due date specified in the Debentures without first (i) directing
the Institutional Trustee to enforce the terms of the Debentures or (ii) instituting a legal
proceeding directly against the Debenture Issuer to enforce the Institutional Trustees rights
under the Debentures. Except as provided in the preceding sentence, the Holders of Capital
Securities will not be able to exercise directly any other remedy available to the holders of the
Debentures. In connection with such Direct Action, Citigroup will be subrogated to the rights of
such Holder of Capital Securities under the Declaration to the extent of any payment made by
Citigroup to such holder of Capital Securities in such Direct Action.
Any required approval or direction of Holders of Capital Securities may be given at a separate
meeting of Holders of Capital Securities convened for such purpose, at a meeting of all of the
Holders of Securities in the Trust or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Capital Securities. Each such notice will include a statement setting forth
(i) the date of such meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or
of such matter upon which written consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of the Capital Securities will be required for the Trust to
redeem and cancel Capital Securities or to distribute the Debentures in accordance with this
Declaration and the terms of the Securities.
Notwithstanding that Holders of Capital Securities are entitled to vote or consent under any
of the circumstances described above, any of the Capital Securities that are owned by the Sponsor
or any Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
I-10
6.
Voting Rights Common Securities
.
(a) Except as provided under Sections 6(b), (c) and 7 as otherwise required by law and the
Declaration, the Holders of the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance with and subject to
Article V of the Declaration, to vote to appoint, remove or replace any Trustee or to increase or
decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the Default with respect to the
Capital Securities has been cured, waived, or otherwise eliminated and subject to the requirements
of the second to last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional Trustee, or direct the
exercise of any trust or power conferred upon the Institutional Trustee under the Declaration,
including (i) directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waiving any past Default (as defined in the Indenture)
that is waivable under Section 5.6 of the Indenture, or (iii) exercising any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and payable, provided
that, where a consent or action under the Indenture would require the consent or act of the Holders
of greater than a majority in principal amount of Debentures affected thereby (a Super Majority),
the Institutional Trustee may only give such consent or take such action at the written direction
of the Holders of at least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 6(c), the Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital Securities. Other than with respect
to directing the time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of the Common Securities
under this paragraph unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Declaration, any Holder of Common Securities may institute a legal
proceeding directly against any Person to enforce the Institutional Trustees rights under the
Declaration, without first instituting a legal proceeding against the Institutional Trustee or any
other Person.
Any approval or direction of Holders of Common Securities may be given at a separate meeting
of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of
Securities in the Trust or pursuant to written consent. The Regular Trustees will cause a notice
of any meeting at which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to each Holder of
record of Common Securities. Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such
I-11
Holders are entitled to vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be required for the Trust to
redeem and cancel Common Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
7.
Amendments to Declaration and Indenture
.
(a) In addition to any requirements under Section 12.1 of the Declaration, if any proposed
amendment to the Declaration provides for, or the Regular Trustees otherwise propose to effect, (i)
any action that would adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up or
termination of the Trust, other than as described in Section 8.1 of the Declaration, then the
Holders of outstanding Securities as a class, will be entitled to vote on such amendment or
proposal (but not on any other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in liquidation amount of
the Securities, voting together as a single class; provided, however, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Capital Securities or only the
Common Securities, then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the approval of a
Majority in liquidation amount of such class of Securities.
(b) In the event the consent of the Institutional Trustee as the holder of the Debentures is
required under the Indenture with respect to any amendment, modification or termination on the
Indenture or the Debentures, the Institutional Trustee shall request the written direction of the
Holders of the Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by a Majority in
liquidation amount of the Securities voting together as a single class; provided, however, that
where a consent under the Indenture would require the consent of the holders of greater than a
majority in aggregate principal amount of the Debentures (a Super Majority), the Institutional
Trustee may only give such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding; provided, further, that the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of the Securities under
this Section 7(b) unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action.
8.
Pro Rata
.
A reference in these terms of the Securities to any payment, distribution or treatment as
being Pro Rata shall mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a payment, an a Default
under the Declaration has occurred and is continuing, in which case any funds available to make
such payment shall be paid first to each Holder of the Capital Securities pro rata
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according to the aggregate liquidation amount of Capital Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Capital Securities outstanding, and only
after satisfaction of all amounts owed to the Holders of the Capital Securities, to each Holder of
Common Securities pro rata according to the aggregate liquidation amount of Common Securities held
by the relevant Holder relative to the aggregate liquidation amount of all Common Securities
outstanding.
9.
Ranking
.
The Capital Securities rank pari passu and payment thereon shall be made Pro Rata with the
Common Securities except that, where a Default (as defined in the Indenture) occurs and is
continuing under the Indenture in respect of the Debentures held by the Institutional Trustee, the
rights of Holders of the Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment of the Holders of
the Capital Securities.
10.
Listing
.
The Regular Trustees shall use their best efforts to cause the Capital Securities to be listed
on the New York Stock Exchange.
11.
Acceptance of Securities Guarantee and Indenture
.
Each Holder of Capital Securities and Common Securities, by the acceptance thereof, agrees to
the provisions of the Capital Securities Guarantee, including the subordination provisions therein
and to the provisions of the Indenture.
12.
No Preemptive Rights
.
The Holders of the Securities shall have no preemptive rights to subscribe for any additional
securities.
13.
Miscellaneous
.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration or the Capital Securities Guarantee, and
the Indenture to a Holder without charge on written request to the Sponsor at its principal place
of business.
I-13
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
THIS CAPITAL SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE DECLARATION
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE
DEPOSITARY) OR A NOMINEE OF THE DEPOSITARY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER
THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
(55 WATER STREET, NEW YORK, NEW YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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Certificate Number
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CUSIP NO.
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Certificate Evidencing Capital Securities
of
CITIGROUP CAPITAL XX
% Capital Securities
(Liquidation Amount $25 per Capital Security)
CITIGROUP CAPITAL XX, a statutory trust formed under the laws of the State of Delaware (the
Trust), hereby certifies that ___(the Holder) is the registered owner of ___
(___) capital securities of the Trust representing undivided beneficial interests in the assets of
the Trust designated the % Capital Securities (the Capital Securities). The Capital
Securities are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities are set forth in, and this certificate and the Capital
Securities represented hereby are issued and shall in all respects be subject to, the provisions of
A1-1
the Amended and Restated Declaration of Trust of the Trust dated as of , 20 , as
the same may be amended from time to time (the Declaration), including the designation of the
terms of the Capital Securities as set forth in Annex I thereto. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Capital Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Capital Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Sponsor at its principal place of business.
The Holder of this certificate, by accepting this certificate, is deemed to have (i) agreed to
the terms of the Indenture and the Debentures, including that the Debentures are subordinate and
junior in right of payment to all Senior Indebtedness (as defined in the Indenture) and (ii) agreed
to the terms of the Capital Securities Guarantee, including that the Capital Securities Guarantee
is (A) subordinate and junior in right of payment to all other liabilities of Citigroup, (B) pari
passu with the most senior preferred or preference stock now or hereafter issued by Citigroup and
with any guarantee now or hereafter issued by Citigroup with respect to preferred or preference
stock of Citigroups affiliates and (C) senior to Citigroups common stock.
Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Capital Securities as evidence of indirect beneficial ownership
in the Debentures.
A1-2
IN WITNESS WHEREOF, the Trust has executed this certificate this ___day of _________, ___.
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Name:
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Title: Regular Trustee
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A1-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security Certificate to:
(Insert assignees social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Capital Security Certificate on the books of the Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Capital Security Certificate)
A1-4
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
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Certificate Number
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Number of Common Securities
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Certificate Evidencing Common Securities
of
CITIGROUP CAPITAL XX
% Common Securities
(Liquidation Amount $25 per Common Security)
CITIGROUP CAPITAL XX, a statutory trust formed under the laws of the State of Delaware (the
Trust), hereby certifies that Citigroup Inc., a Delaware corporation (the Holder), is the
registered owner of ___(___) common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the % Common Securities (the
Common Securities). The Common Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer and satisfaction of the other conditions set forth in the
Declaration (as defined below), including, without limitation, Section 9.1 thereof. The
designation, rights, privileges, restrictions, preferences and other terms and provisions of the
Common Securities represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated as of ,
20 , as the same may be amended from time to time (the Declaration), including the designation
of the terms of the Common Securities as set forth in Annex I thereto. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration. The Sponsor will
provide a copy of the Declaration and the Indenture to a Holder without charge upon written request
to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
The Holder of this certificate, by accepting this certificate, is deemed to have agreed to the
terms of the Indenture and the Debentures, including that the Debentures are subordinate and junior
in right of payment to all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture.
A2-1
By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Common Securities as evidence of indirect beneficial ownership
in the Debentures.
A2-2
IN WITNESS WHEREOF, the Trust has executed this certificate this ___day of ___, ___.
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Name:
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Title: Regular Trustee
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A2-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security Certificate to:
(Insert assignees social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Common Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Common Security Certificate)
A2-4
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
Exhibit 4.10
FORM OF
AMENDED AND RESTATED DECLARATION
OF TRUST
CITIGROUP CAPITAL XXI
Dated as of , 20
TABLE OF CONTENTS
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ARTICLE I INTERPRETATION AND DEFINITIONS
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SECTION 1.1 Definitions
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1
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ARTICLE II TRUST INDENTURE ACT
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SECTION 2.1 Trust Indenture Act; Application
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7
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SECTION 2.2 Lists of Holders of Securities
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7
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SECTION 2.3 Reports by the Institutional Trustee
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7
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SECTION 2.4 Periodic Reports to Institutional Trustee
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8
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SECTION 2.5 Evidence of Compliance with Conditions Precedent
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8
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SECTION 2.6 Defaults; Waiver
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8
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SECTION 2.7 Default; Notice
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9
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ARTICLE III ORGANIZATION
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SECTION 3.1 Name
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10
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SECTION 3.2 Office
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10
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SECTION 3.3 Purpose
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10
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SECTION 3.4 Authority
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10
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SECTION 3.5 Title to Property of the Trust
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11
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SECTION 3.6 Powers and Duties of the Regular Trustees
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11
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SECTION 3.7 Prohibition of Actions by the Trust and the Trustees
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13
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SECTION 3.8 Powers and Duties of the Institutional Trustee
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14
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SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee
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16
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SECTION 3.10 Certain Rights of Institutional Trustee
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17
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SECTION 3.11 Delaware Trustee
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19
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SECTION 3.12 Execution of Documents
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20
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SECTION 3.13 Not Responsible for Recitals or Issuance of Securities
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20
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SECTION 3.14 Duration of Trust
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20
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SECTION 3.15 Mergers
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20
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ARTICLE IV SPONSOR
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SECTION 4.1 Sponsors Purchase of Common Securities
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22
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SECTION 4.2 Responsibilities of the Sponsor
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22
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ARTICLE V TRUSTEES
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i
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SECTION 5.1 Number of Trustees
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22
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SECTION 5.2 Delaware Trustee
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23
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SECTION 5.3 Institutional Trustee; Eligibility
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23
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SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally
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24
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SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees
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24
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SECTION 5.6 Appointment, Removal and Resignation of Trustees
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25
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SECTION 5.7 Vacancies among Trustees
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26
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SECTION 5.8 Effect of Vacancies
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27
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SECTION 5.9 Meetings
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27
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SECTION 5.10 Delegation of Power
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27
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SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business
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28
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ARTICLE VI DISTRIBUTIONS
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SECTION 6.1 Distributions
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28
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ARTICLE VII ISSUANCE OF SECURITIES
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SECTION 7.1 General Provisions Regarding Securities
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28
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ARTICLE VIII TERMINATION OF TRUST
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SECTION 8.1 Termination of Trust
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29
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ARTICLE IX TRANSFER OF INTERESTS
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SECTION 9.1 Transfer of Securities
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30
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SECTION 9.2 Transfer of Certificates
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30
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SECTION 9.3 Deemed Security Holders
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31
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SECTION 9.4 Book Entry Interests
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31
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SECTION 9.5 Notices to Clearing Agency
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32
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SECTION 9.6 Appointment of Successor Clearing Agency
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32
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SECTION 9.7 Definitive Capital Security Certificates
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32
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SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates
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32
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ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
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SECTION 10.1 Liability
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33
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SECTION 10.2 Exculpation
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33
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SECTION 10.3 Fiduciary Duty
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34
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SECTION 10.4 Indemnification
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35
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SECTION 10.5 Outside Businesses
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37
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ii
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ARTICLE XI ACCOUNTING
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SECTION 11.1 Fiscal Year
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38
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SECTION 11.2 Certain Accounting Matters
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38
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SECTION 11.3 Banking
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38
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SECTION 11.4 Withholding
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39
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ARTICLE XII AMENDMENTS AND MEETINGS
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SECTION 12.1 Amendments
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39
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SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent
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41
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ARTICLE XIII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
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SECTION 13.1 Representations and Warranties of Institutional Trustee
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42
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SECTION 13.2 Representations and Warranties of Delaware Trustee
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43
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ARTICLE XIV MISCELLANEOUS
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SECTION 14.1 Notices
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43
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SECTION 14.2 Governing Law
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45
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SECTION 14.3 Intention of the Parties
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45
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SECTION 14.4 Headings
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45
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SECTION 14.5 Successors and Assigns
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45
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SECTION 14.6 Partial Enforceability
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45
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SECTION 14.7 Counterparts
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45
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ANNEX I
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TERMS OF SECURITIES
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I-1
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EXHIBIT A-1
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FORM OF CAPITAL SECURITY CERTIFICATE
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A1-1
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EXHIBIT A-2
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FORM OF COMMON SECURITY CERTIFICATE
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A2-1
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EXHIBIT B
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SPECIMEN OF DEBENTURE
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B-1
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EXHIBIT C
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UNDERWRITING AGREEMENT
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C-1
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iii
CROSS-REFERENCE TABLE*
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Section of
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Trust Indenture Act
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of
1939, as amended
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Section of Declaration
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310(a)
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5.3
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(a)
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310(c)
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Inapplicable
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311(c)
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Inapplicable
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312(a)
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2.2
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(a)
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312(b)
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2.2
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(b)
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313
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2.3
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314(a)
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2.4
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314(b)
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Inapplicable
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314(c)
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2.5
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314(d)
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Inapplicable
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314(f)
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Inapplicable
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315(a)
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3.9
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(b)
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315(c)
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3.9
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(a)
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315(d)
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3.9
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(a)
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316(a)
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Annex I
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316(c)
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3.6
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(e)
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*
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This Cross-Reference Table does not constitute part of the Declaration and shall not affect
the interpretation of any of its terms or provisions.
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iv
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CITIGROUP CAPITAL XXI
, 20
AMENDED AND RESTATED DECLARATION OF TRUST (Declaration) dated and effective as of
, 20 , by the Trustees (as defined herein), the Sponsor (as defined herein) and by the
holders, from time to time, of undivided beneficial interests in the assets of the Trust to be
issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established Citigroup Capital XXI (the Trust), a trust
under the Statutory Trust Act (as defined herein) pursuant to a
Declaration of Trust dated as of [ ], 2007 (the Original Declaration) and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on [ ], 2007, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of the Trust and
investing the proceeds thereof in certain Debentures of the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend and restate each and
every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a
statutory trust under the Statutory Trust Act and that this Declaration constitute the governing
instrument of such statutory trust, the Trustees declare that all assets contributed to the Trust
will be held in trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to
the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1
Definitions
.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning throughout;
(c) all references to the Declaration or this Declaration are to this Declaration as
modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and Annexes and Exhibits are
to Articles and Sections of and Annexes and Exhibits to this Declaration unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in this
Declaration unless otherwise defined in this Declaration or unless the context otherwise requires;
and
(f) a reference to the singular includes the plural and vice versa.
Affiliate
has the same meaning as given to that term in Rule 405 of the Securities
Act or any successor rule thereunder.
Authorized Officer
of a Person means any Person that is authorized to bind such
Person.
Book Entry Interest
means a beneficial interest in a Global Certificate, ownership
and transfers of which shall be maintained and made through book entries by a Clearing Agency as
described in Section 9.4.
Business Day
means any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York, New York are permitted or required by any applicable law to
close.
Capital Securities Guarantee
means the guarantee agreement dated as of
, 20 , of the Sponsor in respect of the Capital Securities.
Capital Security
has the meaning specified in Section 7.1.
Capital Security Beneficial Owner
means, with respect to a Book Entry Interest, a
Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
Capital Security Certificate
means a certificate representing a Capital Security
substantially in the form of Exhibit A-1.
Certificate
means a Common Security Certificate or a Capital Security Certificate.
Citigroup
means Citigroup Inc., a Delaware corporation.
2
Clearing Agency
means an organization registered as a Clearing Agency pursuant to
Section 17A of the Exchange Act that is acting as depositary for the Capital Securities and in
whose name or in the name of a nominee of that organization shall be registered a Global
Certificate and which shall undertake to effect book entry transfers and pledges of the Capital
Securities.
Clearing Agency Participant
means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency effects book entry
transfers and pledges of securities deposited with the Clearing Agency.
Closing Date
means , 20 .
Code
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor legislation.
Commission
means the Securities and Exchange Commission.
Common Security
has the meaning specified in Section 7.1.
Common Security Certificate
means a definitive certificate in fully registered form
representing a Common Security substantially in the form of Exhibit A-2.
Company Indemnified Person
means (a) any Regular Trustee; (b) any Affiliate of any
Regular Trustee; (c) any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Regular Trustee; or (d) any officer, employee or agent of the
Trust or its Affiliates.
Corporate Trust Office
means the office of the Institutional Trustee at which the
corporate trust business of the Institutional Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Declaration is located at 101 Barclay
Street-8W, New York, New York 10286.
Covered Person
means: (a) any officer, director, shareholder, partner, member,
representative, employee or agent of (i) the Trust or (ii) the Trusts Affiliates; and (b) any
Holder of Securities.
Debenture Issuer
means Citigroup Inc. (or the Sponsor) in its capacity as issuer of
the Debentures under the Indenture.
Debenture Trustee
means The Bank of New York, as trustee under the Indenture until a
successor is appointed thereunder, and thereafter means such successor trustee.
Debentures
means the series of Debentures to be issued by the Debenture Issuer under
the Indenture to be held by the Institutional Trustee, a specimen certificate for such series of
Debentures being Exhibit B.
Default
in respect of the Securities means a Default (as defined in the Indenture)
has occurred and is continuing in respect of the Debentures.
3
Definitive Capital Security Certificates
has the meaning set forth in Section 9.4.
Delaware Trustee
has the meaning set forth in Section 5.2.
Distribution
has the meaning set forth in Section 6.1.
DTC
means the Depository Trust Company, the initial Clearing Agency.
Exchange Act
means the Securities Exchange Act of 1934, as amended from time to
time, or any successor legislation.
Fiduciary Indemnified Person
has the meaning set forth in Section 10.4(b).
Global Certificate
has the meaning set forth in Section 9.4.
Holder
means a Person in whose name a Certificate representing a Security is
registered, such Person being a beneficial owner within the meaning of the Statutory Trust Act.
Indemnified Person
means a Company Indemnified Person or a Fiduciary Indemnified
Person.
Indenture
means the Indenture, dated as of , 20 (as supplemented
from time to time), between the Debenture Issuer and the Debenture Trustee, pursuant to which the
Debentures are to be issued.
Institutional Trustee
means the Trustee meeting the eligibility requirements set
forth in Section 5.3.
Institutional Trustee Account
has the meaning set forth in Section 3.8(c).
Investment Company
means an investment company as defined in the Investment Company
Act.
Investment Company Act
means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.
Investment Company Event
has the meaning set forth in Annex I hereto.
Legal Action
has the meaning set forth in Section 3.6(g).
Majority in liquidation amount of the Securities
means, except as provided in the
terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities
voting together as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a class, who are the
record owners of an aggregate liquidation amount representing more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
4
Officers Certificate
means, with respect to any Person, a certificate signed by two
Authorized Officers of such Person. Any Officers Certificate delivered with respect to compliance
with a condition or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers Certificate has read the covenant or
condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken
by each officer in rendering the Officers Certificate;
(c) a statement that each such officer has made such examination or investigation as, in such
officers opinion, is necessary to enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant
has been complied with.
Paying Agent
has the meaning specified in Section 3.8(h).
Payment Amount
has the meaning specified in Section 6.1.
Person
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or political subdivision thereof, or any
other entity of whatever nature.
Quorum
means any one Regular Trustee or, if there is only one Regular Trustee, such
Regular Trustee.
Regular Trustee
has the meaning specified in Section 5.1.
Regulatory Capital Event
has the meaning set forth in Annex I hereto.
Related Party
means, with respect to the Sponsor, any direct or indirect wholly
owned subsidiary of the Sponsor or any other Person that owns, directly or indirectly, 100% of the
outstanding voting securities of the Sponsor.
Responsible Officer
means, with respect to the Institutional Trustee, any officer
within the Corporate Trust Office of the Institutional Trustee with direct responsibility for the
administration of this Declaration and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that officers knowledge of
and familiarity with the particular subject.
Rule 3a-5
means Rule 3a-5 under the Investment Company Act.
Securities
means the Common Securities and the Capital Securities.
5
Securities Act
means the Securities Act of 1933, as amended from time to time, or
any successor legislation.
Special Event
has the meaning set forth in Annex I hereto.
Sponsor
means Citigroup Inc. or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
Statutory Trust Act
means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code
§3801 et seq., as it may be amended from time to time, or any successor legislation.
Successor Delaware Trustee
has the meaning set forth in Section 5.6.
Successor Entity
has the meaning set forth in Section 3.15(b).
Successor Institutional Trustee
has the meaning set forth in Section 5.6.
Successor Securities
has the meaning set forth in Section 3.15(b).
Super Majority
has the meaning set forth in Section 2.6(a)(ii).
Tax Event
has the meaning set forth in Annex I hereto.
10% in liquidation amount of the Securities
means, except as provided in the terms
of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities voting
together as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a class, who are the
record owners of an aggregate liquidation amount representing 10% or more of the aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
Treasury Regulations
means the income tax regulations, including temporary and
proposed regulations, promulgated under the Code by the United States Treasury, as such regulations
may be amended from time to time (including corresponding provisions of succeeding regulations).
Trustee
or
Trustees
means each Person who has signed this Declaration as a
trustee, so long as such Person shall continue in office in accordance with the terms hereof, and
all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended from time to
time, or any successor legislation.
Underwriting
Agreement
means the Underwriting Agreement for the offering and sale of
Capital Securities in the form of Exhibit C.
6
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1
Trust Indenture Act; Application
.
(a) This Declaration is subject to the provisions of the Trust Indenture Act that are required
to be part of this Declaration and shall, to the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee that is a Trustee for the purposes of
the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits, qualifies or conflicts
with the duties imposed by §§ 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
(d) The application of the Trust Indenture Act to this Declaration shall not affect the nature
of the Securities as equity securities representing undivided beneficial interests in the assets of
the Trust.
SECTION 2.2
Lists of Holders of Securities
.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide the
Institutional Trustee (i) within 14 days after each record date for payment of Distributions, a
list, in such form as the Institutional Trustee may reasonably require, of the names and addresses
of the Holders of the Securities (List of Holders) as of such record date, provided, that neither
the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to provide such List
of Holders at any time the List of Holders does not differ from the most recent List of Holders
given to the Institutional Trustee by the Sponsor and the Regular Trustees on behalf of the Trust,
and (ii) at any other time, within 30 days of receipt by the Trust of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is given to the
Institutional Trustee. The Institutional Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders given to it or which it
receives in the capacity as Paying Agent (if acting in such capacity), provided, that the
Institutional Trustee may destroy any List of Holders previously given to it on receipt of a new
List of Holders.
(b) The Institutional Trustee shall comply with its obligations under §§ 311(a), 311(b) and
312(b) of the Trust Indenture Act.
SECTION 2.3
Reports by the Institutional Trustee
.
Within 60 days after May 15 of each year, the Institutional Trustee shall provide to the
Holders of the Capital Securities such reports as are required by § 313 of the Trust Indenture Act,
if any, in the form and in the manner provided by § 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of § 313(d) of the Trust Indenture
Act.
7
SECTION 2.4
Periodic Reports to Institutional Trustee
.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Institutional Trustee such documents, reports and information as required by § 314 of the Trust
Indenture Act (if any) and the compliance certificate required by § 314 of the Trust Indenture Act
in the form, in the manner and at the times required by § 314 of the Trust Indenture Act.
SECTION 2.5
Evidence of Compliance with Conditions Precedent
.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Institutional Trustee such evidence of compliance with any conditions precedent provided for in
this Declaration that relate to any of the matters set forth in § 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to § 314(c)(1) of the
Trust Indenture Act may be given in the form of an Officers Certificate.
SECTION 2.6
Defaults; Waiver
.
(a) The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on
behalf of the Holders of all of the Capital Securities, waive any past Default in respect of the
Capital Securities and its consequences, provided, that if the underlying Default under the
Indenture:
(i) is not waivable under the Indenture, the Default under the Declaration shall also
not be waivable; or
(ii) is waivable only with the consent of holders of more than a majority in principal
amount of the Debentures (a Super Majority) affected thereby, only the Holders of at least
the proportion in aggregate liquidation amount of the Capital Securities that the relevant
Super Majority represents of the aggregate principal amount of the Debentures outstanding
may waive such Default in respect of the Capital Securities under the Declaration.
The foregoing provisions of this Section 2.6(a) shall be in lieu of § 316(a)(1)(B) of the Trust
Indenture Act and such § 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such default shall cease to exist, and any Default with respect to the Capital Securities
arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or a Default with respect to the
Capital Securities or impair any right consequent thereon. Any waiver by the Holders of the
Capital Securities of a Default with respect to the Capital Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of any such Default with respect to the
Common Securities for all purposes of this Declaration without any further act, vote, or consent of
the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common Securities may, by vote, on
behalf of the Holders of all of the Common Securities, waive any
8
past Default with respect to the Common Securities and its consequences, provided, that if the
underlying Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of the Common
Securities are deemed to have waived such Default under the Declaration as provided in this
Section 2.6(b), the Default under the Declaration shall also not be waivable; or
(ii) is waivable only with the consent of a Super Majority, except where the Holders of
the Common Securities are deemed to have waived such Default under the Declaration as
provided in this Section 2.6(b), only the Holders of at least the proportion in aggregate
liquidation amount of the Common Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding may waive such Default in
respect of the Common Securities under the Declaration;
provided, further each Holder of Common Securities will be deemed to have waived any such Default
and all Defaults with respect to the Common Securities and its consequences until all Defaults with
respect to the Capital Securities have been cured, waived or otherwise eliminated, and until such
Defaults with respect to the Capital Securities have been so cured, waived or otherwise eliminated,
the Institutional Trustee will be deemed to be acting solely on behalf of the Holders of the
Capital Securities and only the Holders of the Capital Securities will have the right to direct the
Institutional Trustee in accordance with the terms of the Securities. The foregoing provisions of
this Section 2.6(b) shall be in lieu of §§ 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act
and such §§ 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded
from this Declaration and the Securities, as permitted by the Trust Indenture Act. Subject to the
foregoing provisions of this Section 2.6(b), upon the waiver of a Default by the Holders of a
Majority in liquidation amount of the Common Securities, any such default shall cease to exist and
any Default with respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or
other default or Default with respect to the Common Securities or impair any right consequent
thereon.
(c) A waiver of a Default under the Indenture by the Institutional Trustee at the direction of
the Holders of the Capital Securities, constitutes a waiver of the corresponding Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of § 316(a)(1)(B) of
the Trust Indenture Act and such § 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7
Default; Notice
.
(a) The Institutional Trustee shall, within 90 days after the occurrence of a Default,
transmit by mail, first class postage prepaid, to the Holders of the Securities, notices of (i) all
defaults with respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving of such notice (the
term defaults for the purposes of this Section 2.7(a) being hereby defined to be a Default as
defined in the Indenture, not including any periods of grace provided for therein and irrespective
9
of the giving of any notice provided therein) and (ii) any notice of default received from the
Indenture Trustee with respect to the Debentures, which notice from the Institutional Trustee to
the Holders shall state that a Default under the Indenture also constitutes a Default with respect
to the Securities; provided that, except for a default in the payment of principal of (or premium,
if any) or interest on any of the Debentures or in the payment of any sinking fund installment
established for the Debentures, the Institutional Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Institutional Trustee in good faith
determines that the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge of any default except:
(i) a default under Sections 5.7(b) and 5.7(c) of the Indenture; or
(ii) any default as to which the Institutional Trustee shall have received written
notice or of which a Responsible Officer of the Institutional Trustee charged with the
administration of the Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1
Name
.
The Trust is named Citigroup Capital XXI, as such name may be modified from time to time by
the Regular Trustees following written notice to the Institutional Trustee, the Delaware Trustee
and the Holders of Securities. The Trusts activities may be conducted under the name of the Trust
or any other name deemed advisable by the Regular Trustees.
SECTION 3.2
Office
.
The address of the principal office of the Trust is c/o Citigroup Inc., 399 Park Avenue, New
York, NY 10043. On ten Business Days written notice to the Institutional Trustee, the Delaware
Trustee and the Holders of Securities, the Regular Trustees may designate another principal office.
SECTION 3.3
Purpose
.
The exclusive purposes and functions of the Trust are (a) to issue and sell Securities and use
the proceeds from such sale to acquire the Debentures, and (b) except as otherwise limited herein,
to engage in only those other activities necessary, or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets,
or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to
be classified for United States federal income tax purposes as a grantor trust.
SECTION 3.4
Authority
.
10
Subject to the limitations provided in this Declaration and to the specific duties of the
Institutional Trustee, the Regular Trustees shall have exclusive and complete authority to carry
out the purposes of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall constitute the act
of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no
person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees
as set forth in this Declaration.
SECTION 3.5
Title to Property of the Trust
.
Except as provided in Section 3.8 with respect to the Debentures and the Institutional Trustee
Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall
be vested in the Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6
Powers and Duties of the Regular Trustees
.
The Regular Trustees shall have the exclusive power, duty and authority to cause the Trust to
engage in the following activities:
(a) to issue and sell the Capital Securities and the Common Securities in accordance with this
Declaration;
provided, however
, that the Trust may issue no more than one series of Capital
Securities and no more than one series of Common Securities, and,
provided further
, that there
shall be no interests in the Trust other than the Securities, and the issuance of Securities shall
be limited to a simultaneous issuance of both Capital Securities and Common Securities on the
Closing Date;
(b) in connection with the issue and sale of the Capital Securities, at the direction of the
Sponsor, to:
(i) execute and file with the Commission on behalf of the Trust a registration
statement on Form S-3 or on another appropriate form, or a registration statement under Rule
462(b) of the Securities Act, in each case prepared by the Sponsor, including any
pre-effective or post-effective amendments thereto, relating to the registration under the
Securities Act of the Capital Securities;
(ii) execute and file any documents prepared by the Sponsor, or take any acts as
determined by the Sponsor to be necessary in order to qualify or register all or part of the
Capital Securities in any State in which the Sponsor has determined to qualify or register
such Capital Securities for sale;
(iii) execute and file an application, prepared by the Sponsor, to the New York Stock
Exchange, Inc., any other national stock exchange or the Nasdaq National Market for listing
upon notice of issuance of any Capital Securities;
11
(iv) execute and file with the Commission on behalf of the Trust a registration
statement on Form 8-A, prepared by the Sponsor, including any pre-effective or
post-effective amendments thereto, relating to the registration of the Capital Securities
under Section 12(b) of the Exchange Act; and
(v) deliver the Underwriting Agreement providing for the sale of the Capital
Securities;
(c) to acquire the Debentures with the proceeds of the sale of the Capital Securities and the
Common Securities; provided, however, that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Institutional Trustee for the benefit of the
Holders of the Capital Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written notice of the occurrence
of a Special Event; provided, that the Regular Trustees shall consult with the Sponsor and the
Institutional Trustee before taking or refraining from taking any ministerial action in relation to
a Special Event;
(e) to establish a record date with respect to all actions to be taken hereunder that require
a record date be established, including and with respect to, for the purposes of §316(c) of the
Trust Indenture Act, Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as to such actions
and applicable record dates;
(f) to take all actions and perform such duties as may be required of the Regular Trustees
pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or
otherwise adjust claims or demands of or against the Trust (Legal Action), unless pursuant to
Section 3.8(e), the Institutional Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be designated as officers with
titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for
such services;
(i) to cause the Trust to comply with the Trusts obligations under the Trust Indenture Act;
(j) to give the certificate required by § 314(a)(4) of the Trust Indenture Act to the
Institutional Trustee, which certificate may be executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out any of the purposes of the
Trust;
(l) to act as, or appoint another Person to act as, registrar and transfer agent for the
Securities;
12
(m) to give prompt written notice to the Holders of the Securities of any notice received from
the Debenture Issuer of its election to defer payments of interest on the Debentures by extending
the interest payment period under the Indenture;
(n) to take all action that may be necessary or appropriate for the preservation and the
continuation of the Trusts valid existence, rights, franchises and privileges as a statutory
statutory trust under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or with applicable law, that
the Regular Trustees determine in their discretion to be necessary or desirable in carrying out the
activities of the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company required to
be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal income tax
purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the Debentures will
be treated as indebtedness of the Debenture Issuer for United States federal income
tax purposes;
provided
, that any such action does not adversely affect the interests of Holders;
(p) to take all action necessary to cause all applicable tax returns and tax information
reports that are required to be filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust; and
(q) to execute all documents or instruments, perform all duties and powers, and do all things
for and on behalf of the Trust in all matters necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this Section 3.6 in a manner that
is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Regular
Trustees shall not take any action that is inconsistent with the purposes and functions of the
Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of the powers or the
authority of the Institutional Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section 3.6 shall be reimbursed
by the Debenture Issuer.
SECTION 3.7
Prohibition of Actions by the Trust and the Trustees
.
13
(a) The Trust shall not, and the Trustees (including the Institutional Trustee) shall not
cause the Trust to, engage in any activity other than as required or authorized by this
Declaration. In particular, the Trust shall not:
(i) invest any proceeds received by the Trust from holding the Debentures, but shall
promptly distribute all such proceeds to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to vary the Trust assets or the
terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership of, or beneficial
interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A) direct the time,
method and place of exercising any trust or power conferred upon the Debenture Trustee with
respect to the Debentures, (B) waive any past Default that is waivable under the Indenture,
(C) exercise any right to rescind or annul any declaration that the principal of all the
Debentures shall be due and payable or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be required unless
the Trust shall have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters to the effect that as a result of such action, the Trust will
not fail to be classified as a grantor trust for United States federal income tax purposes.
SECTION 3.8
Powers and Duties of the Institutional Trustee
.
(a) The legal title to the Debentures shall be owned by and held of record in the name of the
Institutional Trustee in trust for the benefit of the Holders of the Securities. The right, title
and interest of the Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with Section 5.6. Such
vesting and cessation of title shall be effective whether or not conveyancing documents with regard
to the Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its right, title and interest in the
Debentures to the Regular Trustees or to the Delaware Trustee (if the Institutional Trustee does
not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust account (the
Institutional Trustee Account) in the name of and under the exclusive control of the
14
Institutional Trustee on behalf of the Holders of the Securities and, upon the receipt
of payments of funds made in respect of the Debentures held by the Institutional Trustee,
deposit such funds into the Institutional Trustee Account and make payments to the Holders
of the Capital Securities and Holders of the Common Securities from the Institutional
Trustee Account in accordance with Section 6.1. Funds in the Institutional Trustee Account
shall be held uninvested until disbursed in accordance with this Declaration. The
Institutional Trustee Account shall be an account that is maintained with a banking
institution the rating on whose long-term unsecured indebtedness assigned by a nationally
recognized statistical rating organization, as that term is defined for purposes of Rule
436(g)(2) under the Securities Act, is at least equal to the rating assigned to the Capital
Securities by a nationally recognized statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary or appropriate to
effect the redemption of the Capital Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the Regular Trustees in accordance
with the terms of the Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain Special Events or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform such duties as may be
specifically required of the Institutional Trustee pursuant to the terms of the Securities.
(e) Subject to Section 2.6, the Institutional Trustee shall take any Legal Action which arises
out of or in connection with a Default of which a Responsible Officer of the Institutional Trustee
has actual knowledge or the Institutional Trustees duties and obligations under this Declaration
or the Trust Indenture Act.
(f) The Institutional Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of the liquidation
distributed to the Holders of Securities pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has accepted that
appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise all of the rights, powers
and privileges of a holder of Debentures under the Indenture and, if a Default actually known to a
Responsible Officer of the Institutional Trustee occurs and is continuing, the Institutional
Trustee shall, for the benefit of Holders of the Securities, enforce its rights as holder of the
Debentures subject to the rights of the Holders pursuant to the terms of such Securities, this
Declaration, the Statutory Trust Act and the Trust Indenture Act.
15
(h) The Institutional Trustee may authorize one or more Persons (each, a Paying Agent) to
pay Distributions, redemption payments or liquidation payments on behalf of the Trust with respect
to all securities and any such Paying Agent shall comply with § 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Institutional Trustee at any time and a successor Paying
Agent or additional Paying Agents may be appointed at any time by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall have none of the duties,
liabilities, powers or the authority of the Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth in this Section 3.8 in a manner
that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the
Institutional Trustee shall not take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 3.3.
SECTION 3.9
Certain Duties and Responsibilities of the Institutional Trustee
.
(a) The Institutional Trustee, before the occurrence of any Default and after the curing of
all Defaults that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case a Default has occurred (that has not been
cured or waived pursuant to Section 2.6) of which a Responsible Officer of the Institutional
Trustee has actual knowledge, the Institutional Trustee shall exercise such of the rights and
powers vested in it by this Declaration, and use the same degree of care and skill in the exercise
of such rights and powers, as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the Institutional Trustee
from liability for its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of a Default and after the curing or waiving of all such
Defaults that may have occurred:
(A) the duties and obligations of the Institutional Trustee shall be determined
solely by the express provisions of this Declaration and the Institutional Trustee
shall not be liable except for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied covenants or obligations
shall be read into this Declaration against the Institutional Trustee; and
(B) in the absence of bad faith on the part of the Institutional Trustee, the
Institutional Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Institutional
16
Trustee, the Institutional Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer of the Institutional Trustee, unless it shall be proved
that the Institutional Trustee was negligent in ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the Holders of
not less than a Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the Institutional Trustee to expend
or risk its own funds or otherwise incur personal financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity reasonably
satisfactory to the Institutional Trustee against such risk or liability is not reasonably
assured to it;
(v) the Institutional Trustees sole duty with respect to the custody, safe keeping and
physical preservation of the Debentures and the Institutional Trustee Account shall be to
deal with such property in a similar manner as the Institutional Trustee deals with similar
property for its own account, subject to the protections and limitations on liability
afforded to the Institutional Trustee under this Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability for or with respect to
the value, genuineness, existence or sufficiency of the Debentures or the payment of any
taxes or assessments levied thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for any interest on any money
received by it except as it may otherwise agree with the Sponsor. Money held by the
Institutional Trustee need not be segregated from other funds held by it except in relation
to the Institutional Trustee Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible for monitoring the compliance
by the Regular Trustees or the Sponsor with their respective duties under this Declaration,
nor shall the Institutional Trustee be liable for any default or misconduct of the Regular
Trustees or the Sponsor.
SECTION 3.10
Certain Rights of Institutional Trustee
.
(a) Subject to the provisions of Section 3.9:
17
(i) the Institutional Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees contemplated by this
Declaration shall be sufficiently evidenced by an Officers Certificate;
(iii) whenever in the administration of this Declaration, the Institutional Trustee
shall deem it desirable that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers Certificate which, upon receipt of such request, shall
be promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Institutional Trustee shall have no duty to see to any recording, filing or
registration of any instrument (including any financing or continuation statement or any
filing under tax or securities laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or other experts and the advice
or opinion of such counsel and experts with respect to legal matters or advice within the
scope of such experts area of expertise shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with such advice or opinion, such counsel may be counsel to the Sponsor or
any of its Affiliates, and may include any of its employees. The Institutional Trustee
shall have the right at any time to seek instructions concerning the administration of this
Declaration from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Institutional Trustee security and indemnity,
reasonably satisfactory to the Institutional Trustee, against the costs, expenses (including
attorneys fees and expenses and the expenses of the Institutional Trustees agents,
nominees or custodians) and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be requested by the
Institutional Trustee provided that nothing contained in this Section 3.10(a)(vi) shall be
taken to relieve the Institutional Trustee, upon the occurrence of a Default, of its
obligation to exercise the rights and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it may see fit;
18
(viii) the Institutional Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, custodians, nominees
or attorneys and the Institutional Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents hereunder shall bind
the Trust and the Holders of the Securities, and the signature of the Institutional Trustee
or its agents alone shall be sufficient and effective to perform any such action and no
third party shall be required to inquire as to the authority of the Institutional Trustee to
so act or as to its compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional Trustees or its agents
taking such action;
(x) whenever in the administration of this Declaration the Institutional Trustee shall
deem it desirable to receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Institutional Trustee (i) may request instructions
from the Holders of the Securities which instructions may only be given by the Holders of
the same proportion in liquidation amount of the Securities as would be entitled to direct
the Institutional Trustee under the terms of the Securities in respect of such remedy, right
or action, (ii) may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in conclusively relying
on or acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this Declaration, the Institutional
Trustee shall not be under any obligation to take any action that is discretionary under the
provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty or obligation on the
Institutional Trustee to perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the
Institutional Trustee shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Institutional Trustee shall be construed to be a
duty.
SECTION 3.11
Delaware Trustee
.
The Delaware Trustee is appointed to serve as the trustee of the Trust in the State of
Delaware for the sole purpose of satisfying the requirement of Section 3807(a) of the Statutory
Trust Act that the Trust have at least one trustee with a principal place of business in the State
of Delaware. It is understood and agreed by the parties hereto that the Delaware Trustee shall
have none of the duties or liabilities of the Regular Trustees or the Institutional Trustee. The
duties of the Delaware Trustee shall be limited to (i) accepting legal process served on the Trust
in the State of Delaware and (ii) the execution of any certificates required to be filed with the
Delaware Secretary of State which the Delaware Trustee is required to execute under Section 3811 of
the Statutory Trust Act. To the extent that, at law or in equity, the Delaware
19
Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust
or the Holders, it is hereby understood and agreed by the other parties hereto that such duties and
liabilities are replaced by the duties and liabilities of the Delaware Trustee expressly set forth
in this Declaration. The Delaware trustee shall have no liability for the acts or omissions of the
Regular Trustees or the Institutional Trustee. The Delaware Trustee shall be entitled to all of the
same rights, protections, indemnities and immunities under this Declaration and with respect to the
Trust as the Institutional Trustee.
SECTION 3.12
Execution of Documents
.
Unless otherwise determined by the Regular Trustees, and except as otherwise required by the
Statutory Trust Act, any Regular Trustee is authorized to execute on behalf of the Trust any
documents that the Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided, that the registration statement referred to in Section 3.6(b)(i), including any
amendments thereto, shall be signed by all of the Regular Trustees.
SECTION 3.13
Not Responsible for Recitals or Issuance of Securities
.
The recitals contained in this Declaration and the Securities shall be taken as the statements
of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The
Trustees make no representations as to the value or condition of the property of the Trust or any
part thereof. The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14
Duration of Trust
.
The Trust, unless dissolved and terminated pursuant to the provisions of Article VIII hereof,
shall have existence for sixty (60) years from the Closing Date.
SECTION 3.15
Mergers
.
(a) The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets substantially as an entirety to any corporation
or other body, except as described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if there are more than two, a
majority of the Regular Trustees and without the consent of the Holders of the Securities, the
Delaware Trustee or the Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided, that:
(i) such successor entity (the Successor Entity) either:
(A) expressly assumes all of the obligations of the Trust under the Securities;
or
(B) substitutes for the Securities other securities having substantially the
same terms as the Capital Securities (the Successor Securities) so long as
20
the Successor Securities rank the same as the Capital Securities rank with
respect to Distributions and payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the Successor Entity that
possesses the same powers and duties as the Institutional Trustee in its capacity as the
Holder of the Debentures;
(iii) the Capital Securities or any Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national securities exchange
or with any other organization on which the Capital Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement does not cause the Capital
Securities (including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or replacement does not adversely affect
the rights, preferences and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with respect to any dilution of
such Holders interests in the new entity as a result of such merger, consolidation,
amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation or replacement, the Trust has
received an opinion of a nationally recognized independent counsel to the Trust experienced
in such matters to the effect that:
(A) such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the Holders of the Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the Holders interest in the new entity); and
(B) following such merger, consolidation, amalgamation or replacement, neither
the Trust nor the Successor Entity will be required to register as an Investment
Company; and
(C) following such merger, consolidation, amalgamation or replacement, the
Trust (or the Successor Entity) will continue to be classified as a grantor trust
for United States federal income tax purposes; and
(viii) the Sponsor guarantees the obligations of such Successor Entity under the
Successor Securities at least to the extent provided by the Capital Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with the consent of Holders
of 100% in liquidation amount of the Securities, consolidate, amalgamate, merge with or into, or be
replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it, if in the opinion of a nationally recognized
21
independent tax counsel experienced in such matters, such consolidation, amalgamation, merger
or replacement would cause the Trust or the Successor Entity to be classified as other than a
grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1
Sponsors Purchase of Common Securities
.
On the Closing Date, the Sponsor will purchase all of the Common Securities issued by the
Trust at the same time as the Capital Securities are sold.
SECTION 4.2
Responsibilities of the Sponsor
.
In connection with the issue and sale of the Capital Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a registration statement on Form
S-3 or on another appropriate form, or a registration statement under Rule 462(b) of the Securities
Act, including any pre-effective or post-effective amendments thereto, relating to the registration
under the Securities Act of the Capital Securities;
(b) to determine the States in which to take appropriate action to qualify or register for
sale all or part of the Capital Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New York Stock Exchange, any
other national stock exchange or the Nasdaq National Market for listing upon notice of issuance of
any Capital Securities;
(d) to prepare for filing by the Trust with the Commission a registration statement on Form
8-A, including any pre-effective or post-effective amendments thereto, relating to the registration
of the Capital Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing for the sale of the Capital
Securities.
ARTICLE V
TRUSTEES
SECTION 5.1
Number of Trustees
.
The number of Trustees initially shall be five (5), and:
22
(a) at any time before the issuance of any Securities, the Sponsor may, by written instrument,
increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be increased or decreased
by vote of the Holders of a majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities,
provided, however
, that the number of Trustees shall in no event be less than two (2); provided
further that (1) one Trustee, in the case of a natural person, shall be a person who is a resident
of the State of Delaware or that, if not a natural person, shall be an entity which has its
principal place of business in the State of Delaware (the Delaware Trustee); (2) there shall be
at least one Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
Regular Trustee); and (3) one Trustee shall be the Institutional Trustee for so long as this
Declaration is required to qualify as an indenture under the Trust Indenture Act, and such Trustee
may also serve as Delaware Trustee if it meets the applicable requirements.
SECTION 5.2
Delaware Trustee
.
If required by the Statutory Trust Act, the Delaware Trustee shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of business in the State
of Delaware, and otherwise meets the requirements of applicable law,
provided
, that if the Institutional Trustee has its principal place of business in the State of
Delaware and otherwise meets the requirements of applicable law, then the Institutional Trustee
shall also be the Delaware Trustee and Section 3.11 shall have no application.
SECTION 5.3
Institutional Trustee; Eligibility
.
(a) There shall at all times be one Trustee that shall act as Institutional Trustee which
shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of the United States
of America or any State or Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published; and
23
(iii) if the Trust is excluded from the definition of an Investment Company solely by
means of Rule 3a-7 and to the extent Rule 3a-7 requires a trustee having certain
qualifications to hold title to the eligible assets of the Trust, the Institutional
Trustee shall possess those qualifications.
(b) If at any time the Institutional Trustee shall cease to be eligible to so act under
Section 5.3(a), the Institutional Trustee shall immediately resign in the manner and with the
effect set forth in Section 5.6(c).
(c) If the Institutional Trustee has or shall acquire any conflicting interest within the
meaning of § 310(b) of the Trust Indenture Act, the Institutional Trustee and the Holders of the
Common Securities (as if such Holders were the obligor referred to in § 310(b) of the Trust
Indenture Act) shall in all respects comply with the provisions of § 310(b) of the Trust Indenture
Act.
(d) The Capital Securities Guarantee shall be deemed to be specifically described in this
Declaration for purposes of clause (i) of the first provision contained in Section 310(b) of the
Trust Indenture Act.
(e) The initial Institutional Trustee shall be as set forth in Section 5.5 hereof.
SECTION 5.4
Qualifications of Regular Trustees and Delaware Trustee Generally
.
Each Regular Trustee and the Delaware Trustee (unless the Institutional Trustee also acts as
Delaware Trustee) shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more Authorized Officers.
SECTION 5.5
Initial Trustees; Additional Powers of Regular Trustees
.
(a) The initial Regular Trustees shall be:
Saul Rosen
Eric L. Wentzel
John Gerspach
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
100 White Clay Center
Route 273
P. O. Box 6995
Newark, DE 19711
Attn: Corporate Trust Department
The initial Institutional Trustee shall be:
24
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(b) Except as expressly set forth in this Declaration and except if a meeting of the Regular
Trustees is called with respect to any matter over which the Regular Trustees have power to act,
any power of the Regular Trustees may be exercised by, or with the consent of, any one such Regular
Trustee.
(c) Unless otherwise determined by the Regular Trustees, and except as otherwise required by
the Statutory Trust Act or applicable law, any Regular Trustee is authorized to execute on behalf
of the Trust any documents which the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6, provided, that the registration statement referred to in
Section 3.6, including any amendments thereto, shall be signed by all of the Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 his or her power for the purposes of signing any
documents which the Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6
Appointment, Removal and Resignation of Trustees
.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written instrument executed by the
Sponsor; and
(ii) in the case of the Regular Trustees, after the issuance of any Securities, by vote
of the Holders of a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities;
(iii) in the case of the Institutional Trustee and the Delaware Trustee, unless a
Default shall have occurred and be continuing after the issuance of any Securities, by a
vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; and
(iv) in the case of the Institutional Trustee and the Delaware Trustee, if a Default
shall have occurred and be continuing after the issuance of the Securities, by a vote of
the Holders of a Majority in liquidation amount of the Capital Securities voting as a class
at a meeting of the Holders of the Capital Securities.
(b) (i) The Trustee that acts as Institutional Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as Institutional
Trustee under Section 5.3 (a Successor Institutional Trustee) has been appointed and has accepted
such appointment by written instrument executed by such Successor Institutional Trustee and
delivered to the Regular Trustees and the Sponsor; and
25
(ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as Delaware
Trustee under Sections 5.2 and 5.4 (a Successor Delaware Trustee) has been appointed and
has accepted such appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor shall have been
appointed or until his death, removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect upon such delivery or
upon such later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Institutional Trustee shall be
effective:
(A) until a Successor Institutional Trustee has been appointed and has accepted
such appointment by instrument executed by such Successor Institutional Trustee and
delivered to the Trust, the Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely liquidated and the
proceeds thereof distributed to the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be
effective until a Successor Delaware Trustee has been appointed and has accepted such
appointment by instrument executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts to promptly appoint a
Successor Delaware Trustee or Successor Institutional Trustee as the case may be if the
Institutional Trustee or the Delaware Trustee delivers an instrument of resignation in accordance
with this Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware Trustee shall have been
appointed and accepted appointment as provided in this Section 5.6 within 60 days after delivery to
the Sponsor and the Trust of an instrument of resignation, the resigning Institutional Trustee or
Delaware Trustee, as applicable, may petition any court of competent jurisdiction for appointment
of a Successor Institutional Trustee or Successor Delaware Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper and prescribe, appoint a Successor
Institutional Trustee or Successor Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for the acts or omissions to
act of any Successor Institutional Trustee or Successor Delaware Trustee, as the case may be.
SECTION 5.7
Vacancies among Trustees
.
26
If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced
pursuant to Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of such vacancy by the Regular Trustees
or, if there are more than two, a majority of the Regular Trustees shall be conclusive evidence of
the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance
with Section 5.6.
SECTION 5.8
Effect of Vacancies
.
The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation,
incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust.
Whenever a vacancy in the number of Regular Trustees shall occur, until such vacancy is filled by
the appointment of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the Regular Trustees and
shall discharge all the duties imposed upon the Regular Trustees by this Declaration.
SECTION 5.9
Meetings
.
If there is more than one Regular Trustee, meetings of the Regular Trustees shall be held from
time to time upon the call of any Regular Trustee. Regular meetings of the Regular Trustees may be
held at a time and place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such
meeting. Notice of any telephonic meetings of the Regular Trustees or any committee thereof shall
be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting. The presence (whether in
person or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice of
such meeting except where a Regular Trustee attends a meeting for the express purpose of objecting
to the transaction of any activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the Regular Trustees may be
taken at a meeting by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a Quorum is present, or
without a meeting by the unanimous written consent of the Regular Trustees. In the event there is
only one Regular Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
SECTION 5.10
Delegation of Power
.
(a) Any Regular Trustee may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 his or her power for the purpose of executing any
documents contemplated in Section 3.6, including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing; and
27
(b) the Regular Trustees shall have power to delegate from time to time to such of their
number or to officers of the Trust the doing of such things and the execution of such instruments
either in the name of the Trust or the names of the Regular Trustees or otherwise as the Regular
Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 5.11
Merger, Conversion, Consolidation or Succession to Business
.
Any corporation into which the Institutional Trustee or the Delaware Trustee, as the case may
be, may be merged or converted or with which either may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Institutional Trustee or the
Delaware Trustee, as the case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Institutional Trustee or the Delaware
Trustee, as the case may be, hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1
Distributions
.
Holders shall receive Distributions (as defined herein) in accordance with the applicable
terms of the relevant Holders Securities. Distributions shall be made on the Capital Securities
and the Common Securities in accordance with the preferences set forth in their respective terms.
If and to the extent that the Debenture Issuer makes a payment of interest (including Compounded
Interest (as defined in the Indenture) and Additional Interest (as defined in the Indenture)),
premium and/or principal on the Debentures held by the Institutional Trustee (the amount of any
such payment being a Payment Amount), the Institutional Trustee shall and is directed to make a
distribution (a Distribution) of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1
General Provisions Regarding Securities
.
(a) The Regular Trustees shall on behalf of the Trust issue one class of capital securities
representing undivided beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the Capital Securities) and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as are set forth in
Annex I (the Common Securities). The Trust shall issue no securities or other interests in the
assets of the Trust other than the Capital Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by a Regular Trustee. Such
signature shall be the manual or facsimile signature of any present or any future Regular Trustee.
In case any Regular Trustee of the Trust who shall have signed any of the Securities shall cease to
be such Regular Trustee before the Certificates so signed shall be
28
delivered by the Trust, such Certificates nevertheless may be delivered as though the person
who signed such Certificates had not ceased to be such Regular Trustee; and any Certificate may be
signed on behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be the Regular Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such a Regular Trustee. Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such legends or endorsements
as the Regular Trustees may deem appropriate, or as may be required to comply with any law or with
any rule or regulation of any stock exchange on which Securities may be listed, or to conform to
usage.
(c) The consideration received by the Trust for the issuance of the Securities shall
constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration, the Securities so issued
shall be deemed to be validly issued, fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or a Capital Security Beneficial Owner
in accordance with the terms of this Declaration, shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by, this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1
Termination of Trust
.
(a) The Trust shall terminate:
(i) upon the bankruptcy of any Holder of the Common Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution or its equivalent with respect to
any Holder of the Common Securities or the Sponsor; the filing of a certificate of
cancellation with respect to the Trust or the revocation of the Holder of the Common
Securities or the Sponsors charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of any Holder of the Common
Securities, the Sponsor or the Trust;
(iv) Subject to obtaining any required regulatory approval, when all of the Securities
have been called for redemption and the amounts necessary for redemption thereof have been
paid to the Holders in accordance with the terms of the Securities;
(v) Subject to obtaining any required regulatory approval, when the Trust shall have
been dissolved in accordance with the terms of the Securities upon election by
29
the Sponsor of its right to terminate the Trust and distribute all of the Debentures to
the Holders of Securities in exchange for all of the Securities and all of the Debentures
shall have been distributed to the Holders of Securities in accordance with such election;
(vi) before the issuance of any Securities, with the consent of all of the Regular
Trustees and the Sponsor; or
(vii) upon the expiration of the term of the Trust set forth in Section 3.14.
(b) As soon as is practicable after the occurrence of an event referred to in Section 8.1(a),
and after satisfaction of liabilities to creditors of the Trust as required by applicable law,
including Section 3808 of the Statutory Trust Act, and subject to the terms set forth in Annex I,
the Delaware Trustee, when notified in writing of the completion of the winding up of the Trust in
accordance with the Statutory Trust Act, shall terminate the Trust by filing, at the expense of the
Sponsor, a certificate of cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1
Transfer of Securities
.
(a) Securities may only be transferred, in whole or in part, in accordance with the terms and
conditions set forth in this Declaration and in the terms of the Securities. Any transfer or
purported transfer of any Security not made in accordance with this Declaration shall be null and
void.
(b) Subject to this Article IX, Capital Securities shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party may only transfer Common
Securities to the Sponsor or a Related Party of the Sponsor; provided, that any such transfer is
subject to the condition precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such transfer would not cause more
than an insubstantial risk that:
(i) the Trust would not be classified for United States federal income tax purposes as
a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee would become an
Investment Company.
SECTION 9.2
Transfer of Certificates
.
The Regular Trustees shall provide for the registration of Certificates and of transfers of
Certificates, which will be effected without charge but only upon payment (with such
30
indemnity as the Regular Trustees may require) in respect of any tax or other government
charges that may be imposed in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be issued in the name
of the designated transferee or transferees. Every Certificate surrendered for registration of
transfer shall be accompanied by a written instrument of transfer in form satisfactory to the
Regular Trustees duly executed by the Holder or such Holders attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a Certificate. By
acceptance of a Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.3
Deemed Security Holders
.
The Trustees may treat the Person in whose name any Certificate shall be registered on the
books and records of the Trust as the sole holder of such Certificate and of the Securities
represented by such Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust shall have actual or other notice thereof.
SECTION 9.4
Book Entry Interests
.
Unless otherwise specified in the terms of the Capital Securities, the Capital Securities
Certificates, on original issuance, will be issued in the form of one or more, fully registered,
global Capital Security Certificates (each a Global Certificate), to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially
be registered on the books and records of the Trust in the name of Cede & Co., the nominee of DTC,
and no Capital Security Beneficial Owner will receive a definitive Capital Security Certificate
representing such Capital Security Beneficial Owners interests in such Global Certificates, except
as provided in Section 9.7. Unless and until definitive, fully registered Capital Security
Certificates (the Definitive Capital Security Certificates) have been issued to the Capital
Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and effect;
(b) the Trust and the Trustees shall be entitled to deal with the Clearing Agency for all
purposes of this Declaration (including the payment of Distributions on the Global Certificates and
receiving approvals, votes or consents hereunder) as the Holder of the Capital Securities and the
sole holder of the Global Certificates and shall have no obligation to the Capital Security
Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with any other provisions
of this Declaration, the provisions of this Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and agreements between such
Capital Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants
and receive and transmit payments of Distributions on the
31
Global Certificates to such Clearing Agency Participants. DTC will make book entry transfers
among the Clearing Agency Participants.
SECTION 9.5
Notices to Clearing Agency
.
Whenever a notice or other communication to the Capital Security Holders is required under
this Declaration, unless and until Definitive Capital Security Certificates shall have been issued
to the Capital Security Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give
all such notices and communications specified herein to be given to the Capital Security Holders to
the Clearing Agency, and shall have no notice obligations to the Capital Security Beneficial
Owners.
SECTION 9.6
Appointment of Successor Clearing Agency
.
If any Clearing Agency elects to discontinue its services as a securities depositary with
respect to the Capital Securities, the Regular Trustees may, in their sole discretion, appoint a
successor Clearing Agency with respect to such Capital Securities.
SECTION 9.7
Definitive Capital Security Certificates
.
If:
(a) a Clearing Agency elects to discontinue its services as a securities depositary with
respect to the Capital Securities and a successor Clearing Agency is not appointed within 90 days
after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to terminate the book entry
system through the Clearing Agency with respect to the Capital Securities,
then:
(c) Definitive Capital Security Certificates shall be prepared by the Regular Trustees on
behalf of the Trust with respect to such Capital Securities; and
(d) upon surrender of the Global Certificates by the Clearing Agency, accompanied by
registration instructions, the Regular Trustees shall cause Definitive Certificates to be delivered
to Capital Security Beneficial Owners in accordance with the instructions of the Clearing Agency.
Neither the Trustees nor the Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be protected in relying on, said instructions
of the Clearing Agency. The Definitive Capital Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and may have such letters, numbers or
other marks of identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock exchange on which
Capital Securities may be listed, or to conform to usage.
SECTION 9.8
Mutilated, Destroyed, Lost or Stolen Certificates
.
32
If:
(a) any mutilated Certificates should be surrendered to the Regular Trustees, or if the
Regular Trustees shall receive evidence to their satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or indemnity as may be
required by them to keep each of them harmless.
then, in the absence of notice that such Certificate shall have been acquired by a bona fide
purchaser, any Regular Trustee on behalf of the Trust shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this Section 9.8, the
Regular Trustees may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall
be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1
Liability
.
(a) Except as expressly set forth in this Declaration, the Capital Securities Guarantee and
the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital contributions (or
any return thereon) of the Holders of the Securities which shall be made solely from assets
of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any deficit upon
dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the debts and obligations
of the Trust (other than with respect to the Securities) to the extent not satisfied out of the
Trusts assets.
(c) Pursuant to § 3803(a) of the Statutory Trust Act, the Holders of the Capital Securities
shall be entitled to the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State of Delaware.
SECTION 10.2
Exculpation
.
(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Trust or any Covered Person for any loss, damage or claim incurred
33
by reason of any act or omission performed or omitted by such Indemnified Person in good faith
on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this Declaration or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of
such Indemnified Persons gross negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Trust and upon such information, opinions, reports or statements presented to the Trust by
any Person as to matters the Indemnified Person reasonably believes are within such other Persons
professional or expert competence and who has been selected with reasonable care by or on behalf of
the Trust, including information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be paid.
SECTION 10.3
Fiduciary Duty
.
(a) To the extent that, at law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other
Covered Person for its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified
Person otherwise existing at law or in equity (other than the duties imposed on the Institutional
Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated herein or therein
provides that an Indemnified Person shall act in a manner that is, or provides terms that
are, fair and reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action or provide such
terms, considering in each case the relative interest of each party (including its own interest) to
such conflict, agreement, transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable generally accepted
accounting practices or principles. In the absence of bad faith by the Indemnified Person, the
resolution, action or term so made, taken or provided by the Indemnified Person shall not
constitute a breach of this Declaration or any other agreement contemplated herein or of any duty
or obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or required to make a
decision:
34
(i) in its discretion or under a grant of similar authority, the Indemnified Person
shall be entitled to consider such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any consideration to any interest of
or factors affecting the Trust or any other Person; or
(ii) in its good faith or under another express standard, the Indemnified Person
shall act under such express standard and shall not be subject to any other or different
standard imposed by this Declaration or by applicable law.
SECTION 10.4
Indemnification
.
(a) (i) The Debenture Issuer shall indemnify, to the full extent permitted by law, any Company
Indemnified Person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason of the fact that he
is or was a Company Indemnified Person against expenses (including attorneys fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo
contendere
or its equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent permitted by law, any
Company Indemnified Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best interests of the
Trust and except that no such indemnification shall be made in respect of any claim, issue
or matter as to which such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which such Court of
Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be successful on the merits
or otherwise (including dismissal of an action without prejudice or the settlement of an
action without admission of liability) in defense of any action, suit or proceeding referred
to in paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any claim, issue or
matter therein, he shall be indemnified, to the full extent permitted by
35
law, against expenses (including attorneys fees) actually and reasonably incurred by
him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this Section 10.4(a) (unless
ordered by a court) shall be made by the Debenture Issuer only as authorized in the specific
case upon a determination that indemnification of the Company Indemnified Person is proper
in the circumstances because he has met the applicable standard of conduct set forth in
paragraphs (i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not parties to such
action, suit or proceeding, (2) if such a quorum is not obtainable, or, even if obtainable,
if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a
written opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be indemnified by the
Debenture Issuer as authorized in this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Regular Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security Holder at the time such determination is
made, such Company Indemnified Person acted in bad faith or in a manner that such person did
not believe to be in or not opposed to the best interests of the Trust, or, with respect to
any criminal proceeding, that such Company Indemnified Person believed or had reasonable
cause to believe his conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the Trust or its
Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided by, or granted pursuant
to, the other paragraphs of this Section 10.4(a) shall not be deemed exclusive of any other
rights to which those seeking indemnification and advancement of expenses may be entitled
under any agreement, vote of stockholders or disinterested directors of the Debenture Issuer
or Capital Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be provided by a contract
between the Debenture Issuer and each Company Indemnified Person who serves in such capacity
at any time while this Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then existing.
36
(vii) The Debenture Issuer may purchase and maintain insurance on behalf of any person
who is or was a Company Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such, whether or not
the Debenture Issuer would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to the Trust shall include,
in addition to the resulting or surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or merger, so that any person who
is or was a director, trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee, officer, employee
or agent of another entity, shall stand in the same position under the provisions of this
Section 10.4(a) with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or granted pursuant
to, this Section 10.4(a) shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Institutional Trustee, (ii) the Delaware
Trustee, (iii) any Affiliate of the Institutional Trustee and the Delaware Trustee, and (iv) any
officers, directors, shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee and the Delaware Trustee (each of the Persons in
(i) through (iv) being referred to as a Fiduciary Indemnified Person) for, and to hold each
Fiduciary Indemnified Person harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the acceptance or
administration or the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers or duties hereunder.
The obligation to indemnify as set forth in this Section 10.4(b) shall survive the resignation or
removal of the Institutional Trustee or the Delaware Trustee, as the case may be, and the
satisfaction and discharge of this Declaration.
SECTION 10.5
Outside Businesses
.
Any Covered Person, the Sponsor, the Delaware Trustee and the Institutional Trustee may engage
in or possess an interest in other business ventures of any nature or description, independently or
with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or improper. No Covered
Person, the Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if such opportunity is of
a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Institutional Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend to
37
others any such particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other obligations of the
Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1
Fiscal Year
.
The fiscal year (Fiscal Year) of the Trust shall be the calendar year, or such other year as
is required by the Code.
SECTION 11.2
Certain Accounting Matters
.
(a) At all times during the existence of the Trust, the Regular Trustees shall keep, or cause
to be kept, full books of account, records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for United States
federal income tax purposes. The books of account and the records of the Trust shall be examined
by and reported upon as of the end of each Fiscal Year of the Trust by a firm of independent
certified public accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to each of the Holders of
Securities, to the extent, if any, required by the Trust Indenture Act, within 90 days after the
end of each Fiscal Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements of income or loss;
(c) The Regular Trustees shall cause to be duly prepared and delivered to each of the Holders
of Securities, any annual United States federal income tax information statement required by the
Code, containing such information with regard to the Securities held by each Holder as is required
by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver all such statements
within 30 days after the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed with the appropriate taxing
authority, an annual United States federal income tax return, on a Form 1041 or such other form
required by United States federal income tax law, and any other annual income tax returns required
to be filed by the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3
Banking.
The Trust shall maintain one or more bank accounts in the name and for the sole benefit of the
Trust; provided, however, that all payments of funds in respect of the Debentures
38
held by the Institutional Trustee shall be made directly to the Institutional Trustee Account
and no other funds of the Trust shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees; provided, however, that
the Institutional Trustee shall designate the signatories for the Institutional Trustee Account.
SECTION 11.4
Withholding.
The Trust and the Regular Trustees shall comply with all withholding requirements under United
States federal, state and local law. The Trust shall request, and the Holders shall provide to the
Trust, such forms or certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be requested by the
Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations.
The Regular Trustees shall file required forms with applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder, shall remit amounts withheld with
respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions or allocations to
any Holder, the amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Holder. In the event of any claimed overwithholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be withheld was not
withheld from actual Distributions made, the Trust may reduce subsequent Distributions by the
amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1
Amendments.
(a) Except as otherwise provided in this Declaration or by any applicable terms of the
Securities, this Declaration may only be amended by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular Trustees a majority of
the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties, obligations or immunities of
the Institutional Trustee, the Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties, obligations or immunities of
the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment shall be void and
ineffective:
(i) unless, in the case of any proposed amendment, the Institutional Trustee shall have
first received an Officers Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration (including the
terms of the Securities);
39
(ii) unless, in the case of any proposed amendment which affects the rights, powers,
duties, obligations or immunities of the Institutional Trustee, the Institutional Trustee
shall have first received:
(A) an Officers Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or the Trust) that
such amendment is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for purposes of United
States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the Institutional
Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company required to be
registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that remain outstanding, any
amendment that would adversely affect the rights, privileges or preferences of any Holder of
Securities may be effected only with such additional requirements as may be set forth in the terms
of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without the consent of all of
the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities and;
(f) the rights of the Holders of the Common Securities under Article V to increase or decrease
the number of, and appoint and remove Trustees shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities; and
(g) subject to Section 12.1(c), this Declaration may be amended without the consent of the
Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that may be defective or
inconsistent with any other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of the Sponsor;
40
(iv) to conform to any change in Rule 3a-5 or written change in interpretation or
application of Rule 3a-5 by any legislative body, court, government agency or regulatory
authority which amendment does not have a material adverse effect on the right, preferences
or privileges of the Holders; and
(v) to modify, eliminate and add to any provision of the Declaration to such extent as
may be reasonably necessary to effectuate any of the foregoing or to otherwise comply with
applicable law.
SECTION 12.2
Meetings of the Holders of Securities; Action by Written Consent
.
(a) Meetings of the Holders of any class of Securities may be called at any time by the
Regular Trustees (or as provided in the terms of the Securities) to consider and act on any matter
on which Holders of such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Regular Trustees shall call a meeting of the
Holders of such class if directed to do so by the Holders of Securities representing at least 10%
in liquidation amount of such class of Securities. Such direction shall be given by delivering to
the Regular Trustees one or more calls in a writing stating that the signing Holders of Securities
wish to call a meeting and indicating the general or specific purpose for which the meeting is to
be called. Any Holders of Securities calling a meeting shall specify in writing the Security
Certificates held by the Holders of Securities exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the Securities, the following
provisions shall apply to meetings of Holders of Securities:
(i) notice of any such meeting shall be given to all the Holders of Securities having
a right to vote thereat at least 7 days and not more than 60 days before the date of such
meeting. Whenever a vote, consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, such vote, consent or approval may be given
at a meeting of the Holders of Securities. Any action that may be taken at a meeting of
the Holders of Securities may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary to authorize or
take such action at a meeting at which all Holders of Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders of Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting shall be returned to
the Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to act for it by proxy on all
matters in which a Holder of Securities is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. No proxy shall be valid
41
after the expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation Law of the State
of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust
were a Delaware corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be conducted by the Regular
Trustees or by such other Person that the Regular Trustees may designate; and
(iv) unless the Statutory Trust Act, this Declaration, the terms of the Securities,
the Trust Indenture Act or the listing rules of any stock exchange on which the Capital
Securities are then listed or trading, otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting at which any
matter is to be voted on by any Holders of Securities, waiver of any such notice, action by
consent without a meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1
Representations and Warranties of Institutional Trustee
.
The Trustee that acts as initial Institutional Trustee represents and warrants to the Trust
and to the Sponsor at the date of this Declaration, and each Successor Institutional Trustee
represents and warrants to the Trust and the Sponsor at the time of the Successor Institutional
Trustees acceptance of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a banking corporation with trust powers, duly organized,
validly existing and in good standing under the laws of the State of New York, with trust power and
authority to execute and deliver, and to carry out and perform its obligations under the terms of,
this Declaration;
(b) the execution, delivery and performance by the Institutional Trustee of the Declaration
has been duly authorized by all necessary corporate action on the part of the Institutional
Trustee. The Declaration has been duly executed and delivered by the Institutional Trustee, and it
constitutes a legal, valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors rights generally and to general principles
of equity and the discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
42
(c) the execution, delivery and performance of the Declaration by the Institutional Trustee
does not conflict with or constitute a breach of the Articles of Organization or By-laws of the
Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with or notice to, any State or
Federal banking authority is required for the execution, delivery or performance by the
Institutional Trustee, of the Declaration.
SECTION 13.2
Representations and Warranties of Delaware Trustee
.
The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustees acceptance of
its appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation with trust powers, duly organized,
validly existing and in good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations under the terms of,
the Declaration.
(b) The Delaware Trustee has been authorized to perform its obligations under the Certificate
of Trust and the Declaration. The Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws
affecting creditors rights generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(c) No consent, approval or authorization of, or registration with or notice to, any State or
Federal banking authority is required for the execution, delivery or performance by the Delaware
Trustee, of the Declaration.
(d) The Delaware Trustee is an entity which maintains its principal place of business in the
State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1
Notices
.
All notices provided for in this Declaration shall be in writing, duly signed by the party
giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail,
as follows:
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(a) if given to the Trust, in care of the Regular Trustees at the Trusts mailing address set
forth below (or such other address as the Trust may give notice of to the Holders of the
Securities):
Citigroup Capital XXI
c/o Citigroup Inc.
153 East 53rd Street
New York, NY 10043
Attention: Sallie Krawcheck
(b) if given to the Delaware Trustee, at the mailing address set forth below (or such other
address as Delaware Trustee may give notice of to the Holders of the Securities):
The Bank of New York (Delaware)
100 White Clay Center
Route 273
P. O. Box 6995
Newark, DE 19711
Attention: Corporate Trust Department
(c) if given to the Institutional Trustee, at the mailing address set forth below (or such
other address as the Institutional Trustee may give notice of to the Holders of the Securities):
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(d) if given to the Holder of the Common Securities, at the mailing address of the Sponsor set
forth below (or such other address as the Holder of the Common Securities may give notice of to the
Trust):
Citigroup Inc.
153 East 53rd Street
New York, NY 10043
Attention: Charles E. Wainhouse
(e) if given to any other Holder, at the address set forth on the books and records of the
Trust.
All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
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SECTION 14.2
Governing Law
.
This Declaration and the rights of the parties hereunder shall be governed by and interpreted
in accordance with the laws of the State of Delaware and all rights and remedies shall be governed
by such laws without regard to principles of conflict of laws.
SECTION 14.3
Intention of the Parties
.
It is the intention of the parties hereto that the Trust be classified for United States
federal income tax purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 14.4
Headings.
Headings contained in this Declaration are inserted for convenience of reference only and do
not affect the interpretation of this Declaration or any provision hereof.
SECTION 14.5
Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all covenants and agreements in this
Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6
Partial Enforceability.
If any provision of this Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or the application of such
provision to Persons or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7
Counterparts
.
This Declaration may contain more than one counterpart of the signature page and this
Declaration may be executed by the affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be read as though one,
and they shall have the same force and effect as though all of the signers had signed a single
signature page.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as of the day
and year first above written.
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Name: Gary Crittenden
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Title: Regular Trustee
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THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
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By:
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Name:
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Title:
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THE BANK OF NEW YORK, as Institutional Trustee
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By:
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Name:
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Title:
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CITIGROUP INC., as Sponsor
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By:
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Name: Charles E. Wainhouse
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Title: Assistant Treasurer
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ANNEX I
TERMS OF
% CAPITAL SECURITIES
% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust, dated as of
, 20 (as amended from time to time, the Declaration), the designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in the Prospectus
referred to below):
1.
Designation and Number
.
(a)
Capital Securities
. Capital Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of
dollars ($ ), and a liquidation amount with respect to the assets of the Trust of
$25 per capital security, are hereby designated for the purposes of identification only as %
Capital Securities (the Capital Securities). The Capital Security Certificates evidencing the
Capital Securities shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom
or practice or to conform to the rules of any stock exchange on which the Capital Securities are
listed.
(b)
Common Securities
. Common Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of dollars ($ ),
and a liquidation amount with respect to the assets of the Trust of $25 per common security, are
hereby designated for the purposes of identification only as % Common Securities (the
Common Securities). The Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or practice.
2.
Distributions
.
(a) Distributions payable on each Security will be fixed at a rate per annum of
% (the Coupon Rate) of the stated liquidation amount of $25 per Security, such
rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears beyond the first date such Distributions are payable (or would be payable,
if not for any Extension Period (as defined below) or default by the Debenture Issuer on the
Debentures) will bear interest thereon compounded quarterly at the Coupon Rate (to the extent
permitted by applicable law). The term Distributions as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly Distribution period
on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full
quarterly
I-1
Distribution period for which Distributions are computed, Distributions will be computed on
the basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue from and including
, 20 , and will be payable quarterly in arrears, on , ,
, and of each year, commencing on , 20 . When, as and if
available for payment, Distributions will be made by the Institutional Trustee, except as otherwise
described below. The Debenture Issuer has the right under the Indenture to defer payments of
interest on the Debentures by extending the interest payment period from time to time on the
Debentures for a period not exceeding 40 consecutive quarters (each an Extension Period), during
which Extension Period no interest shall be due and payable on the Debentures, provided, that no
Extension Period may extend beyond the date of maturity of the Debentures. As a consequence of the
Debenture Issuers extension of the interest payment period, quarterly Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate compounded quarterly during
any such Extension Period. In the event that the Debenture Issuer exercises its right to extend
the interest payment period, then (a) the Debenture Issuer and any subsidiary of the Debenture
Issuer shall not declare or pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its capital stock or make
any guarantee payment with respect thereto (other than (i) purchases, redemptions or other
acquisitions of shares of capital stock of the Debenture Issuer in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) purchases of shares of common stock of the Debenture Issuer pursuant
to a contractually binding requirement to buy stock existing prior to the commencement of the
extension period, including under a contractually binding stock repurchase plan (iii) as a result
of an exchange or conversion of any class or series of the Debenture Issuers capital stock for any
other class or series of the Debenture Issuers capital stock, (iv) the purchase of fractional
interests in shares of the Debenture Issuers capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged), or (v) the purchase
of the Debenture Issuers capital stock in connection with the distribution thereof; and (b) the
Debenture Issuer and any subsidiary of the Debenture Issuer will not make any payment of interest,
principal or premium on, or repay, repurchase or redeem, any debt securities or guarantees issued
by the Debenture Issuer that rank pari passu with or junior to the Debentures (other than (i) any
payment of current or deferred interest on securities that rank pari passu with the Debentures that
is made pro rata to the amounts due on such securities (including the Debentures), provided that
any such payments of deferred interest are made in accordance with the Alternative Payment
Mechanism (as defined below) or (ii) any payments of deferred interest on securities that rank pari
passu with the Debentures that, if not made, would give rise to an event of default permitting
acceleration of such securities. The foregoing, however, will not apply to any stock dividends paid
by the Debenture Issuer where the dividend stock is the same stock as that on which the dividend is
being paid. In addition, the Debenture Issuer may pay
current interest at any time with cash from
any source. Prior to the termination of any such Extension Period, the Debenture Issuer may further
extend such Extension Period; provided, that such Extension Period, together with all such previous
and further extensions thereof, may not exceed 40 consecutive quarters; provided further, that no
Extension Period may extend beyond the maturity of the Debentures. Payments of deferred
Distributions and accrued interest thereon will be payable to Holders as they appear
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on the books and records of the Trust on the first record date before the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to the above requirements. The
Regular Trustees will give notice to each Holder of any Extension Period upon their receipt of
notice thereof from the Debenture Issuer.
(c) If the Debenture Issuer does not pay all accrued and unpaid interest on the Debentures for
a period of 20 consecutive quarterly periods or if the Debenture Issuer pays current interest on
the Debentures during an Extension Period, it will be subject to the Alternative Payment
Mechanism, whereby the Debenture Issuer will be obliged to continuously use its commercially
reasonable efforts to sell shares of its common stock (including treasury shares). The Debenture
Issuer will notify the Board of Governors of the Federal Reserve Bank and the Federal Reserve Bank
of New York, or its successor as the Debenture Issuers primary federal banking regulator
(collectively, the Federal Reserve) (1) of the commencement of any Extension Period, (2) of the
fifth anniversary of the commencement of an Extension period or earlier payment of current interest
on the Debentures during an Extension Period and (3) of its intention to sell shares of its common
stock and/or Qualified Warrants (as defined below) and to apply the net proceeds from such sale to
pay deferred interest on the Debentures at least 25 Business Days in advance of the relevant
payment date (or such longer period as may be required by the Federal Reserve or by other
supervisory action). The Debenture Issuer may pay accrued and unpaid interest on the Debentures on
or prior to the next interest payment date using only the net proceeds (after underwriters or
placement agents fees, commissions or discounts and other expenses relating to the issuances) of
such sales received by the Debenture Issuer during the 180-day period prior to that interest
payment date, except that the Debenture Issuer may pay accrued and unpaid interest on the
Debentures with cash from any source (i) upon the maturity of the Debentures, (ii) during the
occurrence and continuation of a Supervisory Event (as defined in the Indenture) or (iii) if an
Event of Default and Acceleration under the Indenture shall have occurred and be continuing.
Corresponding Distributions will be made on the Securities. If (1) a Supervisory Event or (2) a
Market Disruption Event (as defined in the Indenture) shall have occurred and be continuing; then
the Debenture Issuer will be excused from its obligation to use its commercially reasonable efforts
to sell its common stock and apply the net proceeds of such sale to pay accrued and unpaid interest
on the Debentures. During the occurrence of a Supervisory Event, the Debenture Issuer will, no
later than 30 Business Days prior to each interest payment date, notify the Federal Reserve of its
intention to both (1) issue or sell shares of common stock and (2) to apply the net proceeds from
such sale to pay deferred interest on the Debentures, and shall only take any such actions if the
Federal Reserve does not disapprove of any such actions within ten (10) Business Days after the
Debenture Issuer gives such notice to the Federal Reserve. The obligation of the Debenture Issuer
to use commercially reasonable efforts to sell its common stock and apply the net proceeds of such
sale to pay accrued and unpaid interest on the Debentures shall resume at such time as no Market
Disruption Event or Supervisory Event exists or is continuing. The Debenture Issuer is not
permitted to sell shares of common stock in excess of a number of shares of common stock which at
, 20 is equal to (the Share Cap Amount), for the purpose of satisfying the
Alternative Payment Mechanism or otherwise paying deferred interest on the Debentures then
outstanding. If the issued and outstanding shares of common stock shall have been changed into a
different number of shares or a different class by reason of any stock split, reverse stock split,
stock dividend, reclassification, recapitalization, split-up, combination,
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exchange of shares or other similar transaction, then the Share Cap Amount shall be
correspondingly adjusted. The Debenture Issuer shall increase the Share Cap Amount (including
through the increase of its authorized share capital, if necessary) to an amount that would allow
the Debenture Issuer to raise sufficient proceeds to satisfy its obligations to pay deferred
interest in full at the end of the first year of an Extension Period (and on each subsequent
anniversary of the end of the first year of an Extension Period to the extent that an Extension
Period would last more than one year), if the then-current Share Cap Amount would not allow the
Debenture Issuer to raise sufficient proceeds to satisfy its obligations to pay deferred interest
(including compounded interest to that date) assuming a price per share equal to the average
trading price of the Debenture Issuers common shares over the ten-trading-day period preceding
such date; provided that the Debenture Issuer will not be obligated to increase the Share Cap
Amount above shares. Until the tenth anniversary of the commencement of an Extension
Period, a Default will occur if the Debenture Issuer does not increase the Share Cap Amount to an
amount that is greater than shares when required to do so as described above; provided that
no Default will occur if the Debenture Issuer has increased the share cap amount to
shares. The Debenture Issuer will not be obligated to issue common stock prior to the fifth
anniversary of the commencement of an Extension Period if the gross proceeds of any issuance of
common stock and Qualified Warrants applied to pay deferred interest on the Debentures pursuant to
the Alternative Payment Mechanism, together with the gross proceeds of all prior issuances of
common stock and Qualified Warrants applied since the commencement of the Extension Period, would
exceed an amount equal to 2% of the product of (1) the average of the Current Stock Market Prices
(as defined in the Indenture) of the Debenture Issuers common stock on the 10 consecutive trading
days ending on the fourth trading day immediately preceding the date of issuance by the Debenture
Issuer of common stock applied to pay deferred interest on the Debentures pursuant to the
Alternative Payment Mechanism and (2) the total number of issued and outstanding shares of the
Debenture Issuers common stock as of the date of the Debenture Issuers publicly available
consolidated financial statements (the APM Maximum Obligation). Once the Debenture Issuer reaches
the APM Maximum Obligation for an Extension Period, the Debenture Issuer will not be obligated to
issue more common stock or Qualified Warrants in satisfaction of the Alternative Payment Mechanism
prior to the fifth anniversary of the commencement of an Extension Period even if the Current Stock
Market Price of the Debenture Issuers common stock or the number of outstanding shares of its
common stock subsequently increase. The APM Maximum Obligation will cease to apply following the
fifth anniversary of the commencement of an Extension Period, at which point the Debenture Issuer
must repay any deferred interest, regardless of the time at which it was deferred, using proceeds
from sales of the Debenture Issuers common stock, including treasury shares, subject to any Market
Disruption Event, Supervisory Event, and the Share Cap Amount. If the APM Maximum Obligation has
been reached during an Extension Period and the Debenture Issuer subsequently repays all deferred
interest, the APM Maximum Obligation will cease to apply at the termination of such Extension
Period and will not apply again unless and until the Debenture Issuer starts a new Extension
Period. Qualified Warrants means warrants for the Debenture Issuers common stock on t
heir date
of issuance that (1) have an exercise price greater than the Current Stock Market Price of the
Debenture Issuers common stock, and (2) the Debenture Issuer is not entitled to redeem for cash
and the holders are not entitled to require the Debenture Issuer to repurchase for cash in any
circumstances.
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(d) Distributions on the Securities will be payable to the Holders thereof as they appear on
the books and records of the Trust at the close of business on the relevant record dates. While
the Capital Securities remain in book-entry only form, the relevant record dates shall be one
Business Day prior to the relevant payment dates which payment dates shall correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Capital Securities will be made
as described under the heading Description of the Capital Securities Book-Entry Only Issuance
in the Prospectus dated , 20 (the Prospectus), of the Trust included in the
Registration Statement on Form S-3 of the Sponsor, the Trust and certain other statutory trusts.
The relevant record dates for the Common Securities shall be the same record date as for the
Capital Securities. If the Capital Securities shall not continue to remain in book-entry only
form, the relevant record dates for the Capital Securities shall conform to the rules of any
securities exchange on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be more than 14 days but less than 60 days prior to the
relevant payment dates, which payment dates shall correspond to the interest payment dates on the
Debentures. Distributions payable on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Debenture Issuer having failed to make a payment
under the Debentures, will cease to be payable to the Person in whose name such Securities are
registered on the relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on which Distributions are
payable on the Securities is not a Business Day, then payment of the Distribution payable on such
date will be made on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(e) In the event that there is any money or other property held by or for the Trust that is
not accounted for hereunder, such property shall be distributed Pro Rata (as defined herein) among
the Holders of the Securities.
3.
Liquidation Distribution Upon Dissolution
.
(a) In the event of any voluntary or involuntary dissolution, winding-up or termination of the
Trust, the Holders of the Securities on the date of the dissolution, winding-up or termination, as
the case may be, will be entitled to receive out of the assets of the Trust available for
distribution to Holders of Securities after satisfaction of liabilities of creditors, distributions
in an amount equal to the aggregate of the stated liquidation amount of $25 per Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount being the Liquidation
Distribution), unless, in connection with such dissolution, winding-up or termination, Debentures
in an aggregate principal amount equal to the aggregate stated liquidation amount of, with an
interest rate equal to the Coupon Rate, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on, such Securities outstanding at such time, have been
distributed on a Pro Rata basis to the Holders of the Securities in exchange for such Securities.
Prior to any such Liquidation Distribution, the Debenture Issuer will obtain any required
regulatory approval.
I-5
(b) If, upon any such dissolution, the Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on the Securities shall be paid on a
Pro Rata basis.
4.
Redemption and Distribution
.
(a) Upon the repayment of the Debentures in whole or in part, whether at maturity or upon
redemption (either at the option of the Debenture Issuer or pursuant to a Special Event as
described below), the proceeds from such repayment or payment shall be simultaneously applied to
redeem Securities having an aggregate liquidation amount equal to the aggregate principal amount of
the Debentures so repaid or redeemed at a redemption price of $25 per Security plus an amount equal
to accrued and unpaid Distributions thereon at the date of the redemption, payable in cash (the
Redemption Price). Holders shall be given not less than 30 nor more than 60 days notice of such
redemption. Prior to any such redemption, the Debenture Issuer will obtain any required regulatory
approval.
(b) If fewer than all the outstanding Securities are to be so redeemed, the Securities will be
redeemed Pro Rata and the Capital Securities to be redeemed will be as described in Section
4(f)(ii) below.
(c) Subject to obtaining any required regulatory approval, if, at any time, a Tax Event, an
Investment Company Event or a Regulatory Capital Event (each as defined below, and each a Special
Event) shall occur and be continuing, Citigroup shall have the right, upon not less than 30 nor
more than 60 days notice, to redeem the Debentures, in whole or in part, for cash within 90 days
following the occurrence of such Special Event, and, following such redemption, Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the Debentures so redeemed
shall be redeemed by the Trust at the Redemption Price on a Pro Rata basis; provided, however, that
if at the time there is available to Citigroup or the Trust the opportunity to eliminate, within
such 90-day period, the Special Event by taking some ministerial action, such as filing a form or
making an election or pursuing some other similar reasonable measure that will have no adverse
effect on the Trust, Citigroup or the holders of the Securities, then Citigroup or the Trust will
pursue such measure in lieu of redemption.
Tax Event means that the Regular Trustees shall have received an opinion of a nationally
recognized independent tax counsel experienced in such matters (a Tax Event Opinion) to the
effect that, as a result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination on or after the date of the
Prospectus), in either case after the date of the Prospectus, there is more than an insubstantial
risk that (i) the Trust would be subject to United States federal income tax with respect to
interest accrued or received on the Debentures, (ii) the Trust would be subject to more than a de
minimis amount of other taxes, duties or other governmental charges, or (iii) interest payable to
the Trust
I-6
on the Debentures would not be deductible, in whole or in part, by the Debenture Issuer for
United States federal income tax purposes.
Investment Company Event means that the Regular Trustees shall have received an opinion of a
nationally recognized independent counsel experienced in practice under the Investment Company Act
(an Investment Company Event Opinion) to the effect that, as a result of the occurrence of a
change in law or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory authority (a Change
in 1940 Act Law), there is a more than an insubstantial risk that the Trust is or will be
considered an Investment Company which is required to be registered under the Investment Company
Act, which Change in 1940 Act Law becomes effective on or after the date of the Prospectus.
Regulatory Capital Event means a determination by Citigroup, based on an opinion of counsel
experienced in such matters (who may be an employee of Citigroup or any of its affiliates), that,
as a result of (a) any amendment to, clarification of or change (including any announced
prospective change) in applicable laws or regulations or official interpretations thereof or
policies with respect thereto or (b) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment, clarification, change,
pronouncement or decision is announced or is effective after the date of the Prospectus, there is
more than an insubstantial risk that the Capital Securities will no longer constitute Tier I
Capital of Citigroup or any bank holding company of which Citigroup is a subsidiary (or its
equivalent) for purposes of the capital adequacy guidelines or policies of the Board of Governors
of the Federal Reserve System or its successor as Citigroups primary federal banking regulator,
provided, however that the distribution of the Debentures in connection with the liquidation of the
Trust shall not in and of itself constitute a Regulatory Capital Event unless such liquidation
shall have occurred in connection with a Tax Event or an Investment Company Event.
On and from the date fixed by the Regular Trustees for any distribution of the Debentures and
dissolution of the Trust: (i) the Securities will no longer be deemed to be outstanding, (ii) DTC
or its nominee (or any successor Clearing Agency or its nominee), as the record Holder of the
Capital Securities, will receive a registered global certificate or certificates representing the
Debentures to be delivered upon such distribution and (iii) any certificates representing
Securities, except for certificates representing Capital Securities held by DTC or its nominee (or
any successor Clearing Agency or its nominee), will be deemed to represent beneficial interests in
the Debentures having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such certificates are presented
to the Debenture Issuer or its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding Securities unless all accrued and
unpaid Distributions have been paid on all Securities for all quarterly Distribution periods
terminating on or before the date of redemption.
(e) If the Debentures are distributed to the Holders of the Securities, pursuant to the terms
of the Indenture, the Debenture Issuer will use its best efforts to cause the
I-7
Debentures to be listed on the New York Stock Exchange or on such other exchange as the
Capital Securities were listed immediately prior to the distribution of the Debentures.
(f) Redemption or Distribution procedures will be as follows:
(i) Notice of any redemption of, or notice of distribution of Debentures in exchange
for the Securities (a Redemption/Distribution Notice) will be given by the Trust by mail
to the Institutional Trustee and the Delaware Trustee and to each Holder of the Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed
for redemption or exchange thereof which, in the case of a redemption, will be the date
fixed for redemption of the Debentures. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to this Section
4(f)(i), a Redemption/ Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to the Holders of the
Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of the
Securities at the address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof
with respect to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are to be redeemed,
the Securities to be redeemed shall be redeemed Pro Rata from each Holder of Capital
Securities, it being understood that, in respect of Capital Securities registered in the
name of and held of record by DTC or its nominee (or any successor Clearing Agency or its
nominee), the distribution of the proceeds of such redemption will be made to each Clearing
Agency Participant (or Person on whose behalf such nominee holds such securities) in
accordance with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a Redemption/Distribution
Notice, which notice may only be issued if the Debentures are redeemed as set out in this
Section 4 (which notice will be irrevocable), then (A) while the Capital Securities are in
book-entry only form, with respect to the Capital Securities, by 12:00 noon, New York City
time, on the redemption date, provided, that the Debenture Issuer has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related redemption
or maturity of the Debentures, the Institutional Trustee will deposit irrevocably with DTC
or its nominee (or successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Capital Securities and will give DTC (or any
successor Clearing Agency) irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Capital Securities, and (B) with respect to Capital Securities
issued in definitive form and Common Securities, provided, that the Debenture Issuer has
paid the Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Institutional Trustee will pay the relevant
Redemption Price to the Holders of such Securities by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the redemption date. If
a Redemption/Distribution Notice shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of business on the date of such deposit, or
I-8
on the redemption date, as applicable, distributions will cease to accrue on the
Securities so called for redemption and all rights of the Holders of such Securities so
called for redemption will cease, except the right of the Holders of such Securities to
receive the Redemption Price, but without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to register or cause to be registered the
transfer of any Securities that have been so called for redemption. If any date fixed for
redemption of Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of any Securities is improperly
withheld or refused and not paid either by the Institutional Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions on such Securities
will continue to accrue from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular Trustees on behalf of
the Trust to (A) in respect of the Capital Securities, DTC or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been issued or, if
Definitive Capital Security Certificates have been issued, to the Holder thereof and (B) in
respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without limitation, United
States federal securities laws), the Debenture Issuer or its affiliates may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
5.
Voting Rights Capital Securities
.
(a) Except as provided under Sections 5(b) and 7 and as otherwise required by law and the
Declaration, the Holders of the Capital Securities will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the Holders of a Majority in
aggregate liquidation amount of the Capital Securities, voting separately as a class, may direct
the time, method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the Institutional
Trustee, as holder of the Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercise any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waive any past Default (as
defined in the Indenture) that is waivable under Section 5.6 of the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required; provided, however, that, where a consent or action
under the Indenture would require the consent or act of each holder of each Debenture
I-9
affected thereby, such consent or action under the Indenture shall not be effective until each
Holder of Capital Securities shall have consented to such action or provided such consent. The
Institutional Trustee shall not revoke any action previously authorized or approved by a vote of
the Holders of the Capital Securities. Except with respect to directing the time, method and place
of conducting a proceeding for a remedy available to the Institutional Trustee, the Institutional
Trustee, as holder of the Debentures, shall not take any of the actions described in clauses (i),
(ii), (iii) or (iv) above unless the Institutional Trustee has obtained an opinion of a nationally
recognized independent tax counsel experienced in such matters to the effect that as a result of
such action, the Trust will not fail to be classified as a grantor trust for United States federal
income tax purposes. If the Institutional Trustee fails to enforce its rights under the
Debentures, any Holder of Capital Securities may directly institute a legal proceeding against the
Debenture Issuer to enforce the Institutional Trustees rights under the Debentures without first
instituting a legal proceeding against the Institutional Trustee or any other Person or entity. If
a Default under the Declaration has occurred and is continuing and such event is attributable to
the failure of the Debenture Issuer to pay interest or principal on the Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the redemption date),
then a holder of Capital Securities may also directly institute a proceeding for enforcement of
payment to such holder (a Direct Action) of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Capital Securities of such
holder on or after the respective due date specified in the Debentures without first (i) directing
the Institutional Trustee to enforce the terms of the Debentures or (ii) instituting a legal
proceeding directly against the Debenture Issuer to enforce the Institutional Trustees rights
under the Debentures. Except as provided in the preceding sentence, the Holders of Capital
Securities will not be able to exercise directly any other remedy available to the holders of the
Debentures. In connection with such Direct Action, Citigroup will be subrogated to the rights of
such Holder of Capital Securities under the Declaration to the extent of any payment made by
Citigroup to such holder of Capital Securities in such Direct Action.
Any required approval or direction of Holders of Capital Securities may be given at a separate
meeting of Holders of Capital Securities convened for such purpose, at a meeting of all of the
Holders of Securities in the Trust or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Capital Securities. Each such notice will include a statement setting forth
(i) the date of such meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or
of such matter upon which written consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of the Capital Securities will be required for the Trust to
redeem and cancel Capital Securities or to distribute the Debentures in accordance with this
Declaration and the terms of the Securities.
Notwithstanding that Holders of Capital Securities are entitled to vote or consent under any
of the circumstances described above, any of the Capital Securities that are owned by the Sponsor
or any Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
I-10
6.
Voting Rights Common Securities
.
(a) Except as provided under Sections 6(b), (c) and 7 as otherwise required by law and the
Declaration, the Holders of the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance with and subject to
Article V of the Declaration, to vote to appoint, remove or replace any Trustee or to increase or
decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the Default with respect to the
Capital Securities has been cured, waived, or otherwise eliminated and subject to the requirements
of the second to last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional Trustee, or direct the
exercise of any trust or power conferred upon the Institutional Trustee under the Declaration,
including (i) directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waiving any past Default (as defined in the Indenture)
that is waivable under Section 5.6 of the Indenture, or (iii) exercising any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and payable, provided
that, where a consent or action under the Indenture would require the consent or act of the Holders
of greater than a majority in principal amount of Debentures affected thereby (a Super Majority),
the Institutional Trustee may only give such consent or take such action at the written direction
of the Holders of at least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 6(c), the Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital Securities. Other than with respect
to directing the time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of the Common Securities
under this paragraph unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Declaration, any Holder of Common Securities may institute a legal
proceeding directly against any Person to enforce the Institutional Trustees rights under the
Declaration, without first instituting a legal proceeding against the Institutional Trustee or any
other Person.
Any approval or direction of Holders of Common Securities may be given at a separate meeting
of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of
Securities in the Trust or pursuant to written consent. The Regular Trustees will cause a notice
of any meeting at which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to each Holder of
record of Common Securities. Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such
I-11
Holders are entitled to vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be required for the Trust to
redeem and cancel Common Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
7.
Amendments to Declaration and Indenture
.
(a) In addition to any requirements under Section 12.1 of the Declaration, if any proposed
amendment to the Declaration provides for, or the Regular Trustees otherwise propose to effect, (i)
any action that would adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up or
termination of the Trust, other than as described in Section 8.1 of the Declaration, then the
Holders of outstanding Securities as a class, will be entitled to vote on such amendment or
proposal (but not on any other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in liquidation amount of
the Securities, voting together as a single class; provided, however, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Capital Securities or only the
Common Securities, then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the approval of a
Majority in liquidation amount of such class of Securities.
(b) In the event the consent of the Institutional Trustee as the holder of the Debentures is
required under the Indenture with respect to any amendment, modification or termination on the
Indenture or the Debentures, the Institutional Trustee shall request the written direction of the
Holders of the Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by a Majority in
liquidation amount of the Securities voting together as a single class; provided, however, that
where a consent under the Indenture would require the consent of the holders of greater than a
majority in aggregate principal amount of the Debentures (a Super Majority), the Institutional
Trustee may only give such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding; provided, further, that the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of the Securities under
this Section 7(b) unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action.
8.
Pro Rata
.
A reference in these terms of the Securities to any payment, distribution or treatment as
being Pro Rata shall mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a payment, an a Default
under the Declaration has occurred and is continuing, in which case any funds available to make
such payment shall be paid first to each Holder of the Capital Securities pro rata
I-12
according to the aggregate liquidation amount of Capital Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Capital Securities outstanding, and only
after satisfaction of all amounts owed to the Holders of the Capital Securities, to each Holder of
Common Securities pro rata according to the aggregate liquidation amount of Common Securities held
by the relevant Holder relative to the aggregate liquidation amount of all Common Securities
outstanding.
9.
Ranking
.
The Capital Securities rank pari passu and payment thereon shall be made Pro Rata with the
Common Securities except that, where a Default (as defined in the Indenture) occurs and is
continuing under the Indenture in respect of the Debentures held by the Institutional Trustee, the
rights of Holders of the Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment of the Holders of
the Capital Securities.
10.
Listing
.
The Regular Trustees shall use their best efforts to cause the Capital Securities to be listed
on the New York Stock Exchange.
11.
Acceptance of Securities Guarantee and Indenture
.
Each Holder of Capital Securities and Common Securities, by the acceptance thereof, agrees to
the provisions of the Capital Securities Guarantee, including the subordination provisions therein
and to the provisions of the Indenture.
12.
No Preemptive Rights
.
The Holders of the Securities shall have no preemptive rights to subscribe for any additional
securities.
13.
Miscellaneous
.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration or the Capital Securities Guarantee, and
the Indenture to a Holder without charge on written request to the Sponsor at its principal place
of business.
I-13
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
THIS CAPITAL SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE DECLARATION
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE
DEPOSITARY) OR A NOMINEE OF THE DEPOSITARY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER
THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
(55 WATER STREET, NEW YORK, NEW YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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Certificate Number
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Number of Capital Securities
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CUSIP NO.
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Certificate Evidencing Capital Securities
of
CITIGROUP CAPITAL XXI
% Capital Securities
(Liquidation Amount $25 per Capital Security)
CITIGROUP CAPITAL XXI, a statutory trust formed under the laws of the State of Delaware (the
Trust), hereby certifies that
(the Holder) is the registered owner of
(___) capital securities of the Trust representing undivided beneficial interests in the assets of
the Trust designated the % Capital Securities (the Capital Securities). The Capital
Securities are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities are set forth in, and this certificate and the Capital
Securities represented hereby are issued and shall in all respects be subject to, the provisions of
A1-1
the Amended and Restated Declaration of Trust of the Trust dated as of , 20 , as
the same may be amended from time to time (the Declaration), including the designation of the
terms of the Capital Securities as set forth in Annex I thereto. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Capital Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Capital Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Sponsor at its principal place of business.
The Holder of this certificate, by accepting this certificate, is deemed to have (i) agreed to
the terms of the Indenture and the Debentures, including that the Debentures are subordinate and
junior in right of payment to all Senior Indebtedness (as defined in the Indenture) and (ii) agreed
to the terms of the Capital Securities Guarantee, including that the Capital Securities Guarantee
is (A) subordinate and junior in right of payment to all other liabilities of Citigroup, (B) pari
passu with the most senior preferred or preference stock now or hereafter issued by Citigroup and
with any guarantee now or hereafter issued by Citigroup with respect to preferred or preference
stock of Citigroups affiliates and (C) senior to Citigroups common stock.
Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Capital Securities as evidence of indirect beneficial ownership
in the Debentures.
A1-2
IN WITNESS WHEREOF, the Trust has executed this certificate this ___day of
, ___.
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Name:
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Title: Regular Trustee
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A1-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security Certificate to:
(Insert assignees social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Capital Security
Certificate on the books of the Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Capital Security Certificate)
A1-4
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
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Certificate Number
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Number of Common Securities
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Certificate Evidencing Common Securities
of
CITIGROUP CAPITAL XXI
% Common Securities
(Liquidation Amount $25 per Common Security)
CITIGROUP CAPITAL XXI, a statutory trust formed under the laws of the State of Delaware (the
Trust), hereby certifies that Citigroup Inc., a Delaware corporation (the Holder), is the
registered owner of
(
) common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the % Common Securities (the
Common Securities). The Common Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer and satisfaction of the other conditions set forth in the
Declaration (as defined below), including, without limitation, Section 9.1 thereof. The
designation, rights, privileges, restrictions, preferences and other terms and provisions of the
Common Securities represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated as of ,
20 , as the same may be amended from time to time (the Declaration), including the designation
of the terms of the Common Securities as set forth in Annex I thereto. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration. The Sponsor will
provide a copy of the Declaration and the Indenture to a Holder without charge upon written request
to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
The Holder of this certificate, by accepting this certificate, is deemed to have agreed to the
terms of the Indenture and the Debentures, including that the Debentures are subordinate and junior
in right of payment to all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture.
A2-1
By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Common Securities as evidence of indirect beneficial ownership
in the Debentures.
A2-2
IN WITNESS WHEREOF, the Trust has executed this certificate this ___day of
, ___.
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Name:
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Title: Regular Trustee
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A2-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security Certificate to:
(Insert assignees social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Common Security Certificate)
A2-4
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
Exhibit 4.11
FORM OF
AMENDED AND RESTATED DECLARATION
OF TRUST
CITIGROUP CAPITAL XXII
Dated as of , 20
TABLE OF CONTENTS
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ARTICLE I INTERPRETATION AND DEFINITIONS
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SECTION 1.1 Definitions
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1
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ARTICLE II TRUST INDENTURE ACT
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SECTION 2.1 Trust Indenture Act; Application
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7
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SECTION 2.2 Lists of Holders of Securities
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7
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SECTION 2.3 Reports by the Institutional Trustee
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7
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SECTION 2.4 Periodic Reports to Institutional Trustee
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8
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SECTION 2.5 Evidence of Compliance with Conditions Precedent
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8
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SECTION 2.6 Defaults; Waiver
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8
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SECTION 2.7 Default; Notice
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9
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ARTICLE III ORGANIZATION
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SECTION 3.1 Name
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10
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SECTION 3.2 Office
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10
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SECTION 3.3 Purpose
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10
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SECTION 3.4 Authority
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10
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SECTION 3.5 Title to Property of the Trust
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11
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SECTION 3.6 Powers and Duties of the Regular Trustees
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11
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SECTION 3.7 Prohibition of Actions by the Trust and the Trustees
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13
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SECTION 3.8 Powers and Duties of the Institutional Trustee
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14
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SECTION 3.9 Certain Duties and Responsibilities of the Institutional Trustee
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16
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SECTION 3.10 Certain Rights of Institutional Trustee
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17
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SECTION 3.11 Delaware Trustee
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19
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SECTION 3.12 Execution of Documents
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20
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SECTION 3.13 Not Responsible for Recitals or Issuance of Securities
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20
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SECTION 3.14 Duration of Trust
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20
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SECTION 3.15 Mergers
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20
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ARTICLE IV SPONSOR
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SECTION 4.1 Sponsors Purchase of Common Securities
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22
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SECTION 4.2 Responsibilities of the Sponsor
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22
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ARTICLE V TRUSTEES
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i
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SECTION 5.1 Number of Trustees
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22
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SECTION 5.2 Delaware Trustee
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23
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SECTION 5.3 Institutional Trustee; Eligibility
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23
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SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally
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24
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SECTION 5.5 Initial Trustees; Additional Powers of Regular Trustees
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24
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SECTION 5.6 Appointment, Removal and Resignation of Trustees
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25
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SECTION 5.7 Vacancies among Trustees
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26
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SECTION 5.8 Effect of Vacancies
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27
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SECTION 5.9 Meetings
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27
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SECTION 5.10 Delegation of Power
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27
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SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business
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28
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ARTICLE VI DISTRIBUTIONS
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SECTION 6.1 Distributions
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28
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ARTICLE VII ISSUANCE OF SECURITIES
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SECTION 7.1 General Provisions Regarding Securities
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28
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ARTICLE VIII TERMINATION OF TRUST
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SECTION 8.1 Termination of Trust
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29
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ARTICLE IX TRANSFER OF INTERESTS
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SECTION 9.1 Transfer of Securities
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30
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SECTION 9.2 Transfer of Certificates
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30
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SECTION 9.3 Deemed Security Holders
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31
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SECTION 9.4 Book Entry Interests
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31
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SECTION 9.5 Notices to Clearing Agency
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32
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SECTION 9.6 Appointment of Successor Clearing Agency
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32
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SECTION 9.7 Definitive Capital Security Certificates
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32
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SECTION 9.8 Mutilated, Destroyed, Lost or Stolen Certificates
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32
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ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
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SECTION 10.1 Liability
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33
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SECTION 10.2 Exculpation
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33
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SECTION 10.3 Fiduciary Duty
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34
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SECTION 10.4 Indemnification
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35
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SECTION 10.5 Outside Businesses
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37
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ii
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ARTICLE XI ACCOUNTING
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SECTION 11.1 Fiscal Year
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38
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SECTION 11.2 Certain Accounting Matters
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38
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SECTION 11.3 Banking
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38
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SECTION 11.4 Withholding
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39
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ARTICLE XII AMENDMENTS AND MEETINGS
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SECTION 12.1 Amendments
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39
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SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent
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41
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ARTICLE XIII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
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SECTION 13.1 Representations and Warranties of Institutional Trustee
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42
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SECTION 13.2 Representations and Warranties of Delaware Trustee
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43
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ARTICLE XIV MISCELLANEOUS
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SECTION 14.1 Notices
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43
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SECTION 14.2 Governing Law
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45
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SECTION 14.3 Intention of the Parties
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45
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SECTION 14.4 Headings
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45
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SECTION 14.5 Successors and Assigns
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45
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SECTION 14.6 Partial Enforceability
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45
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SECTION 14.7 Counterparts
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45
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ANNEX I
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TERMS OF SECURITIES
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I-1
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EXHIBIT A-1
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FORM OF CAPITAL SECURITY CERTIFICATE
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A1-1
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EXHIBIT A-2
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FORM OF COMMON SECURITY CERTIFICATE
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A2-1
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EXHIBIT B
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SPECIMEN OF DEBENTURE
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B-1
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EXHIBIT C
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UNDERWRITING AGREEMENT
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C-1
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iii
CROSS-REFERENCE TABLE*
|
|
|
|
|
Section of
|
|
|
|
Trust Indenture Act
|
|
|
|
of 1939, as amended
|
|
Section of Declaration
|
|
310(a)
|
|
|
5.3
|
(a)
|
310(c)
|
|
Inapplicable
|
311(c)
|
|
Inapplicable
|
312(a)
|
|
|
2.2
|
(a)
|
312(b)
|
|
|
2.2
|
(b)
|
313
|
|
|
2.3
|
314(a)
|
|
|
2.4
|
314(b)
|
|
Inapplicable
|
314(c)
|
|
|
2.5
|
314(d)
|
|
Inapplicable
|
314(f)
|
|
Inapplicable
|
315(a)
|
|
|
3.9
|
(b)
|
315(c)
|
|
|
3.9
|
(a)
|
315(d)
|
|
|
3.9
|
(a)
|
316(a)
|
|
Annex I
|
316(c)
|
|
|
3.6
|
(e)
|
|
|
|
*
|
|
This Cross-Reference Table does not constitute part of the Declaration and shall not affect
the interpretation of any of its terms or provisions.
|
iv
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CITIGROUP CAPITAL XXII
, 20
AMENDED AND RESTATED DECLARATION OF TRUST (Declaration) dated and effective as of
, 20 , by the Trustees (as defined herein), the Sponsor (as defined herein) and by the
holders, from time to time, of undivided beneficial interests in the assets of the Trust to be
issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established Citigroup Capital XXII (the Trust), a
trust under the Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated as
of [ ], 2007 (the Original Declaration) and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on [ ], 2007, for the sole purpose of issuing
and selling certain securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in certain Debentures of the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend and restate each and
every term and provision of the Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a
statutory trust under the Statutory Trust Act and that this Declaration constitute the governing
instrument of such statutory trust, the Trustees declare that all assets contributed to the Trust
will be held in trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to
the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1
Definitions
.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration has the same meaning throughout;
(c) all references to the Declaration or this Declaration are to this Declaration as
modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and Annexes and Exhibits are
to Articles and Sections of and Annexes and Exhibits to this Declaration unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in this
Declaration unless otherwise defined in this Declaration or unless the context otherwise requires;
and
(f) a reference to the singular includes the plural and vice versa.
Affiliate
has the same meaning as given to that term in Rule 405 of the Securities
Act or any successor rule thereunder.
Authorized Officer
of a Person means any Person that is authorized to bind such
Person.
Book Entry Interest
means a beneficial interest in a Global Certificate, ownership
and transfers of which shall be maintained and made through book entries by a Clearing Agency as
described in Section 9.4.
Business Day
means any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York, New York are permitted or required by any applicable law to
close.
Capital Securities Guarantee
means the guarantee agreement dated as of
, 20 , of the Sponsor in respect of the Capital Securities.
Capital Security
has the meaning specified in Section 7.1.
Capital Security Beneficial Owner
means, with respect to a Book Entry Interest, a
Person who is the beneficial owner of such Book Entry Interest, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
Capital Security Certificate
means a certificate representing a Capital Security
substantially in the form of Exhibit A-1.
Certificate
means a Common Security Certificate or a Capital Security Certificate.
Citigroup
means Citigroup Inc., a Delaware corporation.
2
Clearing Agency
means an organization registered as a Clearing Agency pursuant to
Section 17A of the Exchange Act that is acting as depositary for the Capital Securities and in
whose name or in the name of a nominee of that organization shall be registered a Global
Certificate and which shall undertake to effect book entry transfers and pledges of the Capital
Securities.
Clearing Agency Participant
means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency effects book entry
transfers and pledges of securities deposited with the Clearing Agency.
Closing Date
means , 20.
Code
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor legislation.
Commission
means the Securities and Exchange Commission.
Common Security
has the meaning specified in Section 7.1.
Common Security Certificate
means a definitive certificate in fully registered form
representing a Common Security substantially in the form of Exhibit A-2.
Company Indemnified Person
means (a) any Regular Trustee; (b) any Affiliate of any
Regular Trustee; (c) any officers, directors, shareholders, members, partners, employees,
representatives or agents of any Regular Trustee; or (d) any officer, employee or agent of the
Trust or its Affiliates.
Corporate Trust Office
means the office of the Institutional Trustee at which the
corporate trust business of the Institutional Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Declaration is located at 101 Barclay
Street-8W, New York, New York 10286.
Covered Person
means: (a) any officer, director, shareholder, partner, member,
representative, employee or agent of (i) the Trust or (ii) the Trusts Affiliates; and (b) any
Holder of Securities.
Debenture Issuer
means Citigroup Inc. (or the Sponsor) in its capacity as issuer of
the Debentures under the Indenture.
Debenture Trustee
means The Bank of New York, as trustee under the Indenture until a
successor is appointed thereunder, and thereafter means such successor trustee.
Debentures
means the series of Debentures to be issued by the Debenture Issuer under
the Indenture to be held by the Institutional Trustee, a specimen certificate for such series of
Debentures being Exhibit B.
Default
in respect of the Securities means a Default (as defined in the Indenture)
has occurred and is continuing in respect of the Debentures.
3
Definitive Capital Security Certificates
has the meaning set forth in Section 9.4.
Delaware Trustee
has the meaning set forth in Section 5.2.
Distribution
has the meaning set forth in Section 6.1.
DTC
means the Depository Trust Company, the initial Clearing Agency.
Exchange Act
means the Securities Exchange Act of 1934, as amended from time to
time, or any successor legislation.
Fiduciary Indemnified Person
has the meaning set forth in Section 10.4(b).
Global Certificate
has the meaning set forth in Section 9.4.
Holder
means a Person in whose name a Certificate representing a Security is
registered, such Person being a beneficial owner within the meaning of the Statutory Trust Act.
Indemnified Person
means a Company Indemnified Person or a Fiduciary Indemnified
Person.
Indenture
means the Indenture, dated as of , 20 (as supplemented
from time to time), between the Debenture Issuer and the Debenture Trustee, pursuant to which the
Debentures are to be issued.
Institutional Trustee
means the Trustee meeting the eligibility requirements set
forth in Section 5.3.
Institutional Trustee Account
has the meaning set forth in Section 3.8(c).
Investment Company
means an investment company as defined in the Investment Company
Act.
Investment Company Act
means the Investment Company Act of 1940, as amended from
time to time, or any successor legislation.
Investment Company Event
has the meaning set forth in Annex I hereto.
Legal Action
has the meaning set forth in Section 3.6(g).
Majority in liquidation amount of the Securities
means, except as provided in the
terms of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities
voting together as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a class, who are the
record owners of an aggregate liquidation amount representing more than 50% of the aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
4
Officers Certificate
means, with respect to any Person, a certificate signed by two
Authorized Officers of such Person. Any Officers Certificate delivered with respect to compliance
with a condition or covenant provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers Certificate has read the covenant or
condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken
by each officer in rendering the Officers Certificate;
(c) a statement that each such officer has made such examination or investigation as, in such
officers opinion, is necessary to enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant
has been complied with.
Paying Agent
has the meaning specified in Section 3.8(h).
Payment Amount
has the meaning specified in Section 6.1.
Person
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or political subdivision thereof, or any
other entity of whatever nature.
Quorum
means any one Regular Trustee or, if there is only one Regular Trustee, such
Regular Trustee.
Regular Trustee
has the meaning specified in Section 5.1.
Regulatory Capital Event
has the meaning set forth in Annex I hereto.
Related Party
means, with respect to the Sponsor, any direct or indirect wholly
owned subsidiary of the Sponsor or any other Person that owns, directly or indirectly, 100% of the
outstanding voting securities of the Sponsor.
Responsible Officer
means, with respect to the Institutional Trustee, any officer
within the Corporate Trust Office of the Institutional Trustee with direct responsibility for the
administration of this Declaration and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that officers knowledge of
and familiarity with the particular subject.
Rule 3a-5
means Rule 3a-5 under the Investment Company Act.
Securities
means the Common Securities and the Capital Securities.
5
Securities Act
means the Securities Act of 1933, as amended from time to time, or
any successor legislation.
Special Event
has the meaning set forth in Annex I hereto.
Sponsor
means Citigroup Inc. or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
Statutory Trust Act
means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code
§3801 et seq., as it may be amended from time to time, or any successor legislation.
Successor Delaware Trustee
has the meaning set forth in Section 5.6.
Successor Entity
has the meaning set forth in Section 3.15(b).
Successor Institutional Trustee
has the meaning set forth in Section 5.6.
Successor Securities
has the meaning set forth in Section 3.15(b).
Super Majority
has the meaning set forth in Section 2.6(a)(ii).
Tax Event
has the meaning set forth in Annex I hereto.
10% in liquidation amount of the Securities
means, except as provided in the terms
of the Capital Securities or by the Trust Indenture Act, Holder(s) of outstanding Securities voting
together as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a class, who are the
record owners of an aggregate liquidation amount representing 10% or more of the aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
Treasury Regulations
means the income tax regulations, including temporary and
proposed regulations, promulgated under the Code by the United States Treasury, as such regulations
may be amended from time to time (including corresponding provisions of succeeding regulations).
Trustee
or
Trustees
means each Person who has signed this Declaration as a
trustee, so long as such Person shall continue in office in accordance with the terms hereof, and
all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended from time to
time, or any successor legislation.
Underwriting
Agreement
means the Underwriting Agreement for the offering and sale of
Capital Securities in the form of Exhibit C.
6
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1
Trust Indenture Act; Application
.
(a) This Declaration is subject to the provisions of the Trust Indenture Act that are required
to be part of this Declaration and shall, to the extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee that is a Trustee for the purposes of
the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits, qualifies or conflicts
with the duties imposed by §§ 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
(d) The application of the Trust Indenture Act to this Declaration shall not affect the nature
of the Securities as equity securities representing undivided beneficial interests in the assets of
the Trust.
SECTION 2.2
Lists of Holders of Securities
.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide the
Institutional Trustee (i) within 14 days after each record date for payment of Distributions, a
list, in such form as the Institutional Trustee may reasonably require, of the names and addresses
of the Holders of the Securities (List of Holders) as of such record date, provided, that neither
the Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to provide such List
of Holders at any time the List of Holders does not differ from the most recent List of Holders
given to the Institutional Trustee by the Sponsor and the Regular Trustees on behalf of the Trust,
and (ii) at any other time, within 30 days of receipt by the Trust of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is given to the
Institutional Trustee. The Institutional Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders given to it or which it
receives in the capacity as Paying Agent (if acting in such capacity), provided, that the
Institutional Trustee may destroy any List of Holders previously given to it on receipt of a new
List of Holders.
(b) The Institutional Trustee shall comply with its obligations under §§ 311(a), 311(b) and
312(b) of the Trust Indenture Act.
SECTION 2.3
Reports by the Institutional Trustee
.
Within 60 days after May 15 of each year, the Institutional Trustee shall provide to the
Holders of the Capital Securities such reports as are required by § 313 of the Trust Indenture Act,
if any, in the form and in the manner provided by § 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of § 313(d) of the Trust Indenture
Act.
7
SECTION 2.4
Periodic Reports to Institutional Trustee
.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Institutional Trustee such documents, reports and information as required by § 314 of the Trust
Indenture Act (if any) and the compliance certificate required by § 314 of the Trust Indenture Act
in the form, in the manner and at the times required by § 314 of the Trust Indenture Act.
SECTION 2.5
Evidence of Compliance with Conditions Precedent
.
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Institutional Trustee such evidence of compliance with any conditions precedent provided for in
this Declaration that relate to any of the matters set forth in § 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to § 314(c)(1) of the
Trust Indenture Act may be given in the form of an Officers Certificate.
SECTION 2.6
Defaults; Waiver
.
(a) The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on
behalf of the Holders of all of the Capital Securities, waive any past Default in respect of the
Capital Securities and its consequences, provided, that if the underlying Default under the
Indenture:
(i) is not waivable under the Indenture, the Default under the Declaration shall also
not be waivable; or
(ii) is waivable only with the consent of holders of more than a majority in principal
amount of the Debentures (a Super Majority) affected thereby, only the Holders of at least
the proportion in aggregate liquidation amount of the Capital Securities that the relevant
Super Majority represents of the aggregate principal amount of the Debentures outstanding
may waive such Default in respect of the Capital Securities under the Declaration.
The foregoing provisions of this Section 2.6(a) shall be in lieu of § 316(a)(1)(B) of the Trust
Indenture Act and such § 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such default shall cease to exist, and any Default with respect to the Capital Securities
arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or a Default with respect to the
Capital Securities or impair any right consequent thereon. Any waiver by the Holders of the
Capital Securities of a Default with respect to the Capital Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of any such Default with respect to the
Common Securities for all purposes of this Declaration without any further act, vote, or consent of
the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common Securities may, by vote, on
behalf of the Holders of all of the Common Securities, waive any
8
past Default with respect to the Common Securities and its consequences, provided, that if the
underlying Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of the Common
Securities are deemed to have waived such Default under the Declaration as provided in this
Section 2.6(b), the Default under the Declaration shall also not be waivable; or
(ii) is waivable only with the consent of a Super Majority, except where the Holders of
the Common Securities are deemed to have waived such Default under the Declaration as
provided in this Section 2.6(b), only the Holders of at least the proportion in aggregate
liquidation amount of the Common Securities that the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding may waive such Default in
respect of the Common Securities under the Declaration;
provided, further each Holder of Common Securities will be deemed to have waived any such Default
and all Defaults with respect to the Common Securities and its consequences until all Defaults with
respect to the Capital Securities have been cured, waived or otherwise eliminated, and until such
Defaults with respect to the Capital Securities have been so cured, waived or otherwise eliminated,
the Institutional Trustee will be deemed to be acting solely on behalf of the Holders of the
Capital Securities and only the Holders of the Capital Securities will have the right to direct the
Institutional Trustee in accordance with the terms of the Securities. The foregoing provisions of
this Section 2.6(b) shall be in lieu of §§ 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act
and such §§ 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded
from this Declaration and the Securities, as permitted by the Trust Indenture Act. Subject to the
foregoing provisions of this Section 2.6(b), upon the waiver of a Default by the Holders of a
Majority in liquidation amount of the Common Securities, any such default shall cease to exist and
any Default with respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to any subsequent or
other default or Default with respect to the Common Securities or impair any right consequent
thereon.
(c) A waiver of a Default under the Indenture by the Institutional Trustee at the direction of
the Holders of the Capital Securities, constitutes a waiver of the corresponding Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of § 316(a)(1)(B) of
the Trust Indenture Act and such § 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7
Default; Notice
.
(a) The Institutional Trustee shall, within 90 days after the occurrence of a Default,
transmit by mail, first class postage prepaid, to the Holders of the Securities, notices of (i) all
defaults with respect to the Securities actually known to a Responsible Officer of the
Institutional Trustee, unless such defaults have been cured before the giving of such notice (the
term defaults for the purposes of this Section 2.7(a) being hereby defined to be a Default as
defined in the Indenture, not including any periods of grace provided for therein and irrespective
9
of the giving of any notice provided therein) and (ii) any notice of default received from the
Indenture Trustee with respect to the Debentures, which notice from the Institutional Trustee to
the Holders shall state that a Default under the Indenture also constitutes a Default with respect
to the Securities; provided that, except for a default in the payment of principal of (or premium,
if any) or interest on any of the Debentures or in the payment of any sinking fund installment
established for the Debentures, the Institutional Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Institutional Trustee in good faith
determines that the withholding of such notice is in the interests of the Holders of the
Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge of any default except:
(i) a default under Sections 5.7(b) and 5.7(c) of the Indenture; or
(ii) any default as to which the Institutional Trustee shall have received written
notice or of which a Responsible Officer of the Institutional Trustee charged with the
administration of the Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1
Name
.
The Trust is named Citigroup Capital XXII, as such name may be modified from time to time by
the Regular Trustees following written notice to the Institutional Trustee, the Delaware Trustee
and the Holders of Securities. The Trusts activities may be conducted under the name of the Trust
or any other name deemed advisable by the Regular Trustees.
SECTION 3.2
Office
.
The address of the principal office of the Trust is c/o Citigroup Inc., 399 Park Avenue, New
York, NY 10043. On ten Business Days written notice to the Institutional Trustee, the Delaware
Trustee and the Holders of Securities, the Regular Trustees may designate another principal office.
SECTION 3.3
Purpose
.
The exclusive purposes and functions of the Trust are (a) to issue and sell Securities and use
the proceeds from such sale to acquire the Debentures, and (b) except as otherwise limited herein,
to engage in only those other activities necessary, or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets,
or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to
be classified for United States federal income tax purposes as a grantor trust.
SECTION 3.4
Authority
.
10
Subject to the limitations provided in this Declaration and to the specific duties of the
Institutional Trustee, the Regular Trustees shall have exclusive and complete authority to carry
out the purposes of the Trust. An action taken by the Regular Trustees in accordance with their
powers shall constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall constitute the act
of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no
person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons
dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees
as set forth in this Declaration.
SECTION 3.5
Title to Property of the Trust
.
Except as provided in Section 3.8 with respect to the Debentures and the Institutional Trustee
Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall
be vested in the Trust. The Holders shall not have legal title to any part of the assets of the
Trust, but shall have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6
Powers and Duties of the Regular Trustees
.
The Regular Trustees shall have the exclusive power, duty and authority to cause the Trust to
engage in the following activities:
(a) to issue and sell the Capital Securities and the Common Securities in accordance with this
Declaration;
provided, however
, that the Trust may issue no more than one series of Capital
Securities and no more than one series of Common Securities, and,
provided further
, that there
shall be no interests in the Trust other than the Securities, and the issuance of Securities shall
be limited to a simultaneous issuance of both Capital Securities and Common Securities on the
Closing Date;
(b) in connection with the issue and sale of the Capital Securities, at the direction of the
Sponsor, to:
(i) execute and file with the Commission on behalf of the Trust a registration
statement on Form S-3 or on another appropriate form, or a registration statement under Rule
462(b) of the Securities Act, in each case prepared by the Sponsor, including any
pre-effective or post-effective amendments thereto, relating to the registration under the
Securities Act of the Capital Securities;
(ii) execute and file any documents prepared by the Sponsor, or take any acts as
determined by the Sponsor to be necessary in order to qualify or register all or part of the
Capital Securities in any State in which the Sponsor has determined to qualify or register
such Capital Securities for sale;
(iii) execute and file an application, prepared by the Sponsor, to the New York Stock
Exchange, Inc., any other national stock exchange or the Nasdaq National Market for listing
upon notice of issuance of any Capital Securities;
11
(iv) execute and file with the Commission on behalf of the Trust a registration
statement on Form 8-A, prepared by the Sponsor, including any pre-effective or
post-effective amendments thereto, relating to the registration of the Capital Securities
under Section 12(b) of the Exchange Act; and
(v) deliver the Underwriting Agreement providing for the sale of the Capital
Securities;
(c) to acquire the Debentures with the proceeds of the sale of the Capital Securities and the
Common Securities; provided, however, that the Regular Trustees shall cause legal title to the
Debentures to be held of record in the name of the Institutional Trustee for the benefit of the
Holders of the Capital Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written notice of the occurrence
of a Special Event; provided, that the Regular Trustees shall consult with the Sponsor and the
Institutional Trustee before taking or refraining from taking any ministerial action in relation to
a Special Event;
(e) to establish a record date with respect to all actions to be taken hereunder that require
a record date be established, including and with respect to, for the purposes of §316(c) of the
Trust Indenture Act, Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Capital Securities and Holders of Common Securities as to such actions
and applicable record dates;
(f) to take all actions and perform such duties as may be required of the Regular Trustees
pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to legal action, or
otherwise adjust claims or demands of or against the Trust (Legal Action), unless pursuant to
Section 3.8(e), the Institutional Trustee has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be designated as officers with
titles) and managers, contractors, advisors, and consultants and pay reasonable compensation for
such services;
(i) to cause the Trust to comply with the Trusts obligations under the Trust Indenture Act;
(j) to give the certificate required by § 314(a)(4) of the Trust Indenture Act to the
Institutional Trustee, which certificate may be executed by any Regular Trustee;
(k) to incur expenses that are necessary or incidental to carry out any of the purposes of the
Trust;
(l) to act as, or appoint another Person to act as, registrar and transfer agent for the
Securities;
12
(m) to give prompt written notice to the Holders of the Securities of any notice received from
the Debenture Issuer of its election to defer payments of interest on the Debentures by extending
the interest payment period under the Indenture;
(n) to take all action that may be necessary or appropriate for the preservation and the
continuation of the Trusts valid existence, rights, franchises and privileges as a statutory
statutory trust under the laws of the State of Delaware and of each other jurisdiction in which
such existence is necessary to protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or with applicable law, that
the Regular Trustees determine in their discretion to be necessary or desirable in carrying out the
activities of the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company required to
be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal income tax
purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the Debentures will
be treated as indebtedness of the Debenture Issuer for United States federal income
tax purposes;
provided
, that any such action does not adversely affect the interests of Holders;
(p) to take all action necessary to cause all applicable tax returns and tax information
reports that are required to be filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust; and
(q) to execute all documents or instruments, perform all duties and powers, and do all things
for and on behalf of the Trust in all matters necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this Section 3.6 in a manner that
is consistent with the purposes and functions of the Trust set out in Section 3.3, and the Regular
Trustees shall not take any action that is inconsistent with the purposes and functions of the
Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of the powers or the
authority of the Institutional Trustee set forth in Section 3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section 3.6 shall be reimbursed
by the Debenture Issuer.
SECTION 3.7
Prohibition of Actions by the Trust and the Trustees
.
13
(a) The Trust shall not, and the Trustees (including the Institutional Trustee) shall not
cause the Trust to, engage in any activity other than as required or authorized by this
Declaration. In particular, the Trust shall not:
(i) invest any proceeds received by the Trust from holding the Debentures, but shall
promptly distribute all such proceeds to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness;
(v) possess any power or otherwise act in such a way as to vary the Trust assets or the
terms of the Securities in any way whatsoever;
(vi) issue any securities or other evidences of beneficial ownership of, or beneficial
interest in, the Trust other than the Securities; or
(vii) other than as provided in this Declaration or Annex I, (A) direct the time,
method and place of exercising any trust or power conferred upon the Debenture Trustee with
respect to the Debentures, (B) waive any past Default that is waivable under the Indenture,
(C) exercise any right to rescind or annul any declaration that the principal of all the
Debentures shall be due and payable or (D) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be required unless
the Trust shall have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters to the effect that as a result of such action, the Trust will
not fail to be classified as a grantor trust for United States federal income tax purposes.
SECTION 3.8
Powers and Duties of the Institutional Trustee
.
(a) The legal title to the Debentures shall be owned by and held of record in the name of the
Institutional Trustee in trust for the benefit of the Holders of the Securities. The right, title
and interest of the Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with Section 5.6. Such
vesting and cessation of title shall be effective whether or not conveyancing documents with regard
to the Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its right, title and interest in the
Debentures to the Regular Trustees or to the Delaware Trustee (if the Institutional Trustee does
not also act as Delaware Trustee).
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust account (the
Institutional Trustee Account) in the name of and under the exclusive control of the
14
Institutional Trustee on behalf of the Holders of the Securities and, upon the receipt
of payments of funds made in respect of the Debentures held by the Institutional Trustee,
deposit such funds into the Institutional Trustee Account and make payments to the Holders
of the Capital Securities and Holders of the Common Securities from the Institutional
Trustee Account in accordance with Section 6.1. Funds in the Institutional Trustee Account
shall be held uninvested until disbursed in accordance with this Declaration. The
Institutional Trustee Account shall be an account that is maintained with a banking
institution the rating on whose long-term unsecured indebtedness assigned by a nationally
recognized statistical rating organization, as that term is defined for purposes of Rule
436(g)(2) under the Securities Act, is at least equal to the rating assigned to the Capital
Securities by a nationally recognized statistical rating organization;
(ii) engage in such ministerial activities as shall be necessary or appropriate to
effect the redemption of the Capital Securities and the Common Securities to the extent the
Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the Regular Trustees in accordance
with the terms of the Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the Debentures to Holders of
Securities upon the occurrence of certain Special Events or other specified circumstances
pursuant to the terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform such duties as may be
specifically required of the Institutional Trustee pursuant to the terms of the Securities.
(e) Subject to Section 2.6, the Institutional Trustee shall take any Legal Action which arises
out of or in connection with a Default of which a Responsible Officer of the Institutional Trustee
has actual knowledge or the Institutional Trustees duties and obligations under this Declaration
or the Trust Indenture Act.
(f) The Institutional Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of the liquidation
distributed to the Holders of Securities pursuant to the terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and has accepted that
appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise all of the rights, powers
and privileges of a holder of Debentures under the Indenture and, if a Default actually known to a
Responsible Officer of the Institutional Trustee occurs and is continuing, the Institutional
Trustee shall, for the benefit of Holders of the Securities, enforce its rights as holder of the
Debentures subject to the rights of the Holders pursuant to the terms of such Securities, this
Declaration, the Statutory Trust Act and the Trust Indenture Act.
15
(h) The Institutional Trustee may authorize one or more Persons (each, a Paying Agent) to
pay Distributions, redemption payments or liquidation payments on behalf of the Trust with respect
to all securities and any such Paying Agent shall comply with § 317(b) of the Trust Indenture Act.
Any Paying Agent may be removed by the Institutional Trustee at any time and a successor Paying
Agent or additional Paying Agents may be appointed at any time by the Institutional Trustee.
(i) Subject to this Section 3.8, the Institutional Trustee shall have none of the duties,
liabilities, powers or the authority of the Regular Trustees set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth in this Section 3.8 in a manner
that is consistent with the purposes and functions of the Trust set out in Section 3.3, and the
Institutional Trustee shall not take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 3.3.
SECTION 3.9
Certain Duties and Responsibilities of the Institutional Trustee
.
(a) The Institutional Trustee, before the occurrence of any Default and after the curing of
all Defaults that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case a Default has occurred (that has not been
cured or waived pursuant to Section 2.6) of which a Responsible Officer of the Institutional
Trustee has actual knowledge, the Institutional Trustee shall exercise such of the rights and
powers vested in it by this Declaration, and use the same degree of care and skill in the exercise
of such rights and powers, as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve the Institutional Trustee
from liability for its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of a Default and after the curing or waiving of all such
Defaults that may have occurred:
(A) the duties and obligations of the Institutional Trustee shall be determined
solely by the express provisions of this Declaration and the Institutional Trustee
shall not be liable except for the performance of such duties and obligations as are
specifically set forth in this Declaration, and no implied covenants or obligations
shall be read into this Declaration against the Institutional Trustee; and
(B) in the absence of bad faith on the part of the Institutional Trustee, the
Institutional Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Institutional Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Institutional
16
Trustee, the Institutional Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer of the Institutional Trustee, unless it shall be proved
that the Institutional Trustee was negligent in ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the Holders of
not less than a Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the Institutional Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the Institutional Trustee to expend
or risk its own funds or otherwise incur personal financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity reasonably
satisfactory to the Institutional Trustee against such risk or liability is not reasonably
assured to it;
(v) the Institutional Trustees sole duty with respect to the custody, safe keeping and
physical preservation of the Debentures and the Institutional Trustee Account shall be to
deal with such property in a similar manner as the Institutional Trustee deals with similar
property for its own account, subject to the protections and limitations on liability
afforded to the Institutional Trustee under this Declaration and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability for or with respect to
the value, genuineness, existence or sufficiency of the Debentures or the payment of any
taxes or assessments levied thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for any interest on any money
received by it except as it may otherwise agree with the Sponsor. Money held by the
Institutional Trustee need not be segregated from other funds held by it except in relation
to the Institutional Trustee Account maintained by the Institutional Trustee pursuant to
Section 3.8(c)(i) and except to the extent otherwise required by law; and
(viii) the Institutional Trustee shall not be responsible for monitoring the compliance
by the Regular Trustees or the Sponsor with their respective duties under this Declaration,
nor shall the Institutional Trustee be liable for any default or misconduct of the Regular
Trustees or the Sponsor.
SECTION 3.10
Certain Rights of Institutional Trustee
.
(a) Subject to the provisions of Section 3.9:
17
(i) the Institutional Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Regular Trustees contemplated by this
Declaration shall be sufficiently evidenced by an Officers Certificate;
(iii) whenever in the administration of this Declaration, the Institutional Trustee
shall deem it desirable that a matter be proved or established before taking, suffering or
omitting any action hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers Certificate which, upon receipt of such request, shall
be promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Institutional Trustee shall have no duty to see to any recording, filing or
registration of any instrument (including any financing or continuation statement or any
filing under tax or securities laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or other experts and the advice
or opinion of such counsel and experts with respect to legal matters or advice within the
scope of such experts area of expertise shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with such advice or opinion, such counsel may be counsel to the Sponsor or
any of its Affiliates, and may include any of its employees. The Institutional Trustee
shall have the right at any time to seek instructions concerning the administration of this
Declaration from any court of competent jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Institutional Trustee security and indemnity,
reasonably satisfactory to the Institutional Trustee, against the costs, expenses (including
attorneys fees and expenses and the expenses of the Institutional Trustees agents,
nominees or custodians) and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be requested by the
Institutional Trustee provided that nothing contained in this Section 3.10(a)(vi) shall be
taken to relieve the Institutional Trustee, upon the occurrence of a Default, of its
obligation to exercise the rights and powers vested in it by this Declaration;
(vii) the Institutional Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it may see fit;
18
(viii) the Institutional Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, custodians, nominees
or attorneys and the Institutional Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Institutional Trustee or its agents hereunder shall bind
the Trust and the Holders of the Securities, and the signature of the Institutional Trustee
or its agents alone shall be sufficient and effective to perform any such action and no
third party shall be required to inquire as to the authority of the Institutional Trustee to
so act or as to its compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional Trustees or its agents
taking such action;
(x) whenever in the administration of this Declaration the Institutional Trustee shall
deem it desirable to receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Institutional Trustee (i) may request instructions
from the Holders of the Securities which instructions may only be given by the Holders of
the same proportion in liquidation amount of the Securities as would be entitled to direct
the Institutional Trustee under the terms of the Securities in respect of such remedy, right
or action, (ii) may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in conclusively relying
on or acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this Declaration, the Institutional
Trustee shall not be under any obligation to take any action that is discretionary under the
provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty or obligation on the
Institutional Trustee to perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the
Institutional Trustee shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Institutional Trustee shall be construed to be a
duty.
SECTION 3.11
Delaware Trustee
.
The Delaware Trustee is appointed to serve as the trustee of the Trust in the State of
Delaware for the sole purpose of satisfying the requirement of Section 3807(a) of the Statutory
Trust Act that the Trust have at least one trustee with a principal place of business in the State
of Delaware. It is understood and agreed by the parties hereto that the Delaware Trustee shall
have none of the duties or liabilities of the Regular Trustees or the Institutional Trustee. The
duties of the Delaware Trustee shall be limited to (i) accepting legal process served on the Trust
in the State of Delaware and (ii) the execution of any certificates required to be filed with the
Delaware Secretary of State which the Delaware Trustee is required to execute under Section 3811 of
the Statutory Trust Act. To the extent that, at law or in equity, the Delaware
19
Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust
or the Holders, it is hereby understood and agreed by the other parties hereto that such duties and
liabilities are replaced by the duties and liabilities of the Delaware Trustee expressly set forth
in this Declaration. The Delaware trustee shall have no liability for the acts or omissions of the
Regular Trustees or the Institutional Trustee. The Delaware Trustee shall be entitled to all of the
same rights, protections, indemnities and immunities under this Declaration and with respect to the
Trust as the Institutional Trustee.
SECTION 3.12
Execution of Documents
.
Unless otherwise determined by the Regular Trustees, and except as otherwise required by the
Statutory Trust Act, any Regular Trustee is authorized to execute on behalf of the Trust any
documents that the Regular Trustees have the power and authority to execute pursuant to Section
3.6; provided, that the registration statement referred to in Section 3.6(b)(i), including any
amendments thereto, shall be signed by all of the Regular Trustees.
SECTION 3.13
Not Responsible for Recitals or Issuance of Securities
.
The recitals contained in this Declaration and the Securities shall be taken as the statements
of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The
Trustees make no representations as to the value or condition of the property of the Trust or any
part thereof. The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14
Duration of Trust
.
The Trust, unless dissolved and terminated pursuant to the provisions of Article VIII hereof,
shall have existence for sixty (60) years from the Closing Date.
SECTION 3.15
Mergers
.
(a) The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets substantially as an entirety to any corporation
or other body, except as described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if there are more than two, a
majority of the Regular Trustees and without the consent of the Holders of the Securities, the
Delaware Trustee or the Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided, that:
(i) such successor entity (the Successor Entity) either:
(A) expressly assumes all of the obligations of the Trust under the Securities;
or
(B) substitutes for the Securities other securities having substantially the
same terms as the Capital Securities (the Successor Securities) so long as
20
the Successor Securities rank the same as the Capital Securities rank with
respect to Distributions and payments upon liquidation, redemption and otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of the Successor Entity that
possesses the same powers and duties as the Institutional Trustee in its capacity as the
Holder of the Debentures;
(iii) the Capital Securities or any Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national securities exchange
or with any other organization on which the Capital Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or replacement does not cause the Capital
Securities (including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or replacement does not adversely affect
the rights, preferences and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with respect to any dilution of
such Holders interests in the new entity as a result of such merger, consolidation,
amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation or replacement, the Trust has
received an opinion of a nationally recognized independent counsel to the Trust experienced
in such matters to the effect that:
(A) such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the Holders of the Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the Holders interest in the new entity); and
(B) following such merger, consolidation, amalgamation or replacement, neither
the Trust nor the Successor Entity will be required to register as an Investment
Company; and
(C) following such merger, consolidation, amalgamation or replacement, the
Trust (or the Successor Entity) will continue to be classified as a grantor trust
for United States federal income tax purposes; and
(viii) the Sponsor guarantees the obligations of such Successor Entity under the
Successor Securities at least to the extent provided by the Capital Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with the consent of Holders
of 100% in liquidation amount of the Securities, consolidate, amalgamate, merge with or into, or be
replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it, if in the opinion of a nationally recognized
21
independent tax counsel experienced in such matters, such consolidation, amalgamation, merger
or replacement would cause the Trust or the Successor Entity to be classified as other than a
grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1
Sponsors Purchase of Common Securities
.
On the Closing Date, the Sponsor will purchase all of the Common Securities issued by the
Trust at the same time as the Capital Securities are sold.
SECTION 4.2
Responsibilities of the Sponsor
.
In connection with the issue and sale of the Capital Securities, the Sponsor shall have the
exclusive right and responsibility to engage in the following activities:
(a) to prepare for filing by the Trust with the Commission a registration statement on Form
S-3 or on another appropriate form, or a registration statement under Rule 462(b) of the Securities
Act, including any pre-effective or post-effective amendments thereto, relating to the registration
under the Securities Act of the Capital Securities;
(b) to determine the States in which to take appropriate action to qualify or register for
sale all or part of the Capital Securities and to do any and all such acts, other than actions
which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such States;
(c) to prepare for filing by the Trust an application to the New York Stock Exchange, any
other national stock exchange or the Nasdaq National Market for listing upon notice of issuance of
any Capital Securities;
(d) to prepare for filing by the Trust with the Commission a registration statement on Form
8-A, including any pre-effective or post-effective amendments thereto, relating to the registration
of the Capital Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Underwriting Agreement providing for the sale of the Capital
Securities.
ARTICLE V
TRUSTEES
SECTION 5.1
Number of Trustees
.
The number of Trustees initially shall be five (5), and:
22
(a) at any time before the issuance of any Securities, the Sponsor may, by written instrument,
increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be increased or decreased
by vote of the Holders of a majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities,
provided, however
, that the number of Trustees shall in no event be less than two (2); provided
further that (1) one Trustee, in the case of a natural person, shall be a person who is a resident
of the State of Delaware or that, if not a natural person, shall be an entity which has its
principal place of business in the State of Delaware (the Delaware Trustee); (2) there shall be
at least one Trustee who is an employee or officer of, or is affiliated with the Sponsor (a
Regular Trustee); and (3) one Trustee shall be the Institutional Trustee for so long as this
Declaration is required to qualify as an indenture under the Trust Indenture Act, and such Trustee
may also serve as Delaware Trustee if it meets the applicable requirements.
SECTION 5.2
Delaware Trustee
.
If required by the Statutory Trust Act, the Delaware Trustee shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of business in the State
of Delaware, and otherwise meets the requirements of applicable law,
provided
, that if the Institutional Trustee has its principal place of business in the State of
Delaware and otherwise meets the requirements of applicable law, then the Institutional Trustee
shall also be the Delaware Trustee and Section 3.11 shall have no application.
SECTION 5.3
Institutional Trustee; Eligibility
.
(a) There shall at all times be one Trustee that shall act as Institutional Trustee which
shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business under the laws of the United States
of America or any State or Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published; and
23
(iii) if the Trust is excluded from the definition of an Investment Company solely by
means of Rule 3a-7 and to the extent Rule 3a-7 requires a trustee having certain
qualifications to hold title to the eligible assets of the Trust, the Institutional
Trustee shall possess those qualifications.
(b) If at any time the Institutional Trustee shall cease to be eligible to so act under
Section 5.3(a), the Institutional Trustee shall immediately resign in the manner and with the
effect set forth in Section 5.6(c).
(c) If the Institutional Trustee has or shall acquire any conflicting interest within the
meaning of § 310(b) of the Trust Indenture Act, the Institutional Trustee and the Holders of the
Common Securities (as if such Holders were the obligor referred to in § 310(b) of the Trust
Indenture Act) shall in all respects comply with the provisions of § 310(b) of the Trust Indenture
Act.
(d) The Capital Securities Guarantee shall be deemed to be specifically described in this
Declaration for purposes of clause (i) of the first provision contained in Section 310(b) of the
Trust Indenture Act.
(e) The initial Institutional Trustee shall be as set forth in Section 5.5 hereof.
SECTION 5.4
Qualifications of Regular Trustees and Delaware Trustee Generally
.
Each Regular Trustee and the Delaware Trustee (unless the Institutional Trustee also acts as
Delaware Trustee) shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more Authorized Officers.
SECTION 5.5
Initial Trustees; Additional Powers of Regular Trustees
.
(a) The initial Regular Trustees shall be:
Saul Rosen
Eric L. Wentzel
John Gerspach
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
100 White Clay Center
Route 273
P. O. Box 6995
Newark, DE 19711
Attn: Corporate Trust Department
The initial Institutional Trustee shall be:
The Bank of New York
101 Barclay Street-8W
24
New York, New York 10286
(b) Except as expressly set forth in this Declaration and except if a meeting of the Regular
Trustees is called with respect to any matter over which the Regular Trustees have power to act,
any power of the Regular Trustees may be exercised by, or with the consent of, any one such Regular
Trustee.
(c) Unless otherwise determined by the Regular Trustees, and except as otherwise required by
the Statutory Trust Act or applicable law, any Regular Trustee is authorized to execute on behalf
of the Trust any documents which the Regular Trustees have the power and authority to cause the
Trust to execute pursuant to Section 3.6, provided, that the registration statement referred to in
Section 3.6, including any amendments thereto, shall be signed by all of the Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 his or her power for the purposes of signing any
documents which the Regular Trustees have power and authority to cause the Trust to execute
pursuant to Section 3.6.
SECTION 5.6
Appointment, Removal and Resignation of Trustees
.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written instrument executed by the
Sponsor; and
(ii) in the case of the Regular Trustees, after the issuance of any Securities, by vote
of the Holders of a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities;
(iii) in the case of the Institutional Trustee and the Delaware Trustee, unless a
Default shall have occurred and be continuing after the issuance of any Securities, by a
vote of the Holders of a Majority in liquidation amount of the Common Securities voting as a
class at a meeting of the Holders of the Common Securities; and
(iv) in the case of the Institutional Trustee and the Delaware Trustee, if a Default
shall have occurred and be continuing after the issuance of the Securities, by a vote of
the Holders of a Majority in liquidation amount of the Capital Securities voting as a class
at a meeting of the Holders of the Capital Securities.
(b) (i) The Trustee that acts as Institutional Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as Institutional
Trustee under Section 5.3 (a Successor Institutional Trustee) has been appointed and has accepted
such appointment by written instrument executed by such Successor Institutional Trustee and
delivered to the Regular Trustees and the Sponsor; and
25
(ii) the Trustee that acts as Delaware Trustee shall not be removed in accordance with
Section 5.6(a) until a successor Trustee possessing the qualifications to act as Delaware
Trustee under Sections 5.2 and 5.4 (a Successor Delaware Trustee) has been appointed and
has accepted such appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor shall have been
appointed or until his death, removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect upon such delivery or
upon such later date as is specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Institutional Trustee shall be
effective:
(A) until a Successor Institutional Trustee has been appointed and has accepted
such appointment by instrument executed by such Successor Institutional Trustee and
delivered to the Trust, the Sponsor and the resigning Institutional Trustee; or
(B) until the assets of the Trust have been completely liquidated and the
proceeds thereof distributed to the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware Trustee shall be
effective until a Successor Delaware Trustee has been appointed and has accepted such
appointment by instrument executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts to promptly appoint a
Successor Delaware Trustee or Successor Institutional Trustee as the case may be if the
Institutional Trustee or the Delaware Trustee delivers an instrument of resignation in accordance
with this Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware Trustee shall have been
appointed and accepted appointment as provided in this Section 5.6 within 60 days after delivery to
the Sponsor and the Trust of an instrument of resignation, the resigning Institutional Trustee or
Delaware Trustee, as applicable, may petition any court of competent jurisdiction for appointment
of a Successor Institutional Trustee or Successor Delaware Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper and prescribe, appoint a Successor
Institutional Trustee or Successor Delaware Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for the acts or omissions to
act of any Successor Institutional Trustee or Successor Delaware Trustee, as the case may be.
SECTION 5.7
Vacancies among Trustees
.
26
If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced
pursuant to Section 5.1, or if the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of such vacancy by the Regular Trustees
or, if there are more than two, a majority of the Regular Trustees shall be conclusive evidence of
the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance
with Section 5.6.
SECTION 5.8
Effect of Vacancies
.
The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation,
incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust.
Whenever a vacancy in the number of Regular Trustees shall occur, until such vacancy is filled by
the appointment of a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the Regular Trustees and
shall discharge all the duties imposed upon the Regular Trustees by this Declaration.
SECTION 5.9
Meetings
.
If there is more than one Regular Trustee, meetings of the Regular Trustees shall be held from
time to time upon the call of any Regular Trustee. Regular meetings of the Regular Trustees may be
held at a time and place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such
meeting. Notice of any telephonic meetings of the Regular Trustees or any committee thereof shall
be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting. The presence (whether in
person or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice of
such meeting except where a Regular Trustee attends a meeting for the express purpose of objecting
to the transaction of any activity on the ground that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the Regular Trustees may be
taken at a meeting by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a Quorum is present, or
without a meeting by the unanimous written consent of the Regular Trustees. In the event there is
only one Regular Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
SECTION 5.10
Delegation of Power
.
(a) Any Regular Trustee may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 his or her power for the purpose of executing any
documents contemplated in Section 3.6, including any registration statement or amendment thereto
filed with the Commission, or making any other governmental filing; and
27
(b) the Regular Trustees shall have power to delegate from time to time to such of their
number or to officers of the Trust the doing of such things and the execution of such instruments
either in the name of the Trust or the names of the Regular Trustees or otherwise as the Regular
Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
SECTION 5.11
Merger, Conversion, Consolidation or Succession to Business
.
Any corporation into which the Institutional Trustee or the Delaware Trustee, as the case may
be, may be merged or converted or with which either may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Institutional Trustee or the
Delaware Trustee, as the case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Institutional Trustee or the Delaware
Trustee, as the case may be, hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1
Distributions
.
Holders shall receive Distributions (as defined herein) in accordance with the applicable
terms of the relevant Holders Securities. Distributions shall be made on the Capital Securities
and the Common Securities in accordance with the preferences set forth in their respective terms.
If and to the extent that the Debenture Issuer makes a payment of interest (including Compounded
Interest (as defined in the Indenture) and Additional Interest (as defined in the Indenture)),
premium and/or principal on the Debentures held by the Institutional Trustee (the amount of any
such payment being a Payment Amount), the Institutional Trustee shall and is directed to make a
distribution (a Distribution) of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1
General Provisions Regarding Securities
.
(a) The Regular Trustees shall on behalf of the Trust issue one class of capital securities
representing undivided beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the Capital Securities) and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as are set forth in
Annex I (the Common Securities). The Trust shall issue no securities or other interests in the
assets of the Trust other than the Capital Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by a Regular Trustee. Such
signature shall be the manual or facsimile signature of any present or any future Regular Trustee.
In case any Regular Trustee of the Trust who shall have signed any of the Securities shall cease to
be such Regular Trustee before the Certificates so signed shall be
28
delivered by the Trust, such Certificates nevertheless may be delivered as though the person
who signed such Certificates had not ceased to be such Regular Trustee; and any Certificate may be
signed on behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be the Regular Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such a Regular Trustee. Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and may have such
letters, numbers or other marks of identification or designation and such legends or endorsements
as the Regular Trustees may deem appropriate, or as may be required to comply with any law or with
any rule or regulation of any stock exchange on which Securities may be listed, or to conform to
usage.
(c) The consideration received by the Trust for the issuance of the Securities shall
constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration, the Securities so issued
shall be deemed to be validly issued, fully paid and non-assessable.
(e) Every Person, by virtue of having become a Holder or a Capital Security Beneficial Owner
in accordance with the terms of this Declaration, shall be deemed to have expressly assented and
agreed to the terms of, and shall be bound by, this Declaration.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1
Termination of Trust
.
(a) The Trust shall terminate:
(i) upon the bankruptcy of any Holder of the Common Securities or the Sponsor;
(ii) upon the filing of a certificate of dissolution or its equivalent with respect to
any Holder of the Common Securities or the Sponsor; the filing of a certificate of
cancellation with respect to the Trust or the revocation of the Holder of the Common
Securities or the Sponsors charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of any Holder of the Common
Securities, the Sponsor or the Trust;
(iv) Subject to obtaining any required regulatory approval, when all of the Securities
have been called for redemption and the amounts necessary for redemption thereof have been
paid to the Holders in accordance with the terms of the Securities;
(v) Subject to obtaining any required regulatory approval, when the Trust shall have
been dissolved in accordance with the terms of the Securities upon election by
29
the Sponsor of its right to terminate the Trust and distribute all of the Debentures to
the Holders of Securities in exchange for all of the Securities and all of the Debentures
shall have been distributed to the Holders of Securities in accordance with such election;
(vi) before the issuance of any Securities, with the consent of all of the Regular
Trustees and the Sponsor; or
(vii) upon the expiration of the term of the Trust set forth in Section 3.14.
(b) As soon as is practicable after the occurrence of an event referred to in Section 8.1(a),
and after satisfaction of liabilities to creditors of the Trust as required by applicable law,
including Section 3808 of the Statutory Trust Act, and subject to the terms set forth in Annex I,
the Delaware Trustee, when notified in writing of the completion of the winding up of the Trust in
accordance with the Statutory Trust Act, shall terminate the Trust by filing, at the expense of the
Sponsor, a certificate of cancellation with the Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1
Transfer of Securities
.
(a) Securities may only be transferred, in whole or in part, in accordance with the terms and
conditions set forth in this Declaration and in the terms of the Securities. Any transfer or
purported transfer of any Security not made in accordance with this Declaration shall be null and
void.
(b) Subject to this Article IX, Capital Securities shall be freely transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party may only transfer Common
Securities to the Sponsor or a Related Party of the Sponsor; provided, that any such transfer is
subject to the condition precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such transfer would not cause more
than an insubstantial risk that:
(i) the Trust would not be classified for United States federal income tax purposes as
a grantor trust; and
(ii) the Trust would be an Investment Company or the transferee would become an
Investment Company.
SECTION 9.2
Transfer of Certificates
.
The Regular Trustees shall provide for the registration of Certificates and of transfers of
Certificates, which will be effected without charge but only upon payment (with such
30
indemnity as the Regular Trustees may require) in respect of any tax or other government
charges that may be imposed in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be issued in the name
of the designated transferee or transferees. Every Certificate surrendered for registration of
transfer shall be accompanied by a written instrument of transfer in form satisfactory to the
Regular Trustees duly executed by the Holder or such Holders attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a Certificate. By
acceptance of a Certificate, each transferee shall be deemed to have agreed to be bound by this
Declaration.
SECTION 9.3
Deemed Security Holders
.
The Trustees may treat the Person in whose name any Certificate shall be registered on the
books and records of the Trust as the sole holder of such Certificate and of the Securities
represented by such Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust shall have actual or other notice thereof.
SECTION 9.4
Book Entry Interests
.
Unless otherwise specified in the terms of the Capital Securities, the Capital Securities
Certificates, on original issuance, will be issued in the form of one or more, fully registered,
global Capital Security Certificates (each a Global Certificate), to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Trust. Such Global Certificates shall initially
be registered on the books and records of the Trust in the name of Cede & Co., the nominee of DTC,
and no Capital Security Beneficial Owner will receive a definitive Capital Security Certificate
representing such Capital Security Beneficial Owners interests in such Global Certificates, except
as provided in Section 9.7. Unless and until definitive, fully registered Capital Security
Certificates (the Definitive Capital Security Certificates) have been issued to the Capital
Security Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and effect;
(b) the Trust and the Trustees shall be entitled to deal with the Clearing Agency for all
purposes of this Declaration (including the payment of Distributions on the Global Certificates and
receiving approvals, votes or consents hereunder) as the Holder of the Capital Securities and the
sole holder of the Global Certificates and shall have no obligation to the Capital Security
Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with any other provisions
of this Declaration, the provisions of this Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and agreements between such
Capital Security Beneficial Owners and the Clearing Agency and/or the Clearing Agency Participants
and receive and transmit payments of Distributions on the
31
Global Certificates to such Clearing Agency Participants. DTC will make book entry transfers
among the Clearing Agency Participants.
SECTION 9.5
Notices to Clearing Agency
.
Whenever a notice or other communication to the Capital Security Holders is required under
this Declaration, unless and until Definitive Capital Security Certificates shall have been issued
to the Capital Security Beneficial Owners pursuant to Section 9.7, the Regular Trustees shall give
all such notices and communications specified herein to be given to the Capital Security Holders to
the Clearing Agency, and shall have no notice obligations to the Capital Security Beneficial
Owners.
SECTION 9.6
Appointment of Successor Clearing Agency
.
If any Clearing Agency elects to discontinue its services as a securities depositary with
respect to the Capital Securities, the Regular Trustees may, in their sole discretion, appoint a
successor Clearing Agency with respect to such Capital Securities.
SECTION 9.7
Definitive Capital Security Certificates
.
If:
(a) a Clearing Agency elects to discontinue its services as a securities depositary with
respect to the Capital Securities and a successor Clearing Agency is not appointed within 90 days
after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to terminate the book entry
system through the Clearing Agency with respect to the Capital Securities,
then:
(c) Definitive Capital Security Certificates shall be prepared by the Regular Trustees on
behalf of the Trust with respect to such Capital Securities; and
(d) upon surrender of the Global Certificates by the Clearing Agency, accompanied by
registration instructions, the Regular Trustees shall cause Definitive Certificates to be delivered
to Capital Security Beneficial Owners in accordance with the instructions of the Clearing Agency.
Neither the Trustees nor the Trust shall be liable for any delay in delivery of such instructions
and each of them may conclusively rely on and shall be protected in relying on, said instructions
of the Clearing Agency. The Definitive Capital Security Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the
Regular Trustees, as evidenced by their execution thereof, and may have such letters, numbers or
other marks of identification or designation and such legends or endorsements as the Regular
Trustees may deem appropriate, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock exchange on which
Capital Securities may be listed, or to conform to usage.
SECTION 9.8
Mutilated, Destroyed, Lost or Stolen Certificates
.
32
If:
(a) any mutilated Certificates should be surrendered to the Regular Trustees, or if the
Regular Trustees shall receive evidence to their satisfaction of the destruction, loss or theft of
any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or indemnity as may be
required by them to keep each of them harmless.
then, in the absence of notice that such Certificate shall have been acquired by a bona fide
purchaser, any Regular Trustee on behalf of the Trust shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this Section 9.8, the
Regular Trustees may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute conclusive evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall
be found at any time.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF
SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1
Liability
.
(a) Except as expressly set forth in this Declaration, the Capital Securities Guarantee and
the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital contributions (or
any return thereon) of the Holders of the Securities which shall be made solely from assets
of the Trust; and
(ii) required to pay to the Trust or to any Holder of Securities any deficit upon
dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the debts and obligations
of the Trust (other than with respect to the Securities) to the extent not satisfied out of the
Trusts assets.
(c) Pursuant to § 3803(a) of the Statutory Trust Act, the Holders of the Capital Securities
shall be entitled to the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State of Delaware.
SECTION 10.2
Exculpation
.
(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Trust or any Covered Person for any loss, damage or claim incurred
33
by reason of any act or omission performed or omitted by such Indemnified Person in good faith
on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this Declaration or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of
such Indemnified Persons gross negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Trust and upon such information, opinions, reports or statements presented to the Trust by
any Person as to matters the Indemnified Person reasonably believes are within such other Persons
professional or expert competence and who has been selected with reasonable care by or on behalf of
the Trust, including information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be paid.
SECTION 10.3
Fiduciary Duty
.
(a) To the extent that, at law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other
Covered Person for its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified
Person otherwise existing at law or in equity (other than the duties imposed on the Institutional
Trustee under the Trust Indenture Act), are agreed by the parties hereto to replace such other
duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated herein or therein
provides that an Indemnified Person shall act in a manner that is, or provides terms that
are, fair and reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action or provide such
terms, considering in each case the relative interest of each party (including its own interest) to
such conflict, agreement, transaction or situation and the benefits and burdens relating to such
interests, any customary or accepted industry practices, and any applicable generally accepted
accounting practices or principles. In the absence of bad faith by the Indemnified Person, the
resolution, action or term so made, taken or provided by the Indemnified Person shall not
constitute a breach of this Declaration or any other agreement contemplated herein or of any duty
or obligation of the Indemnified Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or required to make a
decision:
34
(i) in its discretion or under a grant of similar authority, the Indemnified Person
shall be entitled to consider such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any consideration to any interest of
or factors affecting the Trust or any other Person; or
(ii) in its good faith or under another express standard, the Indemnified Person
shall act under such express standard and shall not be subject to any other or different
standard imposed by this Declaration or by applicable law.
SECTION 10.4
Indemnification
.
(a) (i) The Debenture Issuer shall indemnify, to the full extent permitted by law, any Company
Indemnified Person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by reason of the fact that he
is or was a Company Indemnified Person against expenses (including attorneys fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo
contendere
or its equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Trust, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent permitted by law, any
Company Indemnified Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the Trust to procure a
judgment in its favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best interests of the
Trust and except that no such indemnification shall be made in respect of any claim, issue
or matter as to which such Company Indemnified Person shall have been adjudged to be liable
to the Trust unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which such Court of
Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be successful on the merits
or otherwise (including dismissal of an action without prejudice or the settlement of an
action without admission of liability) in defense of any action, suit or proceeding referred
to in paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any claim, issue or
matter therein, he shall be indemnified, to the full extent permitted by
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law, against expenses (including attorneys fees) actually and reasonably incurred by
him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this Section 10.4(a) (unless
ordered by a court) shall be made by the Debenture Issuer only as authorized in the specific
case upon a determination that indemnification of the Company Indemnified Person is proper
in the circumstances because he has met the applicable standard of conduct set forth in
paragraphs (i) and (ii). Such determination shall be made (1) by the Regular Trustees by a
majority vote of a quorum consisting of such Regular Trustees who were not parties to such
action, suit or proceeding, (2) if such a quorum is not obtainable, or, even if obtainable,
if a quorum of disinterested Regular Trustees so directs, by independent legal counsel in a
written opinion, or (3) by the Common Security Holder of the Trust.
(v) Expenses (including attorneys fees) incurred by a Company Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Debenture Issuer in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Company Indemnified Person to repay such
amount if it shall ultimately be determined that he is not entitled to be indemnified by the
Debenture Issuer as authorized in this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Regular Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Regular Trustees so directs, by independent legal counsel in a written opinion
or (iii) the Common Security Holder of the Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security Holder at the time such determination is
made, such Company Indemnified Person acted in bad faith or in a manner that such person did
not believe to be in or not opposed to the best interests of the Trust, or, with respect to
any criminal proceeding, that such Company Indemnified Person believed or had reasonable
cause to believe his conduct was unlawful. In no event shall any advance be made in
instances where the Regular Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the Trust or its
Common or Capital Security Holders.
(vi) The indemnification and advancement of expenses provided by, or granted pursuant
to, the other paragraphs of this Section 10.4(a) shall not be deemed exclusive of any other
rights to which those seeking indemnification and advancement of expenses may be entitled
under any agreement, vote of stockholders or disinterested directors of the Debenture Issuer
or Capital Security Holders of the Trust or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be provided by a contract
between the Debenture Issuer and each Company Indemnified Person who serves in such capacity
at any time while this Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then existing.
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(vii) The Debenture Issuer may purchase and maintain insurance on behalf of any person
who is or was a Company Indemnified Person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such, whether or not
the Debenture Issuer would have the power to indemnify him against such liability under the
provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to the Trust shall include, in
addition to the resulting or surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or merger, so that any person who
is or was a director, trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee, officer, employee
or agent of another entity, shall stand in the same position under the provisions of this
Section 10.4(a) with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or granted pursuant
to, this Section 10.4(a) shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Institutional Trustee, (ii) the Delaware
Trustee, (iii) any Affiliate of the Institutional Trustee and the Delaware Trustee, and (iv) any
officers, directors, shareholders, members, partners, employees, representatives, custodians,
nominees or agents of the Institutional Trustee and the Delaware Trustee (each of the Persons in
(i) through (iv) being referred to as a Fiduciary Indemnified Person) for, and to hold each
Fiduciary Indemnified Person harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the acceptance or
administration or the trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers or duties hereunder.
The obligation to indemnify as set forth in this Section 10.4(b) shall survive the resignation or
removal of the Institutional Trustee or the Delaware Trustee, as the case may be, and the
satisfaction and discharge of this Declaration.
SECTION 10.5
Outside Businesses
.
Any Covered Person, the Sponsor, the Delaware Trustee and the Institutional Trustee may engage
in or possess an interest in other business ventures of any nature or description, independently or
with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such independent ventures
or the income or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or improper. No Covered
Person, the Sponsor, the Delaware Trustee, or the Institutional Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if such opportunity is of
a character that, if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Institutional Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend to
37
others any such particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other obligations of the
Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1
Fiscal Year
.
The fiscal year (Fiscal Year) of the Trust shall be the calendar year, or such other year as
is required by the Code.
SECTION 11.2
Certain Accounting Matters
.
(a) At all times during the existence of the Trust, the Regular Trustees shall keep, or cause
to be kept, full books of account, records and supporting documents, which shall reflect in
reasonable detail, each transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for United States
federal income tax purposes. The books of account and the records of the Trust shall be examined
by and reported upon as of the end of each Fiscal Year of the Trust by a firm of independent
certified public accountants selected by the Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered to each of the Holders of
Securities, to the extent, if any, required by the Trust Indenture Act, within 90 days after the
end of each Fiscal Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements of income or loss;
(c) The Regular Trustees shall cause to be duly prepared and delivered to each of the Holders
of Securities, any annual United States federal income tax information statement required by the
Code, containing such information with regard to the Securities held by each Holder as is required
by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Regular Trustees shall endeavor to deliver all such statements
within 30 days after the end of each Fiscal Year of the Trust.
(d) The Regular Trustees shall cause to be duly prepared and filed with the appropriate taxing
authority, an annual United States federal income tax return, on a Form 1041 or such other form
required by United States federal income tax law, and any other annual income tax returns required
to be filed by the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3
Banking.
The Trust shall maintain one or more bank accounts in the name and for the sole benefit of the
Trust; provided, however, that all payments of funds in respect of the Debentures
38
held by the Institutional Trustee shall be made directly to the Institutional Trustee Account
and no other funds of the Trust shall be deposited in the Institutional Trustee Account. The sole
signatories for such accounts shall be designated by the Regular Trustees; provided, however, that
the Institutional Trustee shall designate the signatories for the Institutional Trustee Account.
SECTION 11.4
Withholding.
The Trust and the Regular Trustees shall comply with all withholding requirements under United
States federal, state and local law. The Trust shall request, and the Holders shall provide to the
Trust, such forms or certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be requested by the
Trust to assist it in determining the extent of, and in fulfilling, its withholding obligations.
The Regular Trustees shall file required forms with applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder, shall remit amounts withheld with
respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions or allocations to
any Holder, the amount withheld shall be deemed to be a distribution in the amount of the
withholding to the Holder. In the event of any claimed overwithholding, Holders shall be limited
to an action against the applicable jurisdiction. If the amount required to be withheld was not
withheld from actual Distributions made, the Trust may reduce subsequent Distributions by the
amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1
Amendments.
(a) Except as otherwise provided in this Declaration or by any applicable terms of the
Securities, this Declaration may only be amended by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more than two Regular Trustees a majority of
the Regular Trustees);
(ii) if the amendment affects the rights, powers, duties, obligations or immunities of
the Institutional Trustee, the Institutional Trustee; and
(iii) if the amendment affects the rights, powers, duties, obligations or immunities of
the Delaware Trustee, the Delaware Trustee;
(b) no amendment shall be made, and any such purported amendment shall be void and
ineffective:
(i) unless, in the case of any proposed amendment, the Institutional Trustee shall have
first received an Officers Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration (including the
terms of the Securities);
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(ii) unless, in the case of any proposed amendment which affects the rights, powers,
duties, obligations or immunities of the Institutional Trustee, the Institutional Trustee
shall have first received:
(A) an Officers Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or the Trust) that
such amendment is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for purposes of United
States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the Institutional
Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company required to be
registered under the Investment Company Act;
(c) at such time after the Trust has issued any Securities that remain outstanding, any
amendment that would adversely affect the rights, privileges or preferences of any Holder of
Securities may be effected only with such additional requirements as may be set forth in the terms
of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without the consent of all of
the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the Holders of a Majority in
liquidation amount of the Common Securities and;
(f) the rights of the Holders of the Common Securities under Article V to increase or decrease
the number of, and appoint and remove Trustees shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities; and
(g) subject to Section 12.1(c), this Declaration may be amended without the consent of the
Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration that may be defective or
inconsistent with any other provision of this Declaration;
(iii) add to the covenants, restrictions or obligations of the Sponsor;
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(iv) to conform to any change in Rule 3a-5 or written change in interpretation or
application of Rule 3a-5 by any legislative body, court, government agency or regulatory
authority which amendment does not have a material adverse effect on the right, preferences
or privileges of the Holders; and
(v) to modify, eliminate and add to any provision of the Declaration to such extent as
may be reasonably necessary to effectuate any of the foregoing or to otherwise comply with
applicable law.
SECTION 12.2
Meetings of the Holders of Securities; Action by Written Consent
.
(a) Meetings of the Holders of any class of Securities may be called at any time by the
Regular Trustees (or as provided in the terms of the Securities) to consider and act on any matter
on which Holders of such class of Securities are entitled to act under the terms of this
Declaration, the terms of the Securities or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading. The Regular Trustees shall call a meeting of the
Holders of such class if directed to do so by the Holders of Securities representing at least 10%
in liquidation amount of such class of Securities. Such direction shall be given by delivering to
the Regular Trustees one or more calls in a writing stating that the signing Holders of Securities
wish to call a meeting and indicating the general or specific purpose for which the meeting is to
be called. Any Holders of Securities calling a meeting shall specify in writing the Security
Certificates held by the Holders of Securities exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the Securities, the following
provisions shall apply to meetings of Holders of Securities:
(i) notice of any such meeting shall be given to all the Holders of Securities having
a right to vote thereat at least 7 days and not more than 60 days before the date of such
meeting. Whenever a vote, consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, such vote, consent or approval may be given
at a meeting of the Holders of Securities. Any action that may be taken at a meeting of
the Holders of Securities may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders of Securities owning not less than the
minimum amount of Securities in liquidation amount that would be necessary to authorize or
take such action at a meeting at which all Holders of Securities having a right to vote
thereon were present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders of Securities entitled to vote who have not consented in
writing. The Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting shall be returned to
the Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any Person to act for it by proxy on all
matters in which a Holder of Securities is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. No proxy shall be valid
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after the expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation Law of the State
of Delaware relating to proxies, and judicial interpretations thereunder, as if the Trust
were a Delaware corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be conducted by the Regular
Trustees or by such other Person that the Regular Trustees may designate; and
(iv) unless the Statutory Trust Act, this Declaration, the terms of the Securities,
the Trust Indenture Act or the listing rules of any stock exchange on which the Capital
Securities are then listed or trading, otherwise provides, the Regular Trustees, in their
sole discretion, shall establish all other provisions relating to meetings of Holders of
Securities, including notice of the time, place or purpose of any meeting at which any
matter is to be voted on by any Holders of Securities, waiver of any such notice, action by
consent without a meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise of any such right to
vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1
Representations and Warranties of Institutional Trustee
.
The Trustee that acts as initial Institutional Trustee represents and warrants to the Trust
and to the Sponsor at the date of this Declaration, and each Successor Institutional Trustee
represents and warrants to the Trust and the Sponsor at the time of the Successor Institutional
Trustees acceptance of its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a banking corporation with trust powers, duly organized,
validly existing and in good standing under the laws of the State of New York, with trust power and
authority to execute and deliver, and to carry out and perform its obligations under the terms of,
this Declaration;
(b) the execution, delivery and performance by the Institutional Trustee of the Declaration
has been duly authorized by all necessary corporate action on the part of the Institutional
Trustee. The Declaration has been duly executed and delivered by the Institutional Trustee, and it
constitutes a legal, valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors rights generally and to general principles
of equity and the discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
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(c) the execution, delivery and performance of the Declaration by the Institutional Trustee
does not conflict with or constitute a breach of the Articles of Organization or By-laws of the
Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with or notice to, any State or
Federal banking authority is required for the execution, delivery or performance by the
Institutional Trustee, of the Declaration.
SECTION 13.2
Representations and Warranties of Delaware Trustee
.
The Trustee that acts as initial Delaware Trustee represents and warrants to the Trust and to
the Sponsor at the date of this Declaration, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Delaware Trustees acceptance of
its appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation with trust powers, duly organized,
validly existing and in good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations under the terms of,
the Declaration.
(b) The Delaware Trustee has been authorized to perform its obligations under the Certificate
of Trust and the Declaration. The Declaration under Delaware law constitutes a legal, valid and
binding obligation of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws
affecting creditors rights generally and to general principles of equity and the discretion of the
court (regardless of whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(c) No consent, approval or authorization of, or registration with or notice to, any State or
Federal banking authority is required for the execution, delivery or performance by the Delaware
Trustee, of the Declaration.
(d) The Delaware Trustee is an entity which maintains its principal place of business in the
State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1
Notices
.
All notices provided for in this Declaration shall be in writing, duly signed by the party
giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail,
as follows:
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(a) if given to the Trust, in care of the Regular Trustees at the Trusts mailing address set
forth below (or such other address as the Trust may give notice of to the Holders of the
Securities):
Citigroup Capital XXII
c/o Citigroup Inc.
153 East 53rd Street
New York, NY 10043
Attention: Sallie Krawcheck
(b) if given to the Delaware Trustee, at the mailing address set forth below (or such other
address as Delaware Trustee may give notice of to the Holders of the Securities):
The Bank of New York (Delaware)
100 White Clay Center
Route 273
P. O. Box 6995
Newark, DE 19711
Attention: Corporate Trust Department
(c) if given to the Institutional Trustee, at the mailing address set forth below (or such
other address as the Institutional Trustee may give notice of to the Holders of the Securities):
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(d) if given to the Holder of the Common Securities, at the mailing address of the Sponsor set
forth below (or such other address as the Holder of the Common Securities may give notice of to the
Trust):
Citigroup Inc.
153 East 53rd Street
New York, NY 10043
Attention: Charles E. Wainhouse
(e) if given to any other Holder, at the address set forth on the books and records of the
Trust.
All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
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SECTION 14.2
Governing Law
.
This Declaration and the rights of the parties hereunder shall be governed by and interpreted
in accordance with the laws of the State of Delaware and all rights and remedies shall be governed
by such laws without regard to principles of conflict of laws.
SECTION 14.3
Intention of the Parties
.
It is the intention of the parties hereto that the Trust be classified for United States
federal income tax purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 14.4
Headings.
Headings contained in this Declaration are inserted for convenience of reference only and do
not affect the interpretation of this Declaration or any provision hereof.
SECTION 14.5
Successors and Assigns.
Whenever in this Declaration any of the parties hereto is named or referred to, the successors
and assigns of such party shall be deemed to be included, and all covenants and agreements in this
Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6
Partial Enforceability.
If any provision of this Declaration, or the application of such provision to any Person or
circumstance, shall be held invalid, the remainder of this Declaration, or the application of such
provision to Persons or circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7
Counterparts
.
This Declaration may contain more than one counterpart of the signature page and this
Declaration may be executed by the affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be read as though one,
and they shall have the same force and effect as though all of the signers had signed a single
signature page.
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IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as of the day
and year first above written.
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Name: Gary Crittenden
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Title: Regular Trustee
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THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
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By:
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Name:
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Title:
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THE BANK OF NEW YORK, as Institutional Trustee
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By:
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Name:
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Title:
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CITIGROUP INC., as Sponsor
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By:
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Name: Charles E. Wainhouse
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Title: Assistant Treasurer
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ANNEX I
TERMS OF
% CAPITAL SECURITIES
% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust, dated as of
, 20 (as amended from time to time, the Declaration), the designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such Declaration, as defined in the Prospectus
referred to below):
1.
Designation and Number
.
(a)
Capital Securities
. Capital Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of
dollars ($ ), and a liquidation amount with respect to the assets of the Trust of
$25 per capital security, are hereby designated for the purposes of identification only as %
Capital Securities (the Capital Securities). The Capital Security Certificates evidencing the
Capital Securities shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom
or practice or to conform to the rules of any stock exchange on which the Capital Securities are
listed.
(b)
Common Securities
. Common Securities of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of dollars ($ ),
and a liquidation amount with respect to the assets of the Trust of $25 per common security, are
hereby designated for the purposes of identification only as % Common Securities (the
Common Securities). The Common Security Certificates evidencing the Common Securities shall be
substantially in the form of Exhibit A-2 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or practice.
2.
Distributions
.
(a) Distributions payable on each Security will be fixed at a rate per annum of
% (the Coupon Rate) of the stated liquidation amount of $25 per Security, such
rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears beyond the first date such Distributions are payable (or would be payable,
if not for any Extension Period (as defined below) or default by the Debenture Issuer on the
Debentures) will bear interest thereon compounded quarterly at the Coupon Rate (to the extent
permitted by applicable law). The term Distributions as used herein includes such cash
distributions and any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by the Institutional
Trustee and to the extent the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly Distribution period
on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full
quarterly
I-1
Distribution period for which Distributions are computed, Distributions will be computed on
the basis of the actual number of days elapsed per 90-day quarter.
(b) Distributions on the Securities will be cumulative, will accrue from and including
, 20 , and will be payable quarterly in arrears, on , ,
, and of each year, commencing on , 20 . When, as and if
available for payment, Distributions will be made by the Institutional Trustee, except as otherwise
described below. The Debenture Issuer has the right under the Indenture to defer payments of
interest on the Debentures by extending the interest payment period from time to time on the
Debentures for a period not exceeding 40 consecutive quarters (each an Extension Period), during
which Extension Period no interest shall be due and payable on the Debentures, provided, that no
Extension Period may extend beyond the date of maturity of the Debentures. As a consequence of the
Debenture Issuers extension of the interest payment period, quarterly Distributions will also be
deferred. Despite such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Coupon Rate compounded quarterly during
any such Extension Period. In the event that the Debenture Issuer exercises its right to extend
the interest payment period, then (a) the Debenture Issuer and any subsidiary of the Debenture
Issuer shall not declare or pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its capital stock or make
any guarantee payment with respect thereto (other than (i) purchases, redemptions or other
acquisitions of shares of capital stock of the Debenture Issuer in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) purchases of shares of common stock of the Debenture Issuer pursuant
to a contractually binding requirement to buy stock existing prior to the commencement of the
extension period, including under a contractually binding stock repurchase plan (iii) as a result
of an exchange or conversion of any class or series of the Debenture Issuers capital stock for any
other class or series of the Debenture Issuers capital stock, (iv) the purchase of fractional
interests in shares of the Debenture Issuers capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged), or (v) the purchase
of the Debenture Issuers capital stock in connection with the distribution thereof; and (b) the
Debenture Issuer and any subsidiary of the Debenture Issuer will not make any payment of interest,
principal or premium on, or repay, repurchase or redeem, any debt securities or guarantees issued
by the Debenture Issuer that rank pari passu with or junior to the Debentures (other than (i) any
payment of current or deferred interest on securities that rank pari passu with the Debentures that
is made pro rata to the amounts due on such securities (including the Debentures), provided that
any such payments of deferred interest are made in accordance with the Alternative Payment
Mechanism (as defined below) or (ii) any payments of deferred interest on securities that rank pari
passu with the Debentures that, if not made, would give rise to an event of default permitting
acceleration of such securities. The foregoing, however, will not apply to any stock dividends paid
by the Debenture Issuer where the dividend stock is the same stock as that on which the dividend is
being paid. In addition, the Debenture Issuer may pay current interest at any time with cash from
any source. Prior to the termination of any such Extens
ion Period, the Debenture Issuer may further
extend such Extension Period; provided, that such Extension Period, together with all such previous
and further extensions thereof, may not exceed 40 consecutive quarters; provided further, that no
Extension Period may extend beyond the maturity of the Debentures. Payments of deferred
Distributions and accrued interest thereon will be payable to Holders as they appear
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on the books and records of the Trust on the first record date before the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all amounts then due, the
Debenture Issuer may commence a new Extension Period, subject to the above requirements. The
Regular Trustees will give notice to each Holder of any Extension Period upon their receipt of
notice thereof from the Debenture Issuer.
(c) If the Debenture Issuer does not pay all accrued and unpaid interest on the Debentures for
a period of 20 consecutive quarterly periods or if the Debenture Issuer pays current interest on
the Debentures during an Extension Period, it will be subject to the Alternative Payment
Mechanism, whereby the Debenture Issuer will be obliged to continuously use its commercially
reasonable efforts to sell shares of its common stock (including treasury shares). The Debenture
Issuer will notify the Board of Governors of the Federal Reserve Bank and the Federal Reserve Bank
of New York, or its successor as the Debenture Issuers primary federal banking regulator
(collectively, the Federal Reserve) (1) of the commencement of any Extension Period, (2) of the
fifth anniversary of the commencement of an Extension period or earlier payment of current interest
on the Debentures during an Extension Period and (3) of its intention to sell shares of its common
stock and/or Qualified Warrants (as defined below) and to apply the net proceeds from such sale to
pay deferred interest on the Debentures at least 25 Business Days in advance of the relevant
payment date (or such longer period as may be required by the Federal Reserve or by other
supervisory action). The Debenture Issuer may pay accrued and unpaid interest on the Debentures on
or prior to the next interest payment date using only the net proceeds (after underwriters or
placement agents fees, commissions or discounts and other expenses relating to the issuances) of
such sales received by the Debenture Issuer during the 180-day period prior to that interest
payment date, except that the Debenture Issuer may pay accrued and unpaid interest on the
Debentures with cash from any source (i) upon the maturity of the Debentures, (ii) during the
occurrence and continuation of a Supervisory Event (as defined in the Indenture) or (iii) if an
Event of Default and Acceleration under the Indenture shall have occurred and be continuing.
Corresponding Distributions will be made on the Securities. If (1) a Supervisory Event or (2) a
Market Disruption Event (as defined in the Indenture) shall have occurred and be continuing; then
the Debenture Issuer will be excused from its obligation to use its commercially reasonable efforts
to sell its common stock and apply the net proceeds of such sale to pay accrued and unpaid interest
on the Debentures. During the occurrence of a Supervisory Event, the Debenture Issuer will, no
later than 30 Business Days prior to each interest payment date, notify the Federal Reserve of its
intention to both (1) issue or sell shares of common stock and (2) to apply the net proceeds from
such sale to pay deferred interest on the Debentures, and shall only take any such actions if the
Federal Reserve does not disapprove of any such actions within ten (10) Business Days after the
Debenture Issuer gives such notice to the Federal Reserve. The obligation of the Debenture Issuer
to use commercially reasonable efforts to sell its common stock and apply the net proceeds of such
sale to pay accrued and unpaid interest on the Debentures shall resume at such time as no Market
Disruption Event or Supervisory Event exists or is continuing. The Debenture Issuer is not
permitted to sell shares of common stock in excess of a number of shares of common stock which at
, 20 is equal to (the Share Cap Amount), for the purpose of satisfying the
Alternative Payment Mechanism or otherwise paying deferred interest on the Debentures then
outstanding. If the issued and outstanding shares of common stock shall have been changed into a
different number of shares or a different class by reason of any stock split, reverse stock split,
stock dividend, reclassification, recapitalization, split-up, combination,
I-3
exchange of shares or other similar transaction, then the Share Cap Amount shall be
correspondingly adjusted. The Debenture Issuer shall increase the Share Cap Amount (including
through the increase of its authorized share capital, if necessary) to an amount that would allow
the Debenture Issuer to raise sufficient proceeds to satisfy its obligations to pay deferred
interest in full at the end of the first year of an Extension Period (and on each subsequent
anniversary of the end of the first year of an Extension Period to the extent that an Extension
Period would last more than one year), if the then-current Share Cap Amount would not allow the
Debenture Issuer to raise sufficient proceeds to satisfy its obligations to pay deferred interest
(including compounded interest to that date) assuming a price per share equal to the average
trading price of the Debenture Issuers common shares over the ten-trading-day period preceding
such date; provided that the Debenture Issuer will not be obligated to increase the Share Cap
Amount above shares. Until the tenth anniversary of the commencement of an Extension
Period, a Default will occur if the Debenture Issuer does not increase the Share Cap Amount to an
amount that is greater than shares when required to do so as described above; provided that
no Default will occur if the Debenture Issuer has increased the share cap amount to
shares. The Debenture Issuer will not be obligated to issue common stock prior to the fifth
anniversary of the commencement of an Extension Period if the gross proceeds of any issuance of
common stock and Qualified Warrants applied to pay deferred interest on the Debentures pursuant to
the Alternative Payment Mechanism, together with the gross proceeds of all prior issuances of
common stock and Qualified Warrants applied since the commencement of the Extension Period, would
exceed an amount equal to 2% of the product of (1) the average of the Current Stock Market Prices
(as defined in the Indenture) of the Debenture Issuers common stock on the 10 consecutive trading
days ending on the fourth trading day immediately preceding the date of issuance by the Debenture
Issuer of common stock applied to pay deferred interest on the Debentures pursuant to the
Alternative Payment Mechanism and (2) the total number of issued and outstanding shares of the
Debenture Issuers common stock as of the date of the Debenture Issuers publicly available
consolidated financial statements (the APM Maximum Obligation). Once the Debenture Issuer reaches
the APM Maximum Obligation for an Extension Period, the Debenture Issuer will not be obligated to
issue more common stock or Qualified Warrants in satisfaction of the Alternative Payment Mechanism
prior to the fifth anniversary of the commencement of an Extension Period even if the Current Stock
Market Price of the Debenture Issuers common stock or the number of outstanding shares of its
common stock subsequently increase. The APM Maximum Obligation will cease to apply following the
fifth anniversary of the commencement of an Extension Period, at which point the Debenture Issuer
must repay any deferred interest, regardless of the time at which it was deferred, using proceeds
from sales of the Debenture Issuers common stock, including treasury shares, subject to any Market
Disruption Event, Supervisory Event, and the Share Cap Amount. If the APM Maximum Obligation has
been reached during an Extension Period and the Debenture Issuer subsequently repays all deferred
interest, the APM Maximum Obligation will cease to apply at the termination of such Extension
Period and will not apply again unless and until the Debenture Issuer starts a new Extension
Period. Qualified Warrants means warrants for the Debenture Issuers common stock on t
heir date
of issuance that (1) have an exercise price greater than the Current Stock Market Price of the
Debenture Issuers common stock, and (2) the Debenture Issuer is not entitled to redeem for cash
and the holders are not entitled to require the Debenture Issuer to repurchase for cash in any
circumstances.
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(d) Distributions on the Securities will be payable to the Holders thereof as they appear on
the books and records of the Trust at the close of business on the relevant record dates. While
the Capital Securities remain in book-entry only form, the relevant record dates shall be one
Business Day prior to the relevant payment dates which payment dates shall correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment in respect of the Capital Securities will be made
as described under the heading Description of the Capital Securities Book-Entry Only Issuance
in the Prospectus dated , 20 (the Prospectus), of the Trust included in the
Registration Statement on Form S-3 of the Sponsor, the Trust and certain other statutory trusts.
The relevant record dates for the Common Securities shall be the same record date as for the
Capital Securities. If the Capital Securities shall not continue to remain in book-entry only
form, the relevant record dates for the Capital Securities shall conform to the rules of any
securities exchange on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be more than 14 days but less than 60 days prior to the
relevant payment dates, which payment dates shall correspond to the interest payment dates on the
Debentures. Distributions payable on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Debenture Issuer having failed to make a payment
under the Debentures, will cease to be payable to the Person in whose name such Securities are
registered on the relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record date or other
specified date determined in accordance with the Indenture. If any date on which Distributions are
payable on the Securities is not a Business Day, then payment of the Distribution payable on such
date will be made on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(e) In the event that there is any money or other property held by or for the Trust that is
not accounted for hereunder, such property shall be distributed Pro Rata (as defined herein) among
the Holders of the Securities.
3.
Liquidation Distribution Upon Dissolution
.
(a) In the event of any voluntary or involuntary dissolution, winding-up or termination of the
Trust, the Holders of the Securities on the date of the dissolution, winding-up or termination, as
the case may be, will be entitled to receive out of the assets of the Trust available for
distribution to Holders of Securities after satisfaction of liabilities of creditors, distributions
in an amount equal to the aggregate of the stated liquidation amount of $25 per Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount being the Liquidation
Distribution), unless, in connection with such dissolution, winding-up or termination, Debentures
in an aggregate principal amount equal to the aggregate stated liquidation amount of, with an
interest rate equal to the Coupon Rate, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on, such Securities outstanding at such time, have been
distributed on a Pro Rata basis to the Holders of the Securities in exchange for such Securities.
Prior to any such Liquidation Distribution, the Debenture Issuer will obtain any required
regulatory approval.
I-5
(b) If, upon any such dissolution, the Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Trust on the Securities shall be paid on a
Pro Rata basis.
4.
Redemption and Distribution
.
(a) Upon the repayment of the Debentures in whole or in part, whether at maturity or upon
redemption (either at the option of the Debenture Issuer or pursuant to a Special Event as
described below), the proceeds from such repayment or payment shall be simultaneously applied to
redeem Securities having an aggregate liquidation amount equal to the aggregate principal amount of
the Debentures so repaid or redeemed at a redemption price of $25 per Security plus an amount equal
to accrued and unpaid Distributions thereon at the date of the redemption, payable in cash (the
Redemption Price). Holders shall be given not less than 30 nor more than 60 days notice of such
redemption. Prior to any such redemption, the Debenture Issuer will obtain any required regulatory
approval.
(b) If fewer than all the outstanding Securities are to be so redeemed, the Securities will be
redeemed Pro Rata and the Capital Securities to be redeemed will be as described in Section
4(f)(ii) below.
(c) Subject to obtaining any required regulatory approval, if, at any time, a Tax Event, an
Investment Company Event or a Regulatory Capital Event (each as defined below, and each a Special
Event) shall occur and be continuing, Citigroup shall have the right, upon not less than 30 nor
more than 60 days notice, to redeem the Debentures, in whole or in part, for cash within 90 days
following the occurrence of such Special Event, and, following such redemption, Securities with an
aggregate liquidation amount equal to the aggregate principal amount of the Debentures so redeemed
shall be redeemed by the Trust at the Redemption Price on a Pro Rata basis; provided, however, that
if at the time there is available to Citigroup or the Trust the opportunity to eliminate, within
such 90-day period, the Special Event by taking some ministerial action, such as filing a form or
making an election or pursuing some other similar reasonable measure that will have no adverse
effect on the Trust, Citigroup or the holders of the Securities, then Citigroup or the Trust will
pursue such measure in lieu of redemption.
Tax Event means that the Regular Trustees shall have received an opinion of a nationally
recognized independent tax counsel experienced in such matters (a Tax Event Opinion) to the
effect that, as a result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination on or after the date of the
Prospectus), in either case after the date of the Prospectus, there is more than an insubstantial
risk that (i) the Trust would be subject to United States federal income tax with respect to
interest accrued or received on the Debentures, (ii) the Trust would be subject to more than a de
minimis amount of other taxes, duties or other governmental charges, or (iii) interest payable to
the Trust
I-6
on the Debentures would not be deductible, in whole or in part, by the Debenture Issuer for
United States federal income tax purposes.
Investment Company Event means that the Regular Trustees shall have received an opinion of a
nationally recognized independent counsel experienced in practice under the Investment Company Act
(an Investment Company Event Opinion) to the effect that, as a result of the occurrence of a
change in law or regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory authority (a Change
in 1940 Act Law), there is a more than an insubstantial risk that the Trust is or will be
considered an Investment Company which is required to be registered under the Investment Company
Act, which Change in 1940 Act Law becomes effective on or after the date of the Prospectus.
Regulatory Capital Event means a determination by Citigroup, based on an opinion of counsel
experienced in such matters (who may be an employee of Citigroup or any of its affiliates), that,
as a result of (a) any amendment to, clarification of or change (including any announced
prospective change) in applicable laws or regulations or official interpretations thereof or
policies with respect thereto or (b) any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment, clarification, change,
pronouncement or decision is announced or is effective after the date of the Prospectus, there is
more than an insubstantial risk that the Capital Securities will no longer constitute Tier I
Capital of Citigroup or any bank holding company of which Citigroup is a subsidiary (or its
equivalent) for purposes of the capital adequacy guidelines or policies of the Board of Governors
of the Federal Reserve System or its successor as Citigroups primary federal banking regulator,
provided, however that the distribution of the Debentures in connection with the liquidation of the
Trust shall not in and of itself constitute a Regulatory Capital Event unless such liquidation
shall have occurred in connection with a Tax Event or an Investment Company Event.
On and from the date fixed by the Regular Trustees for any distribution of the Debentures and
dissolution of the Trust: (i) the Securities will no longer be deemed to be outstanding, (ii) DTC
or its nominee (or any successor Clearing Agency or its nominee), as the record Holder of the
Capital Securities, will receive a registered global certificate or certificates representing the
Debentures to be delivered upon such distribution and (iii) any certificates representing
Securities, except for certificates representing Capital Securities held by DTC or its nominee (or
any successor Clearing Agency or its nominee), will be deemed to represent beneficial interests in
the Debentures having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the Coupon Rate of, and accrued and unpaid interest
equal to accrued and unpaid Distributions on such Securities until such certificates are presented
to the Debenture Issuer or its agent for transfer or reissue.
(d) The Trust may not redeem fewer than all the outstanding Securities unless all accrued and
unpaid Distributions have been paid on all Securities for all quarterly Distribution periods
terminating on or before the date of redemption.
(e) If the Debentures are distributed to the Holders of the Securities, pursuant to the terms
of the Indenture, the Debenture Issuer will use its best efforts to cause the
I-7
Debentures to be listed on the New York Stock Exchange or on such other exchange as the
Capital Securities were listed immediately prior to the distribution of the Debentures.
(f) Redemption or Distribution procedures will be as follows:
(i) Notice of any redemption of, or notice of distribution of Debentures in exchange
for the Securities (a Redemption/Distribution Notice) will be given by the Trust by mail
to the Institutional Trustee and the Delaware Trustee and to each Holder of the Securities
to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed
for redemption or exchange thereof which, in the case of a redemption, will be the date
fixed for redemption of the Debentures. For purposes of the calculation of the date of
redemption or exchange and the dates on which notices are given pursuant to this Section
4(f)(i), a Redemption/ Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to the Holders of the
Securities. Each Redemption/ Distribution Notice shall be addressed to the Holders of the
Securities at the address of each such Holder appearing in the books and records of the
Trust. No defect in the Redemption/Distribution Notice or in the mailing of either thereof
with respect to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities are to be redeemed,
the Securities to be redeemed shall be redeemed Pro Rata from each Holder of Capital
Securities, it being understood that, in respect of Capital Securities registered in the
name of and held of record by DTC or its nominee (or any successor Clearing Agency or its
nominee), the distribution of the proceeds of such redemption will be made to each Clearing
Agency Participant (or Person on whose behalf such nominee holds such securities) in
accordance with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a Redemption/Distribution
Notice, which notice may only be issued if the Debentures are redeemed as set out in this
Section 4 (which notice will be irrevocable), then (A) while the Capital Securities are in
book-entry only form, with respect to the Capital Securities, by 12:00 noon, New York City
time, on the redemption date, provided, that the Debenture Issuer has paid to the
Institutional Trustee a sufficient amount of cash in connection with the related redemption
or maturity of the Debentures, the Institutional Trustee will deposit irrevocably with DTC
or its nominee (or successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Capital Securities and will give DTC (or any
successor Clearing Agency) irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Capital Securities, and (B) with respect to Capital Securities
issued in definitive form and Common Securities, provided, that the Debenture Issuer has
paid the Institutional Trustee a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Institutional Trustee will pay the relevant
Redemption Price to the Holders of such Securities by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the redemption date. If
a Redemption/Distribution Notice shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of business on the date of such deposit, or
I-8
on the redemption date, as applicable, distributions will cease to accrue on the
Securities so called for redemption and all rights of the Holders of such Securities so
called for redemption will cease, except the right of the Holders of such Securities to
receive the Redemption Price, but without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to register or cause to be registered the
transfer of any Securities that have been so called for redemption. If any date fixed for
redemption of Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of any Securities is improperly
withheld or refused and not paid either by the Institutional Trustee or by the Sponsor as
guarantor pursuant to the relevant Securities Guarantee, Distributions on such Securities
will continue to accrue from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular Trustees on behalf of
the Trust to (A) in respect of the Capital Securities, DTC or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been issued or, if
Definitive Capital Security Certificates have been issued, to the Holder thereof and (B) in
respect of the Common Securities to the Holder thereof.
(v) Subject to the foregoing and applicable law (including, without limitation, United
States federal securities laws), the Debenture Issuer or its affiliates may at any time and
from time to time purchase outstanding Capital Securities by tender, in the open market or
by private agreement.
5.
Voting Rights Capital Securities
.
(a) Except as provided under Sections 5(b) and 7 and as otherwise required by law and the
Declaration, the Holders of the Capital Securities will have no voting rights.
(b) Subject to the requirements set forth in this paragraph, the Holders of a Majority in
aggregate liquidation amount of the Capital Securities, voting separately as a class, may direct
the time, method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the Institutional
Trustee, as holder of the Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercise any trust or power
conferred on the Debenture Trustee with respect to the Debentures, (ii) waive any past Default (as
defined in the Indenture) that is waivable under Section 5.6 of the Indenture, (iii) exercise any
right to rescind or annul a declaration that the principal of all the Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required; provided, however, that, where a consent or action
under the Indenture would require the consent or act of each holder of each Debenture
I-9
affected thereby, such consent or action under the Indenture shall not be effective until each
Holder of Capital Securities shall have consented to such action or provided such consent. The
Institutional Trustee shall not revoke any action previously authorized or approved by a vote of
the Holders of the Capital Securities. Except with respect to directing the time, method and place
of conducting a proceeding for a remedy available to the Institutional Trustee, the Institutional
Trustee, as holder of the Debentures, shall not take any of the actions described in clauses (i),
(ii), (iii) or (iv) above unless the Institutional Trustee has obtained an opinion of a nationally
recognized independent tax counsel experienced in such matters to the effect that as a result of
such action, the Trust will not fail to be classified as a grantor trust for United States federal
income tax purposes. If the Institutional Trustee fails to enforce its rights under the
Debentures, any Holder of Capital Securities may directly institute a legal proceeding against the
Debenture Issuer to enforce the Institutional Trustees rights under the Debentures without first
instituting a legal proceeding against the Institutional Trustee or any other Person or entity. If
a Default under the Declaration has occurred and is continuing and such event is attributable to
the failure of the Debenture Issuer to pay interest or principal on the Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the redemption date),
then a holder of Capital Securities may also directly institute a proceeding for enforcement of
payment to such holder (a Direct Action) of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Capital Securities of such
holder on or after the respective due date specified in the Debentures without first (i) directing
the Institutional Trustee to enforce the terms of the Debentures or (ii) instituting a legal
proceeding directly against the Debenture Issuer to enforce the Institutional Trustees rights
under the Debentures. Except as provided in the preceding sentence, the Holders of Capital
Securities will not be able to exercise directly any other remedy available to the holders of the
Debentures. In connection with such Direct Action, Citigroup will be subrogated to the rights of
such Holder of Capital Securities under the Declaration to the extent of any payment made by
Citigroup to such holder of Capital Securities in such Direct Action.
Any required approval or direction of Holders of Capital Securities may be given at a separate
meeting of Holders of Capital Securities convened for such purpose, at a meeting of all of the
Holders of Securities in the Trust or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to be mailed to each
Holder of record of Capital Securities. Each such notice will include a statement setting forth
(i) the date of such meeting or the date by which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or
of such matter upon which written consent is sought and (iii) instructions for the delivery of
proxies or consents.
No vote or consent of the Holders of the Capital Securities will be required for the Trust to
redeem and cancel Capital Securities or to distribute the Debentures in accordance with this
Declaration and the terms of the Securities.
Notwithstanding that Holders of Capital Securities are entitled to vote or consent under any
of the circumstances described above, any of the Capital Securities that are owned by the Sponsor
or any Affiliate of the Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
I-10
6.
Voting Rights Common Securities
.
(a) Except as provided under Sections 6(b), (c) and 7 as otherwise required by law and the
Declaration, the Holders of the Common Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in accordance with and subject to
Article V of the Declaration, to vote to appoint, remove or replace any Trustee or to increase or
decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after the Default with respect to the
Capital Securities has been cured, waived, or otherwise eliminated and subject to the requirements
of the second to last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may direct the time, method, and place of
conducting any proceeding for any remedy available to the Institutional Trustee, or direct the
exercise of any trust or power conferred upon the Institutional Trustee under the Declaration,
including (i) directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waiving any past Default (as defined in the Indenture)
that is waivable under Section 5.6 of the Indenture, or (iii) exercising any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and payable, provided
that, where a consent or action under the Indenture would require the consent or act of the Holders
of greater than a majority in principal amount of Debentures affected thereby (a Super Majority),
the Institutional Trustee may only give such consent or take such action at the written direction
of the Holders of at least the proportion in liquidation amount of the Common Securities which the
relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 6(c), the Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital Securities. Other than with respect
to directing the time, method and place of conducting any proceeding for any remedy available to
the Institutional Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of the Common Securities
under this paragraph unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action. If the Institutional Trustee fails to
enforce its rights under the Declaration, any Holder of Common Securities may institute a legal
proceeding directly against any Person to enforce the Institutional Trustees rights under the
Declaration, without first instituting a legal proceeding against the Institutional Trustee or any
other Person.
Any approval or direction of Holders of Common Securities may be given at a separate meeting
of Holders of Common Securities convened for such purpose, at a meeting of all of the Holders of
Securities in the Trust or pursuant to written consent. The Regular Trustees will cause a notice
of any meeting at which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to each Holder of
record of Common Securities. Each such notice will include a statement setting forth (i) the date
of such meeting or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such
I-11
Holders are entitled to vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be required for the Trust to
redeem and cancel Common Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
7.
Amendments to Declaration and Indenture
.
(a) In addition to any requirements under Section 12.1 of the Declaration, if any proposed
amendment to the Declaration provides for, or the Regular Trustees otherwise propose to effect, (i)
any action that would adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the dissolution, winding-up or
termination of the Trust, other than as described in Section 8.1 of the Declaration, then the
Holders of outstanding Securities as a class, will be entitled to vote on such amendment or
proposal (but not on any other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in liquidation amount of
the Securities, voting together as a single class; provided, however, if any amendment or proposal
referred to in clause (i) above would adversely affect only the Capital Securities or only the
Common Securities, then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the approval of a
Majority in liquidation amount of such class of Securities.
(b) In the event the consent of the Institutional Trustee as the holder of the Debentures is
required under the Indenture with respect to any amendment, modification or termination on the
Indenture or the Debentures, the Institutional Trustee shall request the written direction of the
Holders of the Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by a Majority in
liquidation amount of the Securities voting together as a single class; provided, however, that
where a consent under the Indenture would require the consent of the holders of greater than a
majority in aggregate principal amount of the Debentures (a Super Majority), the Institutional
Trustee may only give such consent at the direction of the Holders of at least the proportion in
liquidation amount of the Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding; provided, further, that the Institutional Trustee
shall not take any action in accordance with the directions of the Holders of the Securities under
this Section 7(b) unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action.
8.
Pro Rata
.
A reference in these terms of the Securities to any payment, distribution or treatment as
being Pro Rata shall mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a payment, an a Default
under the Declaration has occurred and is continuing, in which case any funds available to make
such payment shall be paid first to each Holder of the Capital Securities pro rata
I-12
according to the aggregate liquidation amount of Capital Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Capital Securities outstanding, and only
after satisfaction of all amounts owed to the Holders of the Capital Securities, to each Holder of
Common Securities pro rata according to the aggregate liquidation amount of Common Securities held
by the relevant Holder relative to the aggregate liquidation amount of all Common Securities
outstanding.
9.
Ranking
.
The Capital Securities rank pari passu and payment thereon shall be made Pro Rata with the
Common Securities except that, where a Default (as defined in the Indenture) occurs and is
continuing under the Indenture in respect of the Debentures held by the Institutional Trustee, the
rights of Holders of the Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment of the Holders of
the Capital Securities.
10.
Listing
.
The Regular Trustees shall use their best efforts to cause the Capital Securities to be listed
on the New York Stock Exchange.
11.
Acceptance of Securities Guarantee and Indenture
.
Each Holder of Capital Securities and Common Securities, by the acceptance thereof, agrees to
the provisions of the Capital Securities Guarantee, including the subordination provisions therein
and to the provisions of the Indenture.
12.
No Preemptive Rights
.
The Holders of the Securities shall have no preemptive rights to subscribe for any additional
securities.
13.
Miscellaneous
.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration or the Capital Securities Guarantee, and
the Indenture to a Holder without charge on written request to the Sponsor at its principal place
of business.
I-13
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
THIS CAPITAL SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE DECLARATION
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE
DEPOSITARY) OR A NOMINEE OF THE DEPOSITARY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER
THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
(55 WATER STREET, NEW YORK, NEW YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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Certificate Number
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Number of Capital Securities
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CUSIP NO.
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Certificate Evidencing Capital Securities
of
CITIGROUP CAPITAL XXII
% Capital Securities
(Liquidation Amount $25 per Capital Security)
CITIGROUP CAPITAL XXII, a statutory trust formed under the laws of the State of Delaware (the
Trust), hereby certifies that
(the Holder) is the registered owner of
(___) capital securities of the Trust representing undivided beneficial interests in the assets of
the Trust designated the % Capital Securities (the Capital Securities). The Capital
Securities are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities are set forth in, and this certificate and the Capital
Securities represented hereby are issued and shall in all respects be subject to, the provisions of
A1-1
the Amended and Restated Declaration of Trust of the Trust dated as of , 20 , as
the same may be amended from time to time (the Declaration), including the designation of the
terms of the Capital Securities as set forth in Annex I thereto. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Capital Securities Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Capital Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Sponsor at its principal place of business.
The Holder of this certificate, by accepting this certificate, is deemed to have (i) agreed to
the terms of the Indenture and the Debentures, including that the Debentures are subordinate and
junior in right of payment to all Senior Indebtedness (as defined in the Indenture) and (ii) agreed
to the terms of the Capital Securities Guarantee, including that the Capital Securities Guarantee
is (A) subordinate and junior in right of payment to all other liabilities of Citigroup, (B) pari
passu with the most senior preferred or preference stock now or hereafter issued by Citigroup and
with any guarantee now or hereafter issued by Citigroup with respect to preferred or preference
stock of Citigroups affiliates and (C) senior to Citigroups common stock.
Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Capital Securities as evidence of indirect beneficial ownership
in the Debentures.
A1-2
IN WITNESS WHEREOF, the Trust has executed this certificate this ___day of
, ___.
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Name:
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Title: Regular Trustee
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A1-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security Certificate to:
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(Insert assignees social security or tax identification number)
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(Insert address and zip code of assignee)
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and irrevocably appoints
agent to transfer this Capital Security
Certificate on the books of the Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Capital Security Certificate)
A1-4
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
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Certificate Number
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Number of Common Securities
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Certificate Evidencing Common Securities
of
CITIGROUP CAPITAL XXII
% Common Securities
(Liquidation Amount $25 per Common Security)
CITIGROUP CAPITAL XXII, a statutory trust formed under the laws of the State of Delaware (the
Trust), hereby certifies that Citigroup Inc., a Delaware corporation (the Holder), is the
registered owner of
(
) common securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the % Common Securities (the
Common Securities). The Common Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer and satisfaction of the other conditions set forth in the
Declaration (as defined below), including, without limitation, Section 9.1 thereof. The
designation, rights, privileges, restrictions, preferences and other terms and provisions of the
Common Securities represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated as of ,
20 , as the same may be amended from time to time (the Declaration), including the designation
of the terms of the Common Securities as set forth in Annex I thereto. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration. The Sponsor will
provide a copy of the Declaration and the Indenture to a Holder without charge upon written request
to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration and is entitled to
the benefits thereunder.
The Holder of this certificate, by accepting this certificate, is deemed to have agreed to the
terms of the Indenture and the Debentures, including that the Debentures are subordinate and junior
in right of payment to all Senior Indebtedness (as defined in the Indenture) as and to the extent
provided in the Indenture.
A2-1
By acceptance, the Holder agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Common Securities as evidence of indirect beneficial ownership
in the Debentures.
A2-2
IN WITNESS WHEREOF, the Trust has executed this certificate this ___day of
, ___.
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Name:
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Title: Regular Trustee
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A2-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security Certificate to:
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(Insert assignees social security or tax identification number)
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and irrevocably appoints
agent to transfer this Common Security Certificate on the books of the Trust. The
agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Common Security Certificate)
A2-4
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
Exhibit 4.13
CAPITAL SECURITIES GUARANTEE AGREEMENT
Citigroup Capital XVIII
Dated as of , 20
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND INTERPRETATION
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SECTION 1.1 Definitions and Interpretation
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1
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ARTICLE II TRUST INDENTURE ACT
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SECTION 2.1 Trust Indenture Act; Application
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4
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SECTION 2.2 Lists of Holders of Securities
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4
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SECTION 2.3 Reports by the Capital Guarantee Trustee
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4
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SECTION 2.4 Periodic Reports to Capital Guarantee Trustee
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5
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SECTION 2.5 Evidence of Compliance with Conditions Precedent
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5
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SECTION 2.6 Events of Default; Waiver
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5
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SECTION 2.7 Event of Default; Notice
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5
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SECTION 2.8 Conflicting Interests
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5
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ARTICLE III POWERS, DUTIES AND RIGHTS OF CAPITAL GUARANTEE TRUSTEE
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SECTION 3.1 Powers and Duties of the Capital Guarantee Trustee
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6
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SECTION 3.2 Certain Rights of Capital Guarantee Trustee
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7
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SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
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9
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ARTICLE IV CAPITAL GUARANTEE TRUSTEE
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SECTION 4.1 Capital Guarantee Trustee; Eligibility
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9
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SECTION 4.2 Appointment, Removal and Resignation of Capital Guarantee Trustees
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10
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ARTICLE V GUARANTEE
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SECTION 5.1 Guarantee
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SECTION 5.2 Waiver of Notice and Demand
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11
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SECTION 5.3 Obligations Not Affected
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11
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SECTION 5.4 Rights of Holders
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SECTION 5.5 Guarantee of Payment
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SECTION 5.6 Subrogation
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SECTION 5.7 Independent Obligations
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ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION
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SECTION 6.1 Limitation of Transactions
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Page
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SECTION 6.2 Subordination
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SECTION 6.3 Pari Passu Guarantees
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ARTICLE VII TERMINATION
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SECTION 7.1 Termination
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ARTICLE VIII INDEMNIFICATION
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SECTION 8.1 Exculpation
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SECTION 8.2 Indemnification
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ARTICLE IX MISCELLANEOUS
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SECTION 9.1 Successors and Assigns
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SECTION 9.2 Amendments
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SECTION 9.3 Notices
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SECTION 9.4 Benefit
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SECTION 9.5 Governing Law
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ii
CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the Capital Securities Guarantee), dated as of , 20 , is executed and delivered by Citigroup Inc., a Delaware corporation (the Guarantor), and
The Bank of New York, as trustee (the Capital Guarantee Trustee), for the benefit of the Holders
(as defined herein) from time to time of the Capital Securities (as defined herein) of Citigroup
Capital XVIII, a Delaware statutory trust (the Issuer).
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the Declaration), dated
as of , 20 , among the trustees of the Issuer named therein, the Guarantor, as
sponsor, and the holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof capital securities, having an
aggregate liquidation amount of $ and may issue up to an additional
capital securities, having an aggregate liquidation amount of $ in
connection with an over-allotment option, collectively designated the % Capital Securities
(the Capital Securities);
WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in this Capital
Securities Guarantee, to pay to the Holders the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of Capital Securities, which
purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Capital Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1
Definitions and Interpretation
In this Capital Securities Guarantee, unless the context otherwise requires:
(a) Capitalized terms used in this Capital Securities Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Capital Securities Guarantee has the same meaning
throughout;
(c) all references to the Capital Securities Guarantee or this Capital Securities
Guarantee are to this Capital Securities Guarantee as modified, supplemented or amended from time
to time;
(d) all references in this Capital Securities Guarantee to Articles and Sections are to
Articles and Sections of this Capital Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in this Capital
Securities Guarantee, unless otherwise defined in this Capital Securities Guarantee or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
Authorized Officer
of a Person means any Person that is authorized to bind such
Person.
Affiliate
has the same meaning as given to that term in Rule 405 of the Securities
Act of 1933, as amended, or any successor rule thereunder.
Business Day
means any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York, New York are permitted or required by any applicable law to
close.
Capital Guarantee Trustee
means The Bank of New York, until a Successor Capital
Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of
this Capital Securities Guarantee, and thereafter means each such Successor Capital Guarantee
Trustee.
Common Securities
means the securities representing common undivided beneficial
interests in the assets of the Issuer.
Corporate Trust Office
means the office of the Capital Guarantee Trustee at which
the corporate trust business of the Capital Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this Agreement is located at 101
Barclay Street-8W, New York, New York 10286.
Covered Person
means any Holder or beneficial owner of Capital Securities.
Debentures
means the series of junior subordinated debt securities of the Guarantor
designated the % Junior Subordinated Deferrable Interest Debentures due , 20
held by the Institutional Trustee (as defined in the Declaration) of the Issuer.
Event of Default
means a default by the Guarantor on any of its payment or other
obligations under this Capital Securities Guarantee.
Guarantee Payments
means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or made by the Issuer:
(i) any accrued and unpaid Distributions (as defined in Annex I to the Declaration) that are
required to be paid on the Capital Securities, to the extent the Issuer has funds available
therefor, (ii) the redemption price of $ per Capital Security, plus all accrued and unpaid
Distributions to the date of redemption (the Redemption Price), to the extent that the Issuer has
funds available therefor, with respect to any Capital Securities called for redemption by the
Issuer and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Debentures to the Holders in exchange for
Capital Securities as provided in the Declaration or the redemption of all of the Capital
Securities upon the maturity
2
or redemption of all of the Debentures as provided in the Declaration) the lesser of (a) the
aggregate of the liquidation amount of $ per Capital Security and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, or (b) the amount of assets of the
Issuer remaining for distribution to Holders in liquidation of the Issuer (in either case, the
Liquidation Distribution).
Holder
shall mean any holder, as registered on the books and records of the Issuer,
of any Capital Securities;
provided
, however, that, in determining whether the holders of the
requisite percentage of Capital Securities have given any request, notice, consent or waiver
hereunder, Holder shall not include the Guarantor or any Affiliate of the Guarantor.
Indemnified Person
means the Capital Guarantee Trustee, any Affiliate of the Capital
Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Guarantee Trustee.
Indenture
means the Indenture dated as of , 20 , among the
Guarantor and The Bank of New York, as trustee, and any indenture supplemental thereto, pursuant to
which the Debentures are to be issued to the Institutional Trustee as defined in the Declaration.
Majority in liquidation amount of the Securities
means, except as provided by the
Trust Indenture Act, a vote by Holder(s), voting separately as a class, holding Capital Securities
representing more than 50% of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the
date upon which the voting percentages are determined) of all Capital Securities.
Officers Certificate
means, with respect to any Person, a certificate signed by two
Authorized Officers of such Person. Any Officers Certificate delivered with respect to compliance
with a condition or covenant provided for in this Capital Securities Guarantee shall include:
(a) a statement that each officer signing the Officers Certificate has read the covenant or
condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken
by each officer in rendering the Officers Certificate;
(c) a statement that each such officer has made such examination or investigation as, in such
officers opinion, is necessary to enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant
has been complied with.
Person
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust,
3
unincorporated association, or government or any agency or political subdivision thereof, or
any other entity of whatever nature.
Responsible Officer
means, with respect to the Capital Guarantee Trustee, any
officer within the Corporate Trust Office of the Capital Guarantee Trustee with direct
responsibility for the administration of this Capital Securities Guarantee and also means, with
respect to a particular corporate trust matter, any other officer to whom such matter is referred
because of that officers knowledge of and familiarity with the particular subject.
Successor Capital Guarantee Trustee
means a successor Capital Guarantee Trustee
possessing the qualifications to act as Capital Guarantee Trustee under Section 4.1.
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended.
Underwriting Agreement
has the meaning set forth in the Indenture.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1
Trust Indenture Act; Application
(a) This Capital Securities Guarantee is subject to the provisions of the Trust Indenture Act
that are required to be part of this Capital Securities Guarantee and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Capital Securities Guarantee limits,
qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control.
SECTION 2.2
Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Guarantee Trustee with a list, in such form as the
Capital Guarantee Trustee may reasonably require, of the names and addresses of the Holders (List
of Holders) as of such date, (i) within one Business Day after January 1 and June 30 of each year,
and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a
List of Holders as of a date no more than 14 days before such List of Holders is given to the
Capital Guarantee Trustee;
provided
, that the Guarantor shall not be obligated to provide such List
of Holders at any time the List of Holders does not differ from the most recent List of Holders
given to the Capital Guarantee Trustee by the Guarantor. The Capital Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Capital Guarantee Trustee shall comply with its obligations under Sections 311(a),
311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3
Reports by the Capital Guarantee Trustee
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Within 60 days after May 15 of each year, the Capital Guarantee Trustee shall provide to the
Holders such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The Capital Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4
Periodic Reports to Capital Guarantee Trustee
The Guarantor shall provide to the Capital Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate required by Section
314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314
of the Trust Indenture Act.
SECTION 2.5
Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Guarantee Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Capital Securities Guarantee that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers Certificate.
SECTION 2.6
Events of Default; Waiver
The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on behalf
of the Holders of all of the Capital Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose of this Capital
Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event
of Default or impair any right consequent thereon.
SECTION 2.7
Event of Default; Notice
(a) The Capital Guarantee Trustee shall, within 90 days after the occurrence of an Event of
Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of
Default actually known to a Responsible Officer of the Capital Guarantee Trustee, unless such
defaults have been cured before the giving of such notice;
provided
, that the Capital Guarantee
Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of
the Capital Guarantee Trustee in good faith determines that the withholding of such notice is in
the interests of the Holders.
(b) The Capital Guarantee Trustee shall not be deemed to have knowledge of any Event of
Default unless either the Capital Guarantee Trustee shall have received written notice, or a
Responsible Officer of the Capital Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge.
SECTION 2.8
Conflicting Interests
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The Declaration shall be deemed to be specifically described in this Capital Securities
Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL GUARANTEE TRUSTEE
SECTION 3.1
Powers and Duties of the Capital Guarantee Trustee
(a) This Capital Securities Guarantee shall be held by the Capital Guarantee Trustee for the
benefit of the Holders, and the Capital Guarantee Trustee shall not transfer its right, title and
interest in this Capital Securities Guarantee to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(b) or to a Successor Capital Guarantee Trustee on acceptance by such
Successor Capital Guarantee Trustee of its appointment to act as Successor Capital Guarantee
Trustee. The right, title and interest of the Capital Guarantee Trustee shall automatically vest
in any Successor Capital Guarantee Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the Capital Guarantee
Trustee has occurred and is continuing, the Capital Guarantee Trustee shall enforce this Capital
Securities Guarantee for the benefit of the Holders of the Capital Securities.
(c) The Capital Guarantee Trustee, before the occurrence of any Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to perform only such duties
as are specifically set forth in this Capital Securities Guarantee, and no implied covenants shall
be read into this Capital Securities Guarantee against the Capital Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Capital Guarantee Trustee, the Capital Guarantee
Trustee shall exercise such of the rights and powers vested in it by this Capital Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be construed to relieve the
Capital Guarantee Trustee from liability for its own negligent action, its own negligent failure to
act or its own willful misconduct, except that:
(i) Prior to the occurrence of any Event of Default and after the curing or
waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Capital Guarantee Trustee
shall be determined solely by the express provisions of this Capital
Securities Guarantee, and the Capital Guarantee Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Capital Securities
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Guarantee, and no implied covenants or obligations shall be
read into this Capital Securities Guarantee against the Capital
Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Capital
Guarantee Trustee, the Capital Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Capital Guarantee Trustee and conforming to the
requirements of this Capital Securities Guarantee; but in the case
of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Capital Guarantee
Trustee, the Capital Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Capital Securities Guarantee;
(ii) the Capital Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Capital Guarantee
Trustee, unless it shall be proved that the Capital Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Capital Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of the
Capital Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Capital Guarantee Trustee, or exercising
any trust or power conferred upon the Capital Guarantee Trustee under this Capital
Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee shall require the
Capital Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Capital Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Capital Securities Guarantee or
indemnity, reasonably satisfactory to the Capital Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2
Certain Rights of Capital Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Guarantee Trustee may conclusively rely, and shall be fully
protected in acting or refraining from acting upon, any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document
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believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this Capital
Securities Guarantee shall be sufficiently evidenced by an Officers Certificate.
(iii) Whenever, in the administration of this Capital Securities Guarantee, the
Capital Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the Capital
Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in
the absence of bad faith on its part, request and conclusively rely upon an
Officers Certificate which, upon receipt of such request, shall be promptly
delivered by the Guarantor.
(iv) The Capital Guarantee Trustee shall have no duty to see to any recording,
filing or registration of any instrument (or any rerecording, refiling or
registration thereof).
(v) The Capital Guarantee Trustee may consult with counsel, and the written
advice or opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Capital Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this Capital
Securities Guarantee from any court of competent jurisdiction.
(vi) The Capital Guarantee Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Capital Securities Guarantee at the
request or direction of any Holder, unless such Holder shall have provided to the
Capital Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Capital Guarantee Trustee, against the costs, expenses (including attorneys
fees and expenses and the expenses of the Capital Guarantee Trustees agents,
nominees or custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as may be
requested by the Capital Guarantee Trustee;
provided
that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Capital Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Capital Securities Guarantee.
(vii) The Capital Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document,
but the Capital Guarantee Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit.
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(viii) The Capital Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the Capital Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Capital Guarantee Trustee or its agents hereunder
shall bind the Holders of the Capital Securities, and the signature of the Capital
Guarantee Trustee or its agents alone shall be sufficient and effective to perform
any such action. No third party shall be required to inquire as to the authority of
the Capital Guarantee Trustee to so act or as to its compliance with any of the
terms and provisions of this Capital Securities Guarantee, both of which shall be
conclusively evidenced by the Capital Guarantee Trustees or its agents taking such
action.
(x) Whenever in the administration of this Capital Securities Guarantee the
Capital Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder, the
Capital Guarantee Trustee (i) may request instructions from the Holders of a
Majority in liquidation amount of the Capital Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such instructions
are received, and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Capital Securities Guarantee shall be deemed to impose any duty or
obligation on the Capital Guarantee Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Capital Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the Capital Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3
Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the statements of the Guarantor,
and the Capital Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Guarantee Trustee makes no representation as to the validity or sufficiency of this Capital
Securities Guarantee.
ARTICLE IV
CAPITAL GUARANTEE TRUSTEE
SECTION 4.1
Capital Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
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(ii) be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or of the District of Columbia,
or a corporation or Person permitted by the Securities and Exchange Commission to
act as an institutional trustee under the Trust Indenture Act, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the supervising or examining authority referred to above,
then, for the purposes of this Section 4.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
(b) If at any time the Capital Guarantee Trustee shall cease to be eligible to so act under
Section 4.1(a), the Capital Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Capital Guarantee Trustee has or shall acquire any conflicting interest within
the meaning of Section 310(b) of the Trust Indenture Act, the Capital Guarantee Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2
Appointment, Removal and Resignation of Capital Guarantee
Trustees
(a) Subject to Section 4.2(b), the Capital Guarantee Trustee may be appointed or removed
without cause at any time by the Guarantor except if an Event of Default shall have occurred and be
continuing.
(b) The Capital Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until
a Successor Capital Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Guarantee Trustee and delivered to the
Guarantor.
(c) The Capital Guarantee Trustee appointed to office shall hold office until a Successor
Capital Guarantee Trustee shall have been appointed or until its removal or resignation. The
Capital Guarantee Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing executed by the Capital Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Capital Guarantee Trustee has
been appointed and has accepted such appointment by instrument in writing executed by such
Successor Capital Guarantee Trustee and delivered to the Guarantor and the resigning Capital
Guarantee Trustee.
(d) If no Successor Capital Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantor of an
instrument of resignation, the resigning Capital Guarantee Trustee may petition any court of
competent jurisdiction for appointment of a Successor Capital Guarantee Trustee.
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Such court may thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a Successor Capital Guarantee Trustee.
(e) No Capital Guarantee Trustee shall be liable for the acts or omissions to act of any
Successor Capital Guarantee Trustee.
(f) Upon termination of this Capital Securities Guarantee or removal or resignation of the
Capital Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Capital
Guarantee Trustee all amounts accrued and owing to such Capital Guarantee Trustee to the date of
such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1
Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the
Guarantee Payments, as and when due, regardless of any defense, right of set-off or counterclaim
that the Issuer may have or assert. The Guarantors obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2
Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Capital Securities Guarantee and of
any liability to which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3
Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor under this Capital
Securities Guarantee shall in no way be affected or impaired by reason of the happening from time
to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the performance or observance
by the Issuer of any express or implied agreement, covenant, term or condition relating to the
Capital Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any portion of the
Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms
of the Capital Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce,
assert or exercise any right, privilege, power or remedy conferred on the Holders
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pursuant to the terms of the Capital Securities, or any action on the part of the Issuer
granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any collateral,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations
of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent of, the
Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4
Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Capital Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy available to the
Capital Guarantee Trustee in respect of this Capital Securities Guarantee or exercising any trust
or power conferred upon the Capital Guarantee Trustee under this Capital Securities Guarantee.
(b) If the Capital Guarantee Trustee fails to enforce its rights under this Capital Securities
Guarantee, any Holder may directly institute a legal proceeding against the Guarantor to enforce
the Capital Guarantee Trustees rights under this Capital Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Capital Guarantee Trustee or any other
Person or entity.
(c) A Holder of Capital Securities may also directly institute a legal proceeding against the
Guarantor to enforce such Holders right to receive payment under this Capital Securities Guarantee
without first (i) directing the Capital Guarantee Trustee to enforce the terms of this Capital
Securities Guarantee or (ii) instituting a legal proceeding directly against the Issuer or any
other Person or entity.
SECTION 5.5
Guarantee of Payment
This Capital Securities Guarantee creates a guarantee of payment and not of collection.
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SECTION 5.6
Subrogation
The Guarantor shall be subrogated to all (if any) rights of the Holders of Capital Securities
against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this
Capital Securities Guarantee;
provided
, however, that the Guarantor shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a
result of payment under this Capital Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Capital Securities Guarantee. If any amount shall be paid to
the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7
Independent Obligations
The Guarantor acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Capital Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1
Limitation of Transactions
So long as any Capital Securities remain outstanding, if there shall have occurred any event
that would constitute an Event of Default or a Default under the Declaration, then (a) the
Guarantor shall not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock
or make any guarantee payment with respect thereto (other than (i) repurchases, redemptions or
other acquisitions of shares of capital stock of the Guarantor in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) repurchases of common stock of the Guarantor pursuant to a
contractually binding requirement to buy stock existing prior to the Event of Default or Default,
(iii) as a result of an exchange or conversion of any class or series of the Guarantors capital
stock for any other class or series of the Guarantors capital stock, (iv) the purchase of
fractional interests in shares of the Guarantors capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or exchanged) or (v)
purchase of the Guarantors capital stock in connection with the distribution thereof and (b) the
Guarantor shall not make any payment of interest on, or principal of (or premium, if any, on), or
repay, repurchase or redeem, any debt securities or guarantees issued by the Guarantor that rank
pari passu with or junior to the Debentures;
provided
, however, the Guarantor may declare and pay a
stock dividend where the dividend stock is the same stock as that on which the dividend is being
paid.
SECTION 6.2
Subordination
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The obligations of the Guarantor under this Capital Securities Guarantee will constitute
unsecured obligations of the Guarantor and will rank subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) of the Guarantor to the extent and in the
manner set forth in the Indenture with respect to the Debentures, and the provisions of Article
Fourteen of the Indenture will apply,
mutatis mutandis
, to the obligations of the Guarantor
hereunder. The obligations of the Guarantor hereunder do not constitute Senior Indebtedness (as
defined in the Indenture) of the Guarantor.
SECTION 6.3
Pari Passu Guarantees
The obligations of the Guarantor under this Capital Securities Guarantee shall rank pari passu
with the obligations of the Guarantor under (i) any similar guarantee agreements issued by the
Guarantor on behalf of the holders of preferred or capital securities issued by any Citigroup Trust
(as defined in the Indenture), (ii) the Indenture and the Securities (as defined therein) issued
thereunder, (iii) any expense agreements entered into by the Guarantor in connection with the
offering of preferred or capital securities by any Citigroup Trust (as defined in the Indenture),
and (iv) any other security, guarantee or other agreement or obligation that is by its terms pari
passu with the Securities (as defined in the Indenture) and, in the case of this clause (iv) only,
(x) is issued with the concurrence or approval of the staff of the Federal Reserve Bank of New York
or the staff of the Board of Governors of the Federal Reserve System or (y) does not at the time of
issuance prevent the Securities from qualifying for tier 1 capital treatment (irrespective of any
limits on the amount of the Companys tier 1 capital) under the applicable capital adequacy
guidelines, regulations, policies or published interpretations of the Board of Governors of the
Federal Reserve System.
ARTICLE VII
TERMINATION
SECTION 7.1
Termination
This Capital Securities Guarantee shall terminate upon (i) full payment of the Redemption
Price of all Capital Securities, (ii) the distribution of the Debentures to the Holders of all of
the Capital Securities or (iii) full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this Capital Securities
Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time
any Holder must restore payment of any sums paid under the Capital Securities or under this Capital
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1
Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in accordance with this
Capital Securities Guarantee and in a manner that such
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Indemnified Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Capital Securities Guarantee or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified
Persons negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Guarantor and upon such information, opinions, reports or statements presented to the
Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such
other Persons professional or expert competence and who has been selected with reasonable care by
or on behalf of the Guarantor, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.2
Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified
Person harmless against, any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses)
of defending itself against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as
set forth in this Section 8.2 shall survive the termination of this Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1
Successors and Assigns
All guarantees and agreements contained in this Capital Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to
the benefit of the Holders of the Capital Securities then outstanding.
SECTION 9.2
Amendments
Except with respect to any changes that do not adversely affect the rights of Holders (in
which case no consent of Holders will be required), this Capital Securities Guarantee may be
amended only with the prior approval of the Holders of not less than a Majority in aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all the outstanding Capital Securities. The provisions of Section 12.2 of the
Declaration with respect to meetings of Holders apply to the giving of such approval.
SECTION 9.3
Notices
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All notices provided for in this Capital Securities Guarantee shall be in writing, duly signed
by the party giving such notice, and shall be delivered, telecopied or mailed by registered or
certified mail, as follows:
(a) If given to the Capital Guarantee Trustee, at the Capital Guarantee Trustees mailing
address set forth below (or such other address as the Capital Guarantee Trustee may give notice of
to the Holders):
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(b) If given to the Guarantor, at the Guarantors mailing address set forth below (or such
other address as the Guarantor may give notice of to the Holders):
Citigroup Inc.,
153 East 53rd Street
New York, NY 10043
Attention: Charles E. Wainhouse, Assistant Treasurer
(c) If given to any Holder, at the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 9.4
Benefit
This Capital Securities Guarantee is solely for the benefit of the Holders of the Capital
Securities and, subject to Section 3.1(a), is not separately transferable from the Capital
Securities.
SECTION 9.5
Governing Law
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED
BY SUCH LAWS WITHOUT REGARD FOR THE PRINCIPLES OF ITS CONFLICTS OF LAWS.
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THIS CAPITAL SECURITIES GUARANTEE is executed as of the day and year first above written.
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CITIGROUP INC.,
as Guarantor
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By:
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Name:
Title:
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THE BANK OF NEW YORK,
as Capital Guarantee Trustee
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By:
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Name:
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Title:
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17
Exhibit 4.14
CAPITAL SECURITIES GUARANTEE AGREEMENT
Citigroup Capital XIX
Dated as of , 20
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND INTERPRETATION
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SECTION 1.1 Definitions and Interpretation
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1
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ARTICLE II TRUST INDENTURE ACT
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SECTION 2.1 Trust Indenture Act; Application
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4
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SECTION 2.2 Lists of Holders of Securities
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4
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SECTION 2.3 Reports by the Capital Guarantee Trustee
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4
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SECTION 2.4 Periodic Reports to Capital Guarantee Trustee
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5
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SECTION 2.5 Evidence of Compliance with Conditions Precedent
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5
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SECTION 2.6 Events of Default; Waiver
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5
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SECTION 2.7 Event of Default; Notice
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5
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SECTION 2.8 Conflicting Interests
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5
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ARTICLE III POWERS, DUTIES AND RIGHTS OF CAPITAL GUARANTEE
TRUSTEE
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SECTION 3.1 Powers and Duties of the Capital Guarantee Trustee
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6
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SECTION 3.2 Certain Rights of Capital Guarantee Trustee
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7
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SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
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9
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ARTICLE IV CAPITAL GUARANTEE TRUSTEE
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SECTION 4.1 Capital Guarantee Trustee; Eligibility
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9
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SECTION 4.2 Appointment, Removal and Resignation of Capital Guarantee Trustees
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10
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ARTICLE V GUARANTEE
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SECTION 5.1 Guarantee
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11
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SECTION 5.2 Waiver of Notice and Demand
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11
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SECTION 5.3 Obligations Not Affected
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11
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SECTION 5.4 Rights of Holders
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12
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SECTION 5.5 Guarantee of Payment
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12
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SECTION 5.6 Subrogation
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13
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SECTION 5.7 Independent Obligations
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13
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ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION
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SECTION 6.1 Limitation of Transactions
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13
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Page
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SECTION 6.2 Subordination
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13
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SECTION 6.3 Pari Passu Guarantees
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14
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ARTICLE VII TERMINATION
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SECTION 7.1 Termination
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14
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ARTICLE VIII INDEMNIFICATION
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SECTION 8.1 Exculpation
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14
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SECTION 8.2 Indemnification
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15
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ARTICLE IX MISCELLANEOUS
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SECTION 9.1 Successors and Assigns
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15
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SECTION 9.2 Amendments
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15
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SECTION 9.3 Notices
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15
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SECTION 9.4 Benefit
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16
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SECTION 9.5 Governing Law
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16
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ii
CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the Capital Securities Guarantee), dated as of
, 20 , is executed and delivered by Citigroup Inc., a Delaware corporation (the Guarantor), and
The Bank of New York, as trustee (the Capital Guarantee Trustee), for the benefit of the Holders
(as defined herein) from time to time of the Capital Securities (as defined herein) of Citigroup
Capital XIX, a Delaware statutory trust (the Issuer).
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the Declaration), dated
as of , 20 , among the trustees of the Issuer named therein, the Guarantor, as
sponsor, and the holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof capital securities, having an
aggregate liquidation amount of $ and may issue up to an additional
capital securities, having an aggregate liquidation amount of $ in
connection with an over-allotment option, collectively designated the % Capital Securities
(the Capital Securities);
WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in this Capital
Securities Guarantee, to pay to the Holders the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of Capital Securities, which
purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Capital Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1
Definitions and Interpretation
In this Capital Securities Guarantee, unless the context otherwise requires:
(a) Capitalized terms used in this Capital Securities Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Capital Securities Guarantee has the same meaning
throughout;
(c) all references to the Capital Securities Guarantee or this Capital Securities
Guarantee are to this Capital Securities Guarantee as modified, supplemented or amended from time
to time;
(d) all references in this Capital Securities Guarantee to Articles and Sections are to
Articles and Sections of this Capital Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in this Capital
Securities Guarantee, unless otherwise defined in this Capital Securities Guarantee or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
Authorized Officer
of a Person means any Person that is authorized to bind such
Person.
Affiliate
has the same meaning as given to that term in Rule 405 of the Securities
Act of 1933, as amended, or any successor rule thereunder.
Business Day
means any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York, New York are permitted or required by any applicable law to
close.
Capital Guarantee Trustee
means The Bank of New York, until a Successor Capital
Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of
this Capital Securities Guarantee, and thereafter means each such Successor Capital Guarantee
Trustee.
Common Securities
means the securities representing common undivided beneficial
interests in the assets of the Issuer.
Corporate Trust Office
means the office of the Capital Guarantee Trustee at which
the corporate trust business of the Capital Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this Agreement is located at 101
Barclay Street-8W New York, New York 10286.
Covered Person
means any Holder or beneficial owner of Capital Securities.
Debentures
means the series of junior subordinated debt securities of the Guarantor
designated the % Junior Subordinated Deferrable Interest Debentures due , 20
held by the Institutional Trustee (as defined in the Declaration) of the Issuer.
Event of Default
means a default by the Guarantor on any of its payment or other
obligations under this Capital Securities Guarantee.
Guarantee Payments
means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or made by the Issuer:
(i) any accrued and unpaid Distributions (as defined in Annex I to the Declaration) that are
required to be paid on the Capital Securities, to the extent the Issuer has funds available
therefor, (ii) the redemption price of $ per Capital Security, plus all accrued and unpaid
Distributions to the date of redemption (the Redemption Price), to the extent that the Issuer has
funds available therefor, with respect to any Capital Securities called for redemption by the
Issuer and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Debentures to the Holders in exchange for
Capital Securities as provided in the Declaration or the redemption of all of the Capital
Securities upon the maturity
2
or redemption of all of the Debentures as provided in the Declaration) the lesser of (a) the
aggregate of the liquidation amount of $ per Capital Security and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, or (b) the amount of assets of the
Issuer remaining for distribution to Holders in liquidation of the Issuer (in either case, the
Liquidation Distribution).
Holder
shall mean any holder, as registered on the books and records of the Issuer,
of any Capital Securities;
provided
, however, that, in determining whether the holders of the
requisite percentage of Capital Securities have given any request, notice, consent or waiver
hereunder, Holder shall not include the Guarantor or any Affiliate of the Guarantor.
Indemnified Person
means the Capital Guarantee Trustee, any Affiliate of the Capital
Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Guarantee Trustee.
Indenture
means the Indenture dated as of , 20 , among the
Guarantor and The Bank of New York, as trustee, and any indenture supplemental thereto, pursuant to
which the Debentures are to be issued to the Institutional Trustee as defined in the Declaration.
Majority in liquidation amount of the Securities
means, except as provided by the
Trust Indenture Act, a vote by Holder(s), voting separately as a class, holding Capital Securities
representing more than 50% of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the
date upon which the voting percentages are determined) of all Capital Securities.
Officers Certificate
means, with respect to any Person, a certificate signed by two
Authorized Officers of such Person. Any Officers Certificate delivered with respect to compliance
with a condition or covenant provided for in this Capital Securities Guarantee shall include:
(a) a statement that each officer signing the Officers Certificate has read the covenant or
condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken
by each officer in rendering the Officers Certificate;
(c) a statement that each such officer has made such examination or investigation as, in such
officers opinion, is necessary to enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant
has been complied with.
Person
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust,
3
unincorporated association, or government or any agency or political subdivision thereof, or
any other entity of whatever nature.
Responsible Officer
means, with respect to the Capital Guarantee Trustee, any
officer within the Corporate Trust Office of the Capital Guarantee Trustee with direct
responsibility for the administration of this Capital Securities Guarantee and also means, with
respect to a particular corporate trust matter, any other officer to whom such matter is referred
because of that officers knowledge of and familiarity with the particular subject.
Successor Capital Guarantee Trustee
means a successor Capital Guarantee Trustee
possessing the qualifications to act as Capital Guarantee Trustee under Section 4.1.
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended.
Underwriting Agreement
has the meaning set forth in the Indenture.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1
Trust Indenture Act; Application
(a) This Capital Securities Guarantee is subject to the provisions of the Trust Indenture Act
that are required to be part of this Capital Securities Guarantee and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Capital Securities Guarantee limits,
qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control.
SECTION 2.2
Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Guarantee Trustee with a list, in such form as the
Capital Guarantee Trustee may reasonably require, of the names and addresses of the Holders (List
of Holders) as of such date, (i) within one Business Day after January 1 and June 30 of each year,
and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a
List of Holders as of a date no more than 14 days before such List of Holders is given to the
Capital Guarantee Trustee;
provided
, that the Guarantor shall not be obligated to provide such List
of Holders at any time the List of Holders does not differ from the most recent List of Holders
given to the Capital Guarantee Trustee by the Guarantor. The Capital Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Capital Guarantee Trustee shall comply with its obligations under Sections 311(a),
311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3
Reports by the Capital Guarantee Trustee
4
Within 60 days after May 15 of each year, the Capital Guarantee Trustee shall provide to the
Holders such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The Capital Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4
Periodic Reports to Capital Guarantee Trustee
The Guarantor shall provide to the Capital Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate required by Section
314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314
of the Trust Indenture Act.
SECTION 2.5
Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Guarantee Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Capital Securities Guarantee that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers Certificate.
SECTION 2.6
Events of Default; Waiver
The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on behalf
of the Holders of all of the Capital Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose of this Capital
Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event
of Default or impair any right consequent thereon.
SECTION 2.7
Event of Default; Notice
(a) The Capital Guarantee Trustee shall, within 90 days after the occurrence of an Event of
Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of
Default actually known to a Responsible Officer of the Capital Guarantee Trustee, unless such
defaults have been cured before the giving of such notice;
provided
, that the Capital Guarantee
Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of
the Capital Guarantee Trustee in good faith determines that the withholding of such notice is in
the interests of the Holders.
(b) The Capital Guarantee Trustee shall not be deemed to have knowledge of any Event of
Default unless either the Capital Guarantee Trustee shall have received written notice, or a
Responsible Officer of the Capital Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge.
SECTION 2.8
Conflicting Interests
5
The Declaration shall be deemed to be specifically described in this Capital Securities
Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL GUARANTEE TRUSTEE
SECTION 3.1
Powers and Duties of the Capital Guarantee Trustee
(a) This Capital Securities Guarantee shall be held by the Capital Guarantee Trustee for the
benefit of the Holders, and the Capital Guarantee Trustee shall not transfer its right, title and
interest in this Capital Securities Guarantee to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(b) or to a Successor Capital Guarantee Trustee on acceptance by such
Successor Capital Guarantee Trustee of its appointment to act as Successor Capital Guarantee
Trustee. The right, title and interest of the Capital Guarantee Trustee shall automatically vest
in any Successor Capital Guarantee Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the Capital Guarantee
Trustee has occurred and is continuing, the Capital Guarantee Trustee shall enforce this Capital
Securities Guarantee for the benefit of the Holders of the Capital Securities.
(c) The Capital Guarantee Trustee, before the occurrence of any Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to perform only such duties
as are specifically set forth in this Capital Securities Guarantee, and no implied covenants shall
be read into this Capital Securities Guarantee against the Capital Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Capital Guarantee Trustee, the Capital Guarantee
Trustee shall exercise such of the rights and powers vested in it by this Capital Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be construed to relieve the
Capital Guarantee Trustee from liability for its own negligent action, its own negligent failure to
act or its own willful misconduct, except that:
(i) Prior to the occurrence of any Event of Default and after the curing or
waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Capital Guarantee Trustee
shall be determined solely by the express provisions of this Capital
Securities Guarantee, and the Capital Guarantee Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Capital Securities
6
Guarantee, and no implied covenants or obligations shall be
read into this Capital Securities Guarantee against the Capital
Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Capital
Guarantee Trustee, the Capital Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Capital Guarantee Trustee and conforming to the
requirements of this Capital Securities Guarantee; but in the case
of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Capital Guarantee
Trustee, the Capital Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Capital Securities Guarantee;
(ii) the Capital Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Capital Guarantee
Trustee, unless it shall be proved that the Capital Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Capital Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of the
Capital Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Capital Guarantee Trustee, or exercising
any trust or power conferred upon the Capital Guarantee Trustee under this Capital
Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee shall require the
Capital Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Capital Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Capital Securities Guarantee or
indemnity, reasonably satisfactory to the Capital Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2
Certain Rights of Capital Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Guarantee Trustee may conclusively rely, and shall be fully
protected in acting or refraining from acting upon, any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document
7
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this Capital
Securities Guarantee shall be sufficiently evidenced by an Officers Certificate.
(iii) Whenever, in the administration of this Capital Securities Guarantee, the
Capital Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the Capital
Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in
the absence of bad faith on its part, request and conclusively rely upon an
Officers Certificate which, upon receipt of such request, shall be promptly
delivered by the Guarantor.
(iv) The Capital Guarantee Trustee shall have no duty to see to any recording,
filing or registration of any instrument (or any rerecording, refiling or
registration thereof).
(v) The Capital Guarantee Trustee may consult with counsel, and the written
advice or opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Capital Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this Capital
Securities Guarantee from any court of competent jurisdiction.
(vi) The Capital Guarantee Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Capital Securities Guarantee at the
request or direction of any Holder, unless such Holder shall have provided to the
Capital Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Capital Guarantee Trustee, against the costs, expenses (including attorneys
fees and expenses and the expenses of the Capital Guarantee Trustees agents,
nominees or custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as may be
requested by the Capital Guarantee Trustee;
provided
that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Capital Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Capital Securities Guarantee.
(vii) The Capital Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document,
but the Capital Guarantee Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit.
8
(viii) The Capital Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the Capital Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Capital Guarantee Trustee or its agents hereunder
shall bind the Holders of the Capital Securities, and the signature of the Capital
Guarantee Trustee or its agents alone shall be sufficient and effective to perform
any such action. No third party shall be required to inquire as to the authority of
the Capital Guarantee Trustee to so act or as to its compliance with any of the
terms and provisions of this Capital Securities Guarantee, both of which shall be
conclusively evidenced by the Capital Guarantee Trustees or its agents taking such
action.
(x) Whenever in the administration of this Capital Securities Guarantee the
Capital Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder, the
Capital Guarantee Trustee (i) may request instructions from the Holders of a
Majority in liquidation amount of the Capital Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such instructions
are received, and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Capital Securities Guarantee shall be deemed to impose any duty or
obligation on the Capital Guarantee Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Capital Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the Capital Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3
Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the statements of the Guarantor,
and the Capital Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Guarantee Trustee makes no representation as to the validity or sufficiency of this Capital
Securities Guarantee.
ARTICLE IV
CAPITAL GUARANTEE TRUSTEE
SECTION 4.1
Capital Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
9
(ii) be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or of the District of Columbia,
or a corporation or Person permitted by the Securities and Exchange Commission to
act as an institutional trustee under the Trust Indenture Act, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the supervising or examining authority referred to above,
then, for the purposes of this Section 4.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
(b) If at any time the Capital Guarantee Trustee shall cease to be eligible to so act under
Section 4.1(a), the Capital Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Capital Guarantee Trustee has or shall acquire any conflicting interest within
the meaning of Section 310(b) of the Trust Indenture Act, the Capital Guarantee Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2
Appointment, Removal and Resignation of Capital Guarantee
Trustees
(a) Subject to Section 4.2(b), the Capital Guarantee Trustee may be appointed or removed
without cause at any time by the Guarantor except if an Event of Default shall have occurred and be
continuing.
(b) The Capital Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until
a Successor Capital Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Guarantee Trustee and delivered to the
Guarantor.
(c) The Capital Guarantee Trustee appointed to office shall hold office until a Successor
Capital Guarantee Trustee shall have been appointed or until its removal or resignation. The
Capital Guarantee Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing executed by the Capital Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Capital Guarantee Trustee has
been appointed and has accepted such appointment by instrument in writing executed by such
Successor Capital Guarantee Trustee and delivered to the Guarantor and the resigning Capital
Guarantee Trustee.
(d) If no Successor Capital Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantor of an
instrument of resignation, the resigning Capital Guarantee Trustee may petition any court of
competent jurisdiction for appointment of a Successor Capital Guarantee Trustee.
10
Such court may thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a Successor Capital Guarantee Trustee.
(e) No Capital Guarantee Trustee shall be liable for the acts or omissions to act of any
Successor Capital Guarantee Trustee.
(f) Upon termination of this Capital Securities Guarantee or removal or resignation of the
Capital Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Capital
Guarantee Trustee all amounts accrued and owing to such Capital Guarantee Trustee to the date of
such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1
Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the
Guarantee Payments, as and when due, regardless of any defense, right of set-off or counterclaim
that the Issuer may have or assert. The Guarantors obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2
Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Capital Securities Guarantee and of
any liability to which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3
Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor under this Capital
Securities Guarantee shall in no way be affected or impaired by reason of the happening from time
to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the performance or observance
by the Issuer of any express or implied agreement, covenant, term or condition relating to the
Capital Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any portion of the
Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms
of the Capital Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce,
assert or exercise any right, privilege, power or remedy conferred on the Holders
11
pursuant to the terms of the Capital Securities, or any action on the part of the Issuer
granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any collateral,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations
of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent of, the
Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4
Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Capital Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy available to the
Capital Guarantee Trustee in respect of this Capital Securities Guarantee or exercising any trust
or power conferred upon the Capital Guarantee Trustee under this Capital Securities Guarantee.
(b) If the Capital Guarantee Trustee fails to enforce its rights under this Capital Securities
Guarantee, any Holder may directly institute a legal proceeding against the Guarantor to enforce
the Capital Guarantee Trustees rights under this Capital Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Capital Guarantee Trustee or any other
Person or entity.
(c) A Holder of Capital Securities may also directly institute a legal proceeding against the
Guarantor to enforce such Holders right to receive payment under this Capital Securities Guarantee
without first (i) directing the Capital Guarantee Trustee to enforce the terms of this Capital
Securities Guarantee or (ii) instituting a legal proceeding directly against the Issuer or any
other Person or entity.
SECTION 5.5
Guarantee of Payment
This Capital Securities Guarantee creates a guarantee of payment and not of collection.
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SECTION 5.6
Subrogation
The Guarantor shall be subrogated to all (if any) rights of the Holders of Capital Securities
against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this
Capital Securities Guarantee;
provided
, however, that the Guarantor shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a
result of payment under this Capital Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Capital Securities Guarantee. If any amount shall be paid to
the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7
Independent Obligations
The Guarantor acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Capital Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1
Limitation of Transactions
So long as any Capital Securities remain outstanding, if there shall have occurred any event
that would constitute an Event of Default or a Default under the Declaration, then (a) the
Guarantor shall not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock
or make any guarantee payment with respect thereto (other than (i) repurchases, redemptions or
other acquisitions of shares of capital stock of the Guarantor in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) repurchases of common stock of the Guarantor pursuant to a
contractually binding requirement to buy stock existing prior to the Event of Default or Default,
(iii) as a result of an exchange or conversion of any class or series of the Guarantors capital
stock for any other class or series of the Guarantors capital stock, (iv) the purchase of
fractional interests in shares of the Guarantors capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or exchanged) or (v)
purchase of the Guarantors capital stock in connection with the distribution thereof and (b) the
Guarantor shall not make any payment of interest on, or principal of (or premium, if any, on), or
repay, repurchase or redeem, any debt securities or guarantees issued by the Guarantor that rank
pari passu with or junior to the Debentures;
provided
, however, the Guarantor may declare and pay a
stock dividend where the dividend stock is the same stock as that on which the dividend is being
paid.
SECTION 6.2
Subordination
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The obligations of the Guarantor under this Capital Securities Guarantee will constitute
unsecured obligations of the Guarantor and will rank subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) of the Guarantor to the extent and in the
manner set forth in the Indenture with respect to the Debentures, and the provisions of Article
Fourteen of the Indenture will apply,
mutatis mutandis
, to the obligations of the Guarantor
hereunder. The obligations of the Guarantor hereunder do not constitute Senior Indebtedness (as
defined in the Indenture) of the Guarantor.
SECTION 6.3
Pari Passu Guarantees
The obligations of the Guarantor under this Capital Securities Guarantee shall rank pari passu
with the obligations of the Guarantor under (i) any similar guarantee agreements issued by the
Guarantor on behalf of the holders of preferred or capital securities issued by any Citigroup Trust
(as defined in the Indenture), (ii) the Indenture and the Securities (as defined therein) issued
thereunder, (iii) any expense agreements entered into by the Guarantor in connection with the
offering of preferred or capital securities by any Citigroup Trust (as defined in the Indenture),
and (iv) any other security, guarantee or other agreement or obligation that is by its terms pari
passu with the Securities (as defined in the Indenture) and, in the case of this clause (iv) only,
(x) is issued with the concurrence or approval of the staff of the Federal Reserve Bank of New York
or the staff of the Board of Governors of the Federal Reserve System or (y) does not at the time of
issuance prevent the Securities from qualifying for tier 1 capital treatment (irrespective of any
limits on the amount of the Companys tier 1 capital) under the applicable capital adequacy
guidelines, regulations, policies or published interpretations of the Board of Governors of the
Federal Reserve System.
ARTICLE VII
TERMINATION
SECTION 7.1
Termination
This Capital Securities Guarantee shall terminate upon (i) full payment of the Redemption
Price of all Capital Securities, (ii) the distribution of the Debentures to the Holders of all of
the Capital Securities or (iii) full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this Capital Securities
Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time
any Holder must restore payment of any sums paid under the Capital Securities or under this Capital
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1
Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in accordance with this
Capital Securities Guarantee and in a manner that such
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Indemnified Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Capital Securities Guarantee or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified
Persons negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Guarantor and upon such information, opinions, reports or statements presented to the
Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such
other Persons professional or expert competence and who has been selected with reasonable care by
or on behalf of the Guarantor, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.2
Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified
Person harmless against, any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses)
of defending itself against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as
set forth in this Section 8.2 shall survive the termination of this Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1
Successors and Assigns
All guarantees and agreements contained in this Capital Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to
the benefit of the Holders of the Capital Securities then outstanding.
SECTION 9.2
Amendments
Except with respect to any changes that do not adversely affect the rights of Holders (in
which case no consent of Holders will be required), this Capital Securities Guarantee may be
amended only with the prior approval of the Holders of not less than a Majority in aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all the outstanding Capital Securities. The provisions of Section 12.2 of the
Declaration with respect to meetings of Holders apply to the giving of such approval.
SECTION 9.3
Notices
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All notices provided for in this Capital Securities Guarantee shall be in writing, duly signed
by the party giving such notice, and shall be delivered, telecopied or mailed by registered or
certified mail, as follows:
(a) If given to the Capital Guarantee Trustee, at the Capital Guarantee Trustees mailing
address set forth below (or such other address as the Capital Guarantee Trustee may give notice of
to the Holders):
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(b) If given to the Guarantor, at the Guarantors mailing address set forth below (or such
other address as the Guarantor may give notice of to the Holders):
Citigroup Inc.,
153 East 53rd Street
New York, NY 10043
Attention: Charles E. Wainhouse, Assistant Treasurer
(c) If given to any Holder, at the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 9.4
Benefit
This Capital Securities Guarantee is solely for the benefit of the Holders of the Capital
Securities and, subject to Section 3.1(a), is not separately transferable from the Capital
Securities.
SECTION 9.5
Governing Law
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED
BY SUCH LAWS WITHOUT REGARD FOR THE PRINCIPLES OF ITS CONFLICTS OF LAWS.
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THIS CAPITAL SECURITIES GUARANTEE is executed as of the day and year first above written.
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CITIGROUP INC.,
as Guarantor
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By:
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Name:
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Title:
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THE BANK OF NEW YORK,
as Capital Guarantee Trustee
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By:
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Name:
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Title:
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Exhibit 4.15
CAPITAL SECURITIES GUARANTEE AGREEMENT
Citigroup Capital XX
Dated as of , 20
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND INTERPRETATION
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SECTION 1.1 Definitions and Interpretation
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1
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ARTICLE II TRUST INDENTURE ACT
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SECTION 2.1 Trust Indenture Act; Application
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4
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SECTION 2.2 Lists of Holders of Securities
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4
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SECTION 2.3 Reports by the Capital Guarantee Trustee
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4
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SECTION 2.4 Periodic Reports to Capital Guarantee Trustee
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5
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SECTION 2.5 Evidence of Compliance with Conditions Precedent
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5
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SECTION 2.6 Events of Default; Waiver
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5
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SECTION 2.7 Event of Default; Notice
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5
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SECTION 2.8 Conflicting Interests
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5
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ARTICLE III POWERS, DUTIES AND RIGHTS OF CAPITAL GUARANTEE TRUSTEE
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SECTION 3.1 Powers and Duties of the Capital Guarantee Trustee
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6
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SECTION 3.2 Certain Rights of Capital Guarantee Trustee
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7
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SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
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9
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ARTICLE IV CAPITAL GUARANTEE TRUSTEE
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SECTION 4.1 Capital Guarantee Trustee; Eligibility
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9
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SECTION 4.2 Appointment, Removal and Resignation of Capital Guarantee Trustees
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10
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ARTICLE V GUARANTEE
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SECTION 5.1 Guarantee
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11
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SECTION 5.2 Waiver of Notice and Demand
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11
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SECTION 5.3 Obligations Not Affected
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11
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SECTION 5.4 Rights of Holders
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12
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SECTION 5.5 Guarantee of Payment
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12
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SECTION 5.6 Subrogation
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SECTION 5.7 Independent Obligations
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13
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ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION
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SECTION 6.1 Limitation of Transactions
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Page
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SECTION 6.2 Subordination
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13
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SECTION 6.3 Pari Passu Guarantees
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ARTICLE VII TERMINATION
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SECTION 7.1 Termination
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ARTICLE VIII INDEMNIFICATION
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SECTION 8.1 Exculpation
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SECTION 8.2 Indemnification
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ARTICLE IX MISCELLANEOUS
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SECTION 9.1 Successors and Assigns
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15
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SECTION 9.2 Amendments
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SECTION 9.3 Notices
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SECTION 9.4 Benefit
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SECTION 9.5 Governing Law
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ii
CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the Capital Securities Guarantee), dated as of , 20 , is executed and delivered by Citigroup Inc., a Delaware corporation (the Guarantor), and
The Bank of New York, as trustee (the Capital Guarantee Trustee), for the benefit of the Holders
(as defined herein) from time to time of the Capital Securities (as defined herein) of Citigroup
Capital XX, a Delaware statutory trust (the Issuer).
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the Declaration), dated
as of , 20 , among the trustees of the Issuer named therein, the Guarantor, as
sponsor, and the holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof capital securities, having an
aggregate liquidation amount of $ and may issue up to an additional
capital securities, having an aggregate liquidation amount of $ in
connection with an over-allotment option, collectively designated the % Capital Securities
(the Capital Securities);
WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in this Capital
Securities Guarantee, to pay to the Holders the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of Capital Securities, which
purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Capital Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1
Definitions and Interpretation
In this Capital Securities Guarantee, unless the context otherwise requires:
(a) Capitalized terms used in this Capital Securities Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Capital Securities Guarantee has the same meaning
throughout;
(c) all references to the Capital Securities Guarantee or this Capital Securities
Guarantee are to this Capital Securities Guarantee as modified, supplemented or amended from time
to time;
(d) all references in this Capital Securities Guarantee to Articles and Sections are to
Articles and Sections of this Capital Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in this Capital
Securities Guarantee, unless otherwise defined in this Capital Securities Guarantee or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
Authorized Officer
of a Person means any Person that is authorized to bind such
Person.
Affiliate
has the same meaning as given to that term in Rule 405 of the Securities
Act of 1933, as amended, or any successor rule thereunder.
Business Day
means any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York, New York are permitted or required by any applicable law to
close.
Capital Guarantee Trustee
means The Bank of New York, until a Successor Capital
Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of
this Capital Securities Guarantee, and thereafter means each such Successor Capital Guarantee
Trustee.
Common Securities
means the securities representing common undivided beneficial
interests in the assets of the Issuer.
Corporate Trust Office
means the office of the Capital Guarantee Trustee at which
the corporate trust business of the Capital Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this Agreement is located at 101
Barclay Street-8W, New York, New York 10286.
Covered Person
means any Holder or beneficial owner of Capital Securities.
Debentures
means the series of junior subordinated debt securities of the Guarantor
designated the % Junior Subordinated Deferrable Interest Debentures due , 20
held by the Institutional Trustee (as defined in the Declaration) of the Issuer.
Event of Default
means a default by the Guarantor on any of its payment or other
obligations under this Capital Securities Guarantee.
Guarantee Payments
means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or made by the Issuer:
(i) any accrued and unpaid Distributions (as defined in Annex I to the Declaration) that are
required to be paid on the Capital Securities, to the extent the Issuer has funds available
therefor, (ii) the redemption price of $ per Capital Security, plus all accrued and unpaid
Distributions to the date of redemption (the Redemption Price), to the extent that the Issuer has
funds available therefor, with respect to any Capital Securities called for redemption by the
Issuer and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Debentures to the Holders in exchange for
Capital Securities as provided in the Declaration or the redemption of all of the Capital
Securities upon the maturity
2
or redemption of all of the Debentures as provided in the Declaration) the lesser of (a) the
aggregate of the liquidation amount of $ per Capital Security and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, or (b) the amount of assets of the
Issuer remaining for distribution to Holders in liquidation of the Issuer (in either case, the
Liquidation Distribution).
Holder
shall mean any holder, as registered on the books and records of the Issuer,
of any Capital Securities;
provided
, however, that, in determining whether the holders of the
requisite percentage of Capital Securities have given any request, notice, consent or waiver
hereunder, Holder shall not include the Guarantor or any Affiliate of the Guarantor.
Indemnified Person
means the Capital Guarantee Trustee, any Affiliate of the Capital
Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Guarantee Trustee.
Indenture
means the Indenture, dated as of , 20 (as supplemented
from time to time), between the Debenture Issuer and the Debenture Trustee, pursuant to which the
Debentures are to be issued.
Majority in liquidation amount of the Securities
means, except as provided by the
Trust Indenture Act, a vote by Holder(s), voting separately as a class, holding Capital Securities
representing more than 50% of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the
date upon which the voting percentages are determined) of all Capital Securities.
Officers Certificate
means, with respect to any Person, a certificate signed by two
Authorized Officers of such Person. Any Officers Certificate delivered with respect to compliance
with a condition or covenant provided for in this Capital Securities Guarantee shall include:
(a) a statement that each officer signing the Officers Certificate has read the covenant or
condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken
by each officer in rendering the Officers Certificate;
(c) a statement that each such officer has made such examination or investigation as, in such
officers opinion, is necessary to enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant
has been complied with.
Person
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or political subdivision thereof, or any
other entity of whatever nature.
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Responsible Officer
means, with respect to the Capital Guarantee Trustee, any
officer within the Corporate Trust Office of the Capital Guarantee Trustee with direct
responsibility for the administration of this Capital Securities Guarantee and also means, with
respect to a particular corporate trust matter, any other officer to whom such matter is referred
because of that officers knowledge of and familiarity with the particular subject.
Successor Capital Guarantee Trustee
means a successor Capital Guarantee Trustee
possessing the qualifications to act as Capital Guarantee Trustee under Section 4.1.
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended.
Underwriting Agreement
has the meaning set forth in the Indenture.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1
Trust Indenture Act; Application
(a) This Capital Securities Guarantee is subject to the provisions of the Trust Indenture Act
that are required to be part of this Capital Securities Guarantee and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Capital Securities Guarantee limits,
qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control.
SECTION 2.2
Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Guarantee Trustee with a list, in such form as the
Capital Guarantee Trustee may reasonably require, of the names and addresses of the Holders (List
of Holders) as of such date, (i) within one Business Day after January 1 and June 30 of each year,
and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a
List of Holders as of a date no more than 14 days before such List of Holders is given to the
Capital Guarantee Trustee;
provided
, that the Guarantor shall not be obligated to provide such List
of Holders at any time the List of Holders does not differ from the most recent List of Holders
given to the Capital Guarantee Trustee by the Guarantor. The Capital Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Capital Guarantee Trustee shall comply with its obligations under Sections 311(a),
311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3
Reports by the Capital Guarantee Trustee
Within 60 days after May 15 of each year, the Capital Guarantee Trustee shall provide to the
Holders such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The
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Capital Guarantee Trustee shall also comply with the requirements of Section 313(d) of the
Trust Indenture Act.
SECTION 2.4
Periodic Reports to Capital Guarantee Trustee
The Guarantor shall provide to the Capital Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate required by Section
314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314
of the Trust Indenture Act.
SECTION 2.5
Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Guarantee Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Capital Securities Guarantee that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers Certificate.
SECTION 2.6
Events of Default; Waiver
The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on behalf
of the Holders of all of the Capital Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose of this Capital
Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event
of Default or impair any right consequent thereon.
SECTION 2.7
Event of Default; Notice
(a) The Capital Guarantee Trustee shall, within 90 days after the occurrence of an Event of
Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of
Default actually known to a Responsible Officer of the Capital Guarantee Trustee, unless such
defaults have been cured before the giving of such notice;
provided
, that the Capital Guarantee
Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of
the Capital Guarantee Trustee in good faith determines that the withholding of such notice is in
the interests of the Holders.
(b) The Capital Guarantee Trustee shall not be deemed to have knowledge of any Event of
Default unless either the Capital Guarantee Trustee shall have received written notice, or a
Responsible Officer of the Capital Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge.
SECTION 2.8
Conflicting Interests
The Declaration shall be deemed to be specifically described in this Capital Securities
Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL GUARANTEE TRUSTEE
SECTION 3.1
Powers and Duties of the Capital Guarantee Trustee
(a) This Capital Securities Guarantee shall be held by the Capital Guarantee Trustee for the
benefit of the Holders, and the Capital Guarantee Trustee shall not transfer its right, title and
interest in this Capital Securities Guarantee to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(b) or to a Successor Capital Guarantee Trustee on acceptance by such
Successor Capital Guarantee Trustee of its appointment to act as Successor Capital Guarantee
Trustee. The right, title and interest of the Capital Guarantee Trustee shall automatically vest
in any Successor Capital Guarantee Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the Capital Guarantee
Trustee has occurred and is continuing, the Capital Guarantee Trustee shall enforce this Capital
Securities Guarantee for the benefit of the Holders of the Capital Securities.
(c) The Capital Guarantee Trustee, before the occurrence of any Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to perform only such duties
as are specifically set forth in this Capital Securities Guarantee, and no implied covenants shall
be read into this Capital Securities Guarantee against the Capital Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Capital Guarantee Trustee, the Capital Guarantee
Trustee shall exercise such of the rights and powers vested in it by this Capital Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be construed to relieve the
Capital Guarantee Trustee from liability for its own negligent action, its own negligent failure to
act or its own willful misconduct, except that:
(i) Prior to the occurrence of any Event of Default and after the curing or
waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Capital Guarantee Trustee
shall be determined solely by the express provisions of this Capital
Securities Guarantee, and the Capital Guarantee Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Capital Securities Guarantee, and
no implied covenants or obligations shall be read into this Capital
Securities Guarantee against the Capital Guarantee Trustee; and
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(B) in the absence of bad faith on the part of the Capital
Guarantee Trustee, the Capital Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Capital Guarantee Trustee and conforming to the
requirements of this Capital Securities Guarantee; but in the case
of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Capital Guarantee
Trustee, the Capital Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Capital Securities Guarantee;
(ii) the Capital Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Capital Guarantee
Trustee, unless it shall be proved that the Capital Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Capital Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of the
Capital Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Capital Guarantee Trustee, or exercising
any trust or power conferred upon the Capital Guarantee Trustee under this Capital
Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee shall require the
Capital Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Capital Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Capital Securities Guarantee or
indemnity, reasonably satisfactory to the Capital Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2
Certain Rights of Capital Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Guarantee Trustee may conclusively rely, and shall be fully
protected in acting or refraining from acting upon, any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
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(ii) Any direction or act of the Guarantor contemplated by this Capital
Securities Guarantee shall be sufficiently evidenced by an Officers Certificate.
(iii) Whenever, in the administration of this Capital Securities Guarantee, the
Capital Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the Capital
Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in
the absence of bad faith on its part, request and conclusively rely upon an
Officers Certificate which, upon receipt of such request, shall be promptly
delivered by the Guarantor.
(iv) The Capital Guarantee Trustee shall have no duty to see to any recording,
filing or registration of any instrument (or any rerecording, refiling or
registration thereof).
(v) The Capital Guarantee Trustee may consult with counsel, and the written
advice or opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Capital Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this Capital
Securities Guarantee from any court of competent jurisdiction.
(vi) The Capital Guarantee Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Capital Securities Guarantee at the
request or direction of any Holder, unless such Holder shall have provided to the
Capital Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Capital Guarantee Trustee, against the costs, expenses (including attorneys
fees and expenses and the expenses of the Capital Guarantee Trustees agents,
nominees or custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as may be
requested by the Capital Guarantee Trustee;
provided
that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Capital Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Capital Securities Guarantee.
(vii) The Capital Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document,
but the Capital Guarantee Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit.
(viii) The Capital Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
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agents, nominees, custodians or attorneys, and the Capital Guarantee Trustee
shall not be responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Capital Guarantee Trustee or its agents hereunder
shall bind the Holders of the Capital Securities, and the signature of the Capital
Guarantee Trustee or its agents alone shall be sufficient and effective to perform
any such action. No third party shall be required to inquire as to the authority of
the Capital Guarantee Trustee to so act or as to its compliance with any of the
terms and provisions of this Capital Securities Guarantee, both of which shall be
conclusively evidenced by the Capital Guarantee Trustees or its agents taking such
action.
(x) Whenever in the administration of this Capital Securities Guarantee the
Capital Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder, the
Capital Guarantee Trustee (i) may request instructions from the Holders of a
Majority in liquidation amount of the Capital Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such instructions
are received, and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Capital Securities Guarantee shall be deemed to impose any duty or
obligation on the Capital Guarantee Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Capital Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the Capital Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3
Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the statements of the Guarantor,
and the Capital Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Guarantee Trustee makes no representation as to the validity or sufficiency of this Capital
Securities Guarantee.
ARTICLE IV
CAPITAL GUARANTEE TRUSTEE
SECTION 4.1
Capital Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or of the District of
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Columbia, or a corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject
to supervision or examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
(b) If at any time the Capital Guarantee Trustee shall cease to be eligible to so act under
Section 4.1(a), the Capital Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Capital Guarantee Trustee has or shall acquire any conflicting interest within
the meaning of Section 310(b) of the Trust Indenture Act, the Capital Guarantee Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2
Appointment, Removal and Resignation of Capital Guarantee Trustees
(a) Subject to Section 4.2(b), the Capital Guarantee Trustee may be appointed or removed
without cause at any time by the Guarantor except if an Event of Default shall have occurred and be
continuing.
(b) The Capital Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until
a Successor Capital Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Guarantee Trustee and delivered to the
Guarantor.
(c) The Capital Guarantee Trustee appointed to office shall hold office until a Successor
Capital Guarantee Trustee shall have been appointed or until its removal or resignation. The
Capital Guarantee Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing executed by the Capital Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Capital Guarantee Trustee has
been appointed and has accepted such appointment by instrument in writing executed by such
Successor Capital Guarantee Trustee and delivered to the Guarantor and the resigning Capital
Guarantee Trustee.
(d) If no Successor Capital Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantor of an
instrument of resignation, the resigning Capital Guarantee Trustee may petition any court of
competent jurisdiction for appointment of a Successor Capital Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor
Capital Guarantee Trustee.
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(e) No Capital Guarantee Trustee shall be liable for the acts or omissions to act of any
Successor Capital Guarantee Trustee.
(f) Upon termination of this Capital Securities Guarantee or removal or resignation of the
Capital Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Capital
Guarantee Trustee all amounts accrued and owing to such Capital Guarantee Trustee to the date of
such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1
Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the
Guarantee Payments, as and when due, regardless of any defense, right of set-off or counterclaim
that the Issuer may have or assert. The Guarantors obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2
Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Capital Securities Guarantee and of
any liability to which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3
Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor under this Capital
Securities Guarantee shall in no way be affected or impaired by reason of the happening from time
to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the performance or observance
by the Issuer of any express or implied agreement, covenant, term or condition relating to the
Capital Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any portion of the
Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms
of the Capital Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce,
assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the
terms of the Capital Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of any collateral,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations
of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent of, the
Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4
Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Capital Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy available to the
Capital Guarantee Trustee in respect of this Capital Securities Guarantee or exercising any trust
or power conferred upon the Capital Guarantee Trustee under this Capital Securities Guarantee.
(b) If the Capital Guarantee Trustee fails to enforce its rights under this Capital Securities
Guarantee, any Holder may directly institute a legal proceeding against the Guarantor to enforce
the Capital Guarantee Trustees rights under this Capital Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Capital Guarantee Trustee or any other
Person or entity.
(c) A Holder of Capital Securities may also directly institute a legal proceeding against the
Guarantor to enforce such Holders right to receive payment under this Capital Securities Guarantee
without first (i) directing the Capital Guarantee Trustee to enforce the terms of this Capital
Securities Guarantee or (ii) instituting a legal proceeding directly against the Issuer or any
other Person or entity.
SECTION 5.5
Guarantee of Payment
This Capital Securities Guarantee creates a guarantee of payment and not of collection.
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SECTION 5.6
Subrogation
The Guarantor shall be subrogated to all (if any) rights of the Holders of Capital Securities
against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this
Capital Securities Guarantee;
provided
, however, that the Guarantor shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a
result of payment under this Capital Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Capital Securities Guarantee. If any amount shall be paid to
the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7
Independent Obligations
The Guarantor acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Capital Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1
Limitation of Transactions
So long as any Capital Securities remain outstanding, if there shall have occurred any event
that would constitute an Event of Default or a Default under the Declaration, then (a) the
Guarantor shall not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock
or make any guarantee payment with respect thereto (other than (i) repurchases, redemptions or
other acquisitions of shares of capital stock of the Guarantor in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) repurchases of common stock of the Guarantor pursuant to a
contractually binding requirement to buy stock existing prior to the Event of Default or Default,
(iii) as a result of an exchange or conversion of any class or series of the Guarantors capital
stock for any other class or series of the Guarantors capital stock, (iv) the purchase of
fractional interests in shares of the Guarantors capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or exchanged) or (v)
purchase of the Guarantors capital stock in connection with the distribution thereof and (b) the
Guarantor shall not make any payment of interest on, or principal of (or premium, if any, on), or
repay, repurchase or redeem, any debt securities or guarantees issued by the Guarantor that rank
pari passu with or junior to the Debentures;
provided
, however, the Guarantor may declare and pay a
stock dividend where the dividend stock is the same stock as that on which the dividend is being
paid.
SECTION 6.2
Subordination
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The obligations of the Guarantor under this Capital Securities Guarantee will constitute
unsecured obligations of the Guarantor and will rank subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) of the Guarantor to the extent and in the
manner set forth in the Indenture with respect to the Debentures, and the provisions of Article
Fourteen of the Indenture will apply,
mutatis mutandis
, to the obligations of the Guarantor
hereunder. The obligations of the Guarantor hereunder do not constitute Senior Indebtedness (as
defined in the Indenture) of the Guarantor.
SECTION 6.3
Pari Passu Guarantees
The obligations of the Guarantor under this Capital Securities Guarantee shall rank pari passu
with the obligations of the Guarantor under (i) any similar guarantee agreements issued by the
Guarantor on behalf of the holders of preferred or capital securities issued by any Citigroup Trust
(as defined in the Indenture), (ii) the Indenture and the Securities (as defined therein) issued
thereunder, (iii) any expense agreements entered into by the Guarantor in connection with the
offering of preferred or capital securities by any Citigroup Trust (as defined in the Indenture),
and (iv) any other security, guarantee or other agreement or obligation that is by its terms pari
passu with the Securities (as defined in the Indenture) and, in the case of this clause (iv) only,
(x) is issued with the concurrence or approval of the staff of the Federal Reserve Bank of New York
or the staff of the Board of Governors of the Federal Reserve System or (y) does not at the time of
issuance prevent the Securities from qualifying for tier 1 capital treatment (irrespective of any
limits on the amount of the Companys tier 1 capital) under the applicable capital adequacy
guidelines, regulations, policies or published interpretations of the Board of Governors of the
Federal Reserve System.
ARTICLE VII
TERMINATION
SECTION 7.1
Termination
This Capital Securities Guarantee shall terminate upon (i) full payment of the Redemption
Price of all Capital Securities, (ii) the distribution of the Debentures to the Holders of all of
the Capital Securities or (iii) full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this Capital Securities
Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time
any Holder must restore payment of any sums paid under the Capital Securities or under this Capital
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1
Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in accordance with this
Capital Securities Guarantee and in a manner that such
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Indemnified Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Capital Securities Guarantee or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified
Persons negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Guarantor and upon such information, opinions, reports or statements presented to the
Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such
other Persons professional or expert competence and who has been selected with reasonable care by
or on behalf of the Guarantor, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.2
Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified
Person harmless against, any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses)
of defending itself against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as
set forth in this Section 8.2 shall survive the termination of this Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1
Successors and Assigns
All guarantees and agreements contained in this Capital Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to
the benefit of the Holders of the Capital Securities then outstanding.
SECTION 9.2
Amendments
Except with respect to any changes that do not adversely affect the rights of Holders (in
which case no consent of Holders will be required), this Capital Securities Guarantee may be
amended only with the prior approval of the Holders of not less than a Majority in aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all the outstanding Capital Securities. The provisions of Section 12.2 of the
Declaration with respect to meetings of Holders apply to the giving of such approval.
SECTION 9.3
Notices
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All notices provided for in this Capital Securities Guarantee shall be in writing, duly signed
by the party giving such notice, and shall be delivered, telecopied or mailed by registered or
certified mail, as follows:
(a) If given to the Capital Guarantee Trustee, at the Capital Guarantee Trustees mailing
address set forth below (or such other address as the Capital Guarantee Trustee may give notice of
to the Holders):
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(b) If given to the Guarantor, at the Guarantors mailing address set forth below (or such
other address as the Guarantor may give notice of to the Holders):
Citigroup Inc.,
153 East 53rd Street
New York, NY 10043
Attention: Charles E. Wainhouse, Assistant Treasurer
(c) If given to any Holder, at the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 9.4
Benefit
This Capital Securities Guarantee is solely for the benefit of the Holders of the Capital
Securities and, subject to Section 3.1(a), is not separately transferable from the Capital
Securities.
SECTION 9.5
Governing Law
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED
BY SUCH LAWS WITHOUT REGARD FOR THE PRINCIPLES OF ITS CONFLICTS OF LAWS.
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THIS CAPITAL SECURITIES GUARANTEE is executed as of the day and year first above written.
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CITIGROUP INC.,
as Guarantor
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By:
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Name:
Title:
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THE BANK OF NEW YORK,
as Capital Guarantee Trustee
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By:
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Name:
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Title:
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17
Exhibit 4.16
CAPITAL SECURITIES GUARANTEE AGREEMENT
Citigroup Capital XXI
Dated as of , 20
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND INTERPRETATION
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SECTION 1.1 Definitions and Interpretation
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1
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ARTICLE II TRUST INDENTURE ACT
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SECTION 2.1 Trust Indenture Act; Application
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4
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SECTION 2.2 Lists of Holders of Securities
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4
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SECTION 2.3 Reports by the Capital Guarantee Trustee
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4
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SECTION 2.4 Periodic Reports to Capital Guarantee Trustee
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5
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SECTION 2.5 Evidence of Compliance with Conditions Precedent
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5
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SECTION 2.6 Events of Default; Waiver
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5
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SECTION 2.7 Event of Default; Notice
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5
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SECTION 2.8 Conflicting Interests
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5
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ARTICLE III POWERS, DUTIES AND RIGHTS OF CAPITAL GUARANTEE TRUSTEE
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SECTION 3.1 Powers and Duties of the Capital Guarantee Trustee
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6
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SECTION 3.2 Certain Rights of Capital Guarantee Trustee
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7
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SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
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9
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ARTICLE IV CAPITAL GUARANTEE TRUSTEE
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SECTION 4.1 Capital Guarantee Trustee; Eligibility
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9
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SECTION 4.2 Appointment, Removal and Resignation of Capital Guarantee Trustees
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10
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ARTICLE V GUARANTEE
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SECTION 5.1 Guarantee
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11
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SECTION 5.2 Waiver of Notice and Demand
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11
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SECTION 5.3 Obligations Not Affected
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11
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SECTION 5.4 Rights of Holders
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12
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SECTION 5.5 Guarantee of Payment
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12
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SECTION 5.6 Subrogation
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13
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SECTION 5.7 Independent Obligations
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13
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ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION
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SECTION 6.1 Limitation of Transactions
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13
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Page
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SECTION 6.2 Subordination
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13
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SECTION 6.3 Pari Passu Guarantees
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14
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ARTICLE VII TERMINATION
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SECTION 7.1 Termination
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14
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ARTICLE VIII INDEMNIFICATION
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SECTION 8.1 Exculpation
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14
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SECTION 8.2 Indemnification
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15
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ARTICLE IX MISCELLANEOUS
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SECTION 9.1 Successors and Assigns
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15
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SECTION 9.2 Amendments
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15
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SECTION 9.3 Notices
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15
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SECTION 9.4 Benefit
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16
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SECTION 9.5 Governing Law
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16
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ii
CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the Capital Securities Guarantee), dated as of
, 20 , is executed and delivered by Citigroup Inc., a Delaware corporation (the Guarantor), and
The Bank of New York, as trustee (the Capital Guarantee Trustee), for the benefit of the Holders
(as defined herein) from time to time of the Capital Securities (as defined herein) of Citigroup
Capital XXI, a Delaware statutory trust (the Issuer).
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the Declaration), dated
as of , 20 , among the trustees of the Issuer named therein, the Guarantor, as
sponsor, and the holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof capital securities, having an
aggregate liquidation amount of $ and may issue up to an additional
capital securities, having an aggregate liquidation amount of $ in
connection with an over-allotment option, collectively designated the % Capital Securities
(the Capital Securities);
WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in this Capital
Securities Guarantee, to pay to the Holders the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of Capital Securities, which
purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Capital Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1
Definitions and Interpretation
In this Capital Securities Guarantee, unless the context otherwise requires:
(a) Capitalized terms used in this Capital Securities Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Capital Securities Guarantee has the same meaning
throughout;
(c) all references to the Capital Securities Guarantee or this Capital Securities
Guarantee are to this Capital Securities Guarantee as modified, supplemented or amended from time
to time;
(d) all references in this Capital Securities Guarantee to Articles and Sections are to
Articles and Sections of this Capital Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in this Capital
Securities Guarantee, unless otherwise defined in this Capital Securities Guarantee or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
Authorized Officer
of a Person means any Person that is authorized to bind such
Person.
Affiliate
has the same meaning as given to that term in Rule 405 of the Securities
Act of 1933, as amended, or any successor rule thereunder.
Business Day
means any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York, New York are permitted or required by any applicable law to
close.
Capital Guarantee Trustee
means The Bank of New York, until a Successor Capital
Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of
this Capital Securities Guarantee, and thereafter means each such Successor Capital Guarantee
Trustee.
Common Securities
means the securities representing common undivided beneficial
interests in the assets of the Issuer.
Corporate Trust Office
means the office of the Capital Guarantee Trustee at which
the corporate trust business of the Capital Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this Agreement is located at 101
Barclay Street-8W, New York, New York 10286.
Covered Person
means any Holder or beneficial owner of Capital Securities.
Debentures
means the series of junior subordinated debt securities of the Guarantor
designated the % Junior Subordinated Deferrable Interest Debentures due , 20
held by the Institutional Trustee (as defined in the Declaration) of the Issuer.
Event of Default
means a default by the Guarantor on any of its payment or other
obligations under this Capital Securities Guarantee.
Guarantee Payments
means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or made by the Issuer:
(i) any accrued and unpaid Distributions (as defined in Annex I to the Declaration) that are
required to be paid on the Capital Securities, to the extent the Issuer has funds available
therefor, (ii) the redemption price of $ per Capital Security, plus all accrued and unpaid
Distributions to the date of redemption (the Redemption Price), to the extent that the Issuer has
funds available therefor, with respect to any Capital Securities called for redemption by the
Issuer and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Debentures to the Holders in exchange for
Capital Securities as provided in the Declaration or the redemption of all of the Capital
Securities upon the maturity
2
or redemption of all of the Debentures as provided in the Declaration) the lesser of (a) the
aggregate of the liquidation amount of $ per Capital Security and all accrued and unpaid
Distributions on the Capital Securities to the date of payment, or (b) the amount of assets of the
Issuer remaining for distribution to Holders in liquidation of the Issuer (in either case, the
Liquidation Distribution).
Holder
shall mean any holder, as registered on the books and records of the Issuer,
of any Capital Securities;
provided
, however, that, in determining whether the holders of the
requisite percentage of Capital Securities have given any request, notice, consent or waiver
hereunder, Holder shall not include the Guarantor or any Affiliate of the Guarantor.
Indemnified Person
means the Capital Guarantee Trustee, any Affiliate of the Capital
Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Guarantee Trustee.
Indenture
means the Indenture dated as of September 15, 2006, among the Guarantor
and The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, N.A.), as trustee, and
any indenture supplemental thereto, pursuant to which the Debentures are to be issued to the
Institutional Trustee as defined in the Declaration.
Majority in liquidation amount of the Securities
means, except as provided by the
Trust Indenture Act, a vote by Holder(s), voting separately as a class, holding Capital Securities
representing more than 50% of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the
date upon which the voting percentages are determined) of all Capital Securities.
Officers Certificate
means, with respect to any Person, a certificate signed by two
Authorized Officers of such Person. Any Officers Certificate delivered with respect to compliance
with a condition or covenant provided for in this Capital Securities Guarantee shall include:
(a) a statement that each officer signing the Officers Certificate has read the covenant or
condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken
by each officer in rendering the Officers Certificate;
(c) a statement that each such officer has made such examination or investigation as, in such
officers opinion, is necessary to enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant
has been complied with.
Person
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust,
3
unincorporated association, or government or any agency or political subdivision thereof, or
any other entity of whatever nature.
Responsible Officer
means, with respect to the Capital Guarantee Trustee, any
officer within the Corporate Trust Office of the Capital Guarantee Trustee with direct
responsibility for the administration of this Capital Securities Guarantee and also means, with
respect to a particular corporate trust matter, any other officer to whom such matter is referred
because of that officers knowledge of and familiarity with the particular subject.
Successor Capital Guarantee Trustee
means a successor Capital Guarantee Trustee
possessing the qualifications to act as Capital Guarantee Trustee under Section 4.1.
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended.
Underwriting Agreement
has the meaning set forth in the Indenture.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1
Trust Indenture Act; Application
(a) This Capital Securities Guarantee is subject to the provisions of the Trust Indenture Act
that are required to be part of this Capital Securities Guarantee and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Capital Securities Guarantee limits,
qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control.
SECTION 2.2
Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Guarantee Trustee with a list, in such form as the
Capital Guarantee Trustee may reasonably require, of the names and addresses of the Holders (List
of Holders) as of such date, (i) within one Business Day after January 1 and June 30 of each year,
and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a
List of Holders as of a date no more than 14 days before such List of Holders is given to the
Capital Guarantee Trustee;
provided
, that the Guarantor shall not be obligated to provide such List
of Holders at any time the List of Holders does not differ from the most recent List of Holders
given to the Capital Guarantee Trustee by the Guarantor. The Capital Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Capital Guarantee Trustee shall comply with its obligations under Sections 311(a),
311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3
Reports by the Capital Guarantee Trustee
4
Within 60 days after May 15 of each year, the Capital Guarantee Trustee shall provide to the
Holders such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The Capital Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4
Periodic Reports to Capital Guarantee Trustee
The Guarantor shall provide to the Capital Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate required by Section
314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314
of the Trust Indenture Act.
SECTION 2.5
Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Guarantee Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Capital Securities Guarantee that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers Certificate.
SECTION 2.6
Events of Default; Waiver
The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on behalf
of the Holders of all of the Capital Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose of this Capital
Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event
of Default or impair any right consequent thereon.
SECTION 2.7
Event of Default; Notice
(a) The Capital Guarantee Trustee shall, within 90 days after the occurrence of an Event of
Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of
Default actually known to a Responsible Officer of the Capital Guarantee Trustee, unless such
defaults have been cured before the giving of such notice;
provided
, that the Capital Guarantee
Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of
the Capital Guarantee Trustee in good faith determines that the withholding of such notice is in
the interests of the Holders.
(b) The Capital Guarantee Trustee shall not be deemed to have knowledge of any Event of
Default unless either the Capital Guarantee Trustee shall have received written notice, or a
Responsible Officer of the Capital Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge.
SECTION 2.8
Conflicting Interests
5
The Declaration shall be deemed to be specifically described in this Capital Securities
Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL GUARANTEE TRUSTEE
SECTION 3.1
Powers and Duties of the Capital Guarantee Trustee
(a) This Capital Securities Guarantee shall be held by the Capital Guarantee Trustee for the
benefit of the Holders, and the Capital Guarantee Trustee shall not transfer its right, title and
interest in this Capital Securities Guarantee to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(b) or to a Successor Capital Guarantee Trustee on acceptance by such
Successor Capital Guarantee Trustee of its appointment to act as Successor Capital Guarantee
Trustee. The right, title and interest of the Capital Guarantee Trustee shall automatically vest
in any Successor Capital Guarantee Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the Capital Guarantee
Trustee has occurred and is continuing, the Capital Guarantee Trustee shall enforce this Capital
Securities Guarantee for the benefit of the Holders of the Capital Securities.
(c) The Capital Guarantee Trustee, before the occurrence of any Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to perform only such duties
as are specifically set forth in this Capital Securities Guarantee, and no implied covenants shall
be read into this Capital Securities Guarantee against the Capital Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Capital Guarantee Trustee, the Capital Guarantee
Trustee shall exercise such of the rights and powers vested in it by this Capital Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be construed to relieve the
Capital Guarantee Trustee from liability for its own negligent action, its own negligent failure to
act or its own willful misconduct, except that:
(i) Prior to the occurrence of any Event of Default and after the curing or
waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Capital Guarantee Trustee
shall be determined solely by the express provisions of this Capital
Securities Guarantee, and the Capital Guarantee Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Capital Securities
6
Guarantee, and no implied covenants or obligations shall be
read into this Capital Securities Guarantee against the Capital
Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Capital
Guarantee Trustee, the Capital Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Capital Guarantee Trustee and conforming to the
requirements of this Capital Securities Guarantee; but in the case
of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Capital Guarantee
Trustee, the Capital Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Capital Securities Guarantee;
(ii) the Capital Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Capital Guarantee
Trustee, unless it shall be proved that the Capital Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Capital Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of the
Capital Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Capital Guarantee Trustee, or exercising
any trust or power conferred upon the Capital Guarantee Trustee under this Capital
Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee shall require the
Capital Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Capital Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Capital Securities Guarantee or
indemnity, reasonably satisfactory to the Capital Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2
Certain Rights of Capital Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Guarantee Trustee may conclusively rely, and shall be fully
protected in acting or refraining from acting upon, any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document
7
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this Capital
Securities Guarantee shall be sufficiently evidenced by an Officers Certificate.
(iii) Whenever, in the administration of this Capital Securities Guarantee, the
Capital Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the Capital
Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in
the absence of bad faith on its part, request and conclusively rely upon an
Officers Certificate which, upon receipt of such request, shall be promptly
delivered by the Guarantor.
(iv) The Capital Guarantee Trustee shall have no duty to see to any recording,
filing or registration of any instrument (or any rerecording, refiling or
registration thereof).
(v) The Capital Guarantee Trustee may consult with counsel, and the written
advice or opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Capital Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this Capital
Securities Guarantee from any court of competent jurisdiction.
(vi) The Capital Guarantee Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Capital Securities Guarantee at the
request or direction of any Holder, unless such Holder shall have provided to the
Capital Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Capital Guarantee Trustee, against the costs, expenses (including attorneys
fees and expenses and the expenses of the Capital Guarantee Trustees agents,
nominees or custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as may be
requested by the Capital Guarantee Trustee;
provided
that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Capital Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Capital Securities Guarantee.
(vii) The Capital Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document,
but the Capital Guarantee Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit.
8
(viii) The Capital Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the Capital Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Capital Guarantee Trustee or its agents hereunder
shall bind the Holders of the Capital Securities, and the signature of the Capital
Guarantee Trustee or its agents alone shall be sufficient and effective to perform
any such action. No third party shall be required to inquire as to the authority of
the Capital Guarantee Trustee to so act or as to its compliance with any of the
terms and provisions of this Capital Securities Guarantee, both of which shall be
conclusively evidenced by the Capital Guarantee Trustees or its agents taking such
action.
(x) Whenever in the administration of this Capital Securities Guarantee the
Capital Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder, the
Capital Guarantee Trustee (i) may request instructions from the Holders of a
Majority in liquidation amount of the Capital Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such instructions
are received, and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Capital Securities Guarantee shall be deemed to impose any duty or
obligation on the Capital Guarantee Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Capital Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the Capital Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3
Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the statements of the Guarantor,
and the Capital Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Guarantee Trustee makes no representation as to the validity or sufficiency of this Capital
Securities Guarantee.
ARTICLE IV
CAPITAL GUARANTEE TRUSTEE
SECTION 4.1
Capital Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
9
(ii) be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or of the District of Columbia,
or a corporation or Person permitted by the Securities and Exchange Commission to
act as an institutional trustee under the Trust Indenture Act, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the supervising or examining authority referred to above,
then, for the purposes of this Section 4.1(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
(b) If at any time the Capital Guarantee Trustee shall cease to be eligible to so act under
Section 4.1(a), the Capital Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Capital Guarantee Trustee has or shall acquire any conflicting interest within
the meaning of Section 310(b) of the Trust Indenture Act, the Capital Guarantee Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2
Appointment, Removal and Resignation of Capital Guarantee
Trustees
(a) Subject to Section 4.2(b), the Capital Guarantee Trustee may be appointed or removed
without cause at any time by the Guarantor except if an Event of Default shall have occurred and be
continuing.
(b) The Capital Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until
a Successor Capital Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Guarantee Trustee and delivered to the
Guarantor.
(c) The Capital Guarantee Trustee appointed to office shall hold office until a Successor
Capital Guarantee Trustee shall have been appointed or until its removal or resignation. The
Capital Guarantee Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing executed by the Capital Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Capital Guarantee Trustee has
been appointed and has accepted such appointment by instrument in writing executed by such
Successor Capital Guarantee Trustee and delivered to the Guarantor and the resigning Capital
Guarantee Trustee.
(d) If no Successor Capital Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantor of an
instrument of resignation, the resigning Capital Guarantee Trustee may petition any court of
competent jurisdiction for appointment of a Successor Capital Guarantee Trustee.
10
Such court may thereupon, after prescribing such notice, if any, as it may deem proper,
appoint a Successor Capital Guarantee Trustee.
(e) No Capital Guarantee Trustee shall be liable for the acts or omissions to act of any
Successor Capital Guarantee Trustee.
(f) Upon termination of this Capital Securities Guarantee or removal or resignation of the
Capital Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Capital
Guarantee Trustee all amounts accrued and owing to such Capital Guarantee Trustee to the date of
such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1
Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the
Guarantee Payments, as and when due, regardless of any defense, right of set-off or counterclaim
that the Issuer may have or assert. The Guarantors obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2
Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Capital Securities Guarantee and of
any liability to which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3
Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor under this Capital
Securities Guarantee shall in no way be affected or impaired by reason of the happening from time
to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the performance or observance
by the Issuer of any express or implied agreement, covenant, term or condition relating to the
Capital Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any portion of the
Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms
of the Capital Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce,
assert or exercise any right, privilege, power or remedy conferred on the Holders
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pursuant to the terms of the Capital Securities, or any action on the part of the Issuer
granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any collateral,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations
of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent of, the
Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4
Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Capital Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy available to the
Capital Guarantee Trustee in respect of this Capital Securities Guarantee or exercising any trust
or power conferred upon the Capital Guarantee Trustee under this Capital Securities Guarantee.
(b) If the Capital Guarantee Trustee fails to enforce its rights under this Capital Securities
Guarantee, any Holder may directly institute a legal proceeding against the Guarantor to enforce
the Capital Guarantee Trustees rights under this Capital Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Capital Guarantee Trustee or any other
Person or entity.
(c) A Holder of Capital Securities may also directly institute a legal proceeding against the
Guarantor to enforce such Holders right to receive payment under this Capital Securities Guarantee
without first (i) directing the Capital Guarantee Trustee to enforce the terms of this Capital
Securities Guarantee or (ii) instituting a legal proceeding directly against the Issuer or any
other Person or entity.
SECTION 5.5
Guarantee of Payment
This Capital Securities Guarantee creates a guarantee of payment and not of collection.
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SECTION 5.6
Subrogation
The Guarantor shall be subrogated to all (if any) rights of the Holders of Capital Securities
against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this
Capital Securities Guarantee;
provided
, however, that the Guarantor shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a
result of payment under this Capital Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Capital Securities Guarantee. If any amount shall be paid to
the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7
Independent Obligations
The Guarantor acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Capital Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1
Limitation of Transactions
So long as any Capital Securities remain outstanding, if there shall have occurred any event
that would constitute an Event of Default or a Default under the Declaration, then (a) the
Guarantor shall not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock
or make any guarantee payment with respect thereto (other than (i) repurchases, redemptions or
other acquisitions of shares of capital stock of the Guarantor in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) repurchases of common stock of the Guarantor pursuant to a
contractually binding requirement to buy stock existing prior to the Event of Default or Default,
(iii) as a result of an exchange or conversion of any class or series of the Guarantors capital
stock for any other class or series of the Guarantors capital stock, (iv) the purchase of
fractional interests in shares of the Guarantors capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or exchanged) or (v)
purchase of the Guarantors capital stock in connection with the distribution thereof and (b) the
Guarantor shall not make any payment of interest on, or principal of (or premium, if any, on), or
repay, repurchase or redeem, any debt securities or guarantees issued by the Guarantor that rank
pari passu with or junior to the Debentures;
provided
, however, the Guarantor may declare and pay a
stock dividend where the dividend stock is the same stock as that on which the dividend is being
paid.
SECTION 6.2
Subordination
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The obligations of the Guarantor under this Capital Securities Guarantee will constitute
unsecured obligations of the Guarantor and will rank subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) of the Guarantor to the extent and in the
manner set forth in the Indenture with respect to the Debentures, and the provisions of Article
Fourteen of the Indenture will apply,
mutatis mutandis
, to the obligations of the Guarantor
hereunder. The obligations of the Guarantor hereunder do not constitute Senior Indebtedness (as
defined in the Indenture) of the Guarantor.
SECTION 6.3
Pari Passu Guarantees
The obligations of the Guarantor under this Capital Securities Guarantee shall rank pari passu
with the obligations of the Guarantor under (i) any similar guarantee agreements issued by the
Guarantor on behalf of the holders of preferred or capital securities issued by any Citigroup Trust
(as defined in the Indenture), (ii) the Indenture and the Securities (as defined therein) issued
thereunder, (iii) any expense agreements entered into by the Guarantor in connection with the
offering of preferred or capital securities by any Citigroup Trust (as defined in the Indenture),
and (iv) any other security, guarantee or other agreement or obligation that is by its terms pari
passu with the Securities (as defined in the Indenture) and, in the case of this clause (iv) only,
(x) is issued with the concurrence or approval of the staff of the Federal Reserve Bank of New York
or the staff of the Board of Governors of the Federal Reserve System or (y) does not at the time of
issuance prevent the Securities from qualifying for tier 1 capital treatment (irrespective of any
limits on the amount of the Companys tier 1 capital) under the applicable capital adequacy
guidelines, regulations, policies or published interpretations of the Board of Governors of the
Federal Reserve System.
ARTICLE VII
TERMINATION
SECTION 7.1
Termination
This Capital Securities Guarantee shall terminate upon (i) full payment of the Redemption
Price of all Capital Securities, (ii) the distribution of the Debentures to the Holders of all of
the Capital Securities or (iii) full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this Capital Securities
Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time
any Holder must restore payment of any sums paid under the Capital Securities or under this Capital
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1
Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in accordance with this
Capital Securities Guarantee and in a manner that such
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Indemnified Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Capital Securities Guarantee or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified
Persons negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Guarantor and upon such information, opinions, reports or statements presented to the
Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such
other Persons professional or expert competence and who has been selected with reasonable care by
or on behalf of the Guarantor, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.2
Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified
Person harmless against, any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses)
of defending itself against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as
set forth in this Section 8.2 shall survive the termination of this Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1
Successors and Assigns
All guarantees and agreements contained in this Capital Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to
the benefit of the Holders of the Capital Securities then outstanding.
SECTION 9.2
Amendments
Except with respect to any changes that do not adversely affect the rights of Holders (in
which case no consent of Holders will be required), this Capital Securities Guarantee may be
amended only with the prior approval of the Holders of not less than a Majority in aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all the outstanding Capital Securities. The provisions of Section 12.2 of the
Declaration with respect to meetings of Holders apply to the giving of such approval.
SECTION 9.3
Notices
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All notices provided for in this Capital Securities Guarantee shall be in writing, duly signed
by the party giving such notice, and shall be delivered, telecopied or mailed by registered or
certified mail, as follows:
(a) If given to the Capital Guarantee Trustee, at the Capital Guarantee Trustees mailing
address set forth below (or such other address as the Capital Guarantee Trustee may give notice of
to the Holders):
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(b) If given to the Guarantor, at the Guarantors mailing address set forth below (or such
other address as the Guarantor may give notice of to the Holders):
Citigroup Inc.,
153 East 53rd Street
New York, NY 10043
Attention: Charles E. Wainhouse, Assistant Treasurer
(c) If given to any Holder, at the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 9.4
Benefit
This Capital Securities Guarantee is solely for the benefit of the Holders of the Capital
Securities and, subject to Section 3.1(a), is not separately transferable from the Capital
Securities.
SECTION 9.5
Governing Law
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED
BY SUCH LAWS WITHOUT REGARD FOR THE PRINCIPLES OF ITS CONFLICTS OF LAWS.
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THIS CAPITAL SECURITIES GUARANTEE is executed as of the day and year first above written.
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CITIGROUP INC.,
as Guarantor
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By:
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Name:
Title:
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THE BANK OF NEW YORK,
as Capital Guarantee Trustee
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By:
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Name:
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Title:
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Exhibit 4.17
CAPITAL SECURITIES GUARANTEE AGREEMENT
Citigroup Capital XXII
Dated as of , 20
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS AND INTERPRETATION
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SECTION 1.1 Definitions and Interpretation
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1
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ARTICLE II TRUST INDENTURE ACT
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SECTION 2.1 Trust Indenture Act; Application
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4
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SECTION 2.2 Lists of Holders of Securities
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4
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SECTION 2.3 Reports by the Capital Guarantee Trustee
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4
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SECTION 2.4 Periodic Reports to Capital Guarantee Trustee
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5
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SECTION 2.5 Evidence of Compliance with Conditions Precedent
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5
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SECTION 2.6 Events of Default; Waiver
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5
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SECTION 2.7 Event of Default; Notice
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5
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SECTION 2.8 Conflicting Interests
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5
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ARTICLE III POWERS, DUTIES AND RIGHTS OF CAPITAL GUARANTEE TRUSTEE
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SECTION 3.1 Powers and Duties of the Capital Guarantee Trustee
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6
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SECTION 3.2 Certain Rights of Capital Guarantee Trustee
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7
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SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
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9
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ARTICLE IV CAPITAL GUARANTEE TRUSTEE
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SECTION 4.1 Capital Guarantee Trustee; Eligibility
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9
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SECTION 4.2 Appointment, Removal and Resignation of Capital Guarantee Trustees
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10
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ARTICLE V GUARANTEE
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SECTION 5.1 Guarantee
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SECTION 5.2 Waiver of Notice and Demand
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SECTION 5.3 Obligations Not Affected
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11
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SECTION 5.4 Rights of Holders
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12
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SECTION 5.5 Guarantee of Payment
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12
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SECTION 5.6 Subrogation
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SECTION 5.7 Independent Obligations
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ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION
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SECTION 6.1 Limitation of Transactions
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Page
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SECTION 6.2 Subordination
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SECTION 6.3 Pari Passu Guarantees
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ARTICLE VII TERMINATION
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SECTION 7.1 Termination
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ARTICLE VIII INDEMNIFICATION
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SECTION 8.1 Exculpation
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SECTION 8.2 Indemnification
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ARTICLE IX MISCELLANEOUS
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SECTION 9.1 Successors and Assigns
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SECTION 9.2 Amendments
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SECTION 9.3 Notices
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SECTION 9.4 Benefit
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SECTION 9.5 Governing Law
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CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the Capital Securities Guarantee), dated as of
, 20 , is executed and delivered by Citigroup Inc., a Delaware corporation (the Guarantor), and
The Bank of New York, as trustee (the Capital Guarantee Trustee), for the benefit of the Holders
(as defined herein) from time to time of the Capital Securities (as defined herein) of Citigroup
Capital XXII, a Delaware statutory trust (the Issuer).
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the Declaration), dated
as of , 20 , among the trustees of the Issuer named therein, the Guarantor, as
sponsor, and the holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof capital securities, having an
aggregate liquidation amount of $ and may issue up to an additional
capital securities, having an aggregate liquidation amount of $ in
connection with an over-allotment option, collectively designated the % Capital Securities
(the Capital Securities);
WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in this Capital
Securities Guarantee, to pay to the Holders the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of Capital Securities, which
purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Capital Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1
Definitions and Interpretation
In this Capital Securities Guarantee, unless the context otherwise requires:
(a) Capitalized terms used in this Capital Securities Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Capital Securities Guarantee has the same meaning
throughout;
(c) all references to the Capital Securities Guarantee or this Capital Securities
Guarantee are to this Capital Securities Guarantee as modified, supplemented or amended from time
to time;
(d) all references in this Capital Securities Guarantee to Articles and Sections are to
Articles and Sections of this Capital Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when used in this Capital
Securities Guarantee, unless otherwise defined in this Capital Securities Guarantee or unless the
context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
Authorized Officer
of a Person means any Person that is authorized to bind such
Person.
Affiliate
has the same meaning as given to that term in Rule 405 of the Securities
Act of 1933, as amended, or any successor rule thereunder.
Business Day
means any day other than a Saturday, Sunday or a day on which banking
institutions in the City of New York, New York are permitted or required by any applicable law to
close.
Capital Guarantee Trustee
means The Bank of New York, until a Successor Capital
Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of
this Capital Securities Guarantee, and thereafter means each such Successor Capital Guarantee
Trustee.
Common Securities
means the securities representing common undivided beneficial
interests in the assets of the Issuer.
Corporate Trust Office
means the office of the Capital Guarantee Trustee at which
the corporate trust business of the Capital Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this Agreement is located at 101
Barclay Street-8W, New York, New York 10286.
Covered Person
means any Holder or beneficial owner of Capital Securities.
Debentures
means the series of junior subordinated debt securities of the Guarantor
designated the % Junior Subordinated Deferrable Interest Debentures due , 20
held by the Institutional Trustee (as defined in the Declaration) of the Issuer.
Event of Default
means a default by the Guarantor on any of its payment or other
obligations under this Capital Securities Guarantee.
Guarantee Payments
means the following payments or distributions, without
duplication, with respect to the Capital Securities, to the extent not paid or made by the Issuer:
(i) any accrued and unpaid Distributions (as defined in Annex I to the Declaration) that are
required to be paid on the Capital Securities, to the extent the Issuer has funds available
therefor, (ii) the redemption price of $ per Capital Security, plus all accrued and unpaid
Distributions to the date of redemption (the Redemption Price), to the extent that the Issuer has
funds available therefor, with respect to any Capital Securities called for redemption by the
Issuer and (iii) upon a voluntary or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Debentures to the Holders in exchange for
Capital Securities as provided in the Declaration or the redemption of all of the Capital
Securities upon the maturity
2
or redemption of all of the Debentures as provided in the Declaration)
the lesser of (a) the aggregate of the liquidation amount of $ per Capital Security and all
accrued and unpaid Distributions on the Capital Securities to the date of payment, or (b) the
amount of assets of the
Issuer remaining for distribution to Holders in liquidation of the Issuer (in either case, the
Liquidation Distribution).
Holder
shall mean any holder, as registered on the books and records of the Issuer,
of any Capital Securities;
provided
, however, that, in determining whether the holders of the
requisite percentage of Capital Securities have given any request, notice, consent or waiver
hereunder, Holder shall not include the Guarantor or any Affiliate of the Guarantor.
Indemnified Person
means the Capital Guarantee Trustee, any Affiliate of the Capital
Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Capital Guarantee Trustee.
Indenture
means the Indenture dated as of , 20 , among the
Guarantor and The Bank of New York, as trustee, and any indenture supplemental thereto, pursuant to
which the Debentures are to be issued to the Institutional Trustee as defined in the Declaration.
Majority in liquidation amount of the Securities
means, except as provided by the
Trust Indenture Act, a vote by Holder(s), voting separately as a class, holding Capital Securities
representing more than 50% of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the
date upon which the voting percentages are determined) of all Capital Securities.
Officers Certificate
means, with respect to any Person, a certificate signed by two
Authorized Officers of such Person. Any Officers Certificate delivered with respect to compliance
with a condition or covenant provided for in this Capital Securities Guarantee shall include:
(a) a statement that each officer signing the Officers Certificate has read the covenant or
condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken
by each officer in rendering the Officers Certificate;
(c) a statement that each such officer has made such examination or investigation as, in such
officers opinion, is necessary to enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such condition or covenant
has been complied with.
Person
means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability company, trust,
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unincorporated association, or government or any agency or political subdivision thereof, or any
other entity of whatever nature.
Responsible Officer
means, with respect to the Capital Guarantee Trustee, any
officer within the Corporate Trust Office of the Capital Guarantee Trustee with direct
responsibility for the administration of this Capital Securities Guarantee and also means, with
respect to a particular corporate trust matter, any other officer to whom such matter is referred
because of that officers knowledge of and familiarity with the particular subject.
Successor Capital Guarantee Trustee
means a successor Capital Guarantee Trustee
possessing the qualifications to act as Capital Guarantee Trustee under Section 4.1.
Trust Indenture Act
means the Trust Indenture Act of 1939, as amended.
Underwriting Agreement
has the meaning set forth in the Indenture.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1
Trust Indenture Act; Application
(a) This Capital Securities Guarantee is subject to the provisions of the Trust Indenture Act
that are required to be part of this Capital Securities Guarantee and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Capital Securities Guarantee limits,
qualifies or conflicts with the duties imposed by Section 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control.
SECTION 2.2
Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Guarantee Trustee with a list, in such form as the
Capital Guarantee Trustee may reasonably require, of the names and addresses of the Holders (List
of Holders) as of such date, (i) within one Business Day after January 1 and June 30 of each year,
and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a
List of Holders as of a date no more than 14 days before such List of Holders is given to the
Capital Guarantee Trustee;
provided
, that the Guarantor shall not be obligated to provide such List
of Holders at any time the List of Holders does not differ from the most recent List of Holders
given to the Capital Guarantee Trustee by the Guarantor. The Capital Guarantee Trustee may destroy
any List of Holders previously given to it on receipt of a new List of Holders.
(b) The Capital Guarantee Trustee shall comply with its obligations under Sections 311(a),
311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3
Reports by the Capital Guarantee Trustee
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Within 60 days after May 15 of each year, the Capital Guarantee Trustee shall provide to the
Holders such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The Capital Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4
Periodic Reports to Capital Guarantee Trustee
The Guarantor shall provide to the Capital Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate required by Section
314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314
of the Trust Indenture Act.
SECTION 2.5
Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Guarantee Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Capital Securities Guarantee that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers Certificate.
SECTION 2.6
Events of Default; Waiver
The Holders of a Majority in liquidation amount of Capital Securities may, by vote, on behalf
of the Holders of all of the Capital Securities, waive any past Event of Default and its
consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose of this Capital
Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event
of Default or impair any right consequent thereon.
SECTION 2.7
Event of Default; Notice
(a) The Capital Guarantee Trustee shall, within 90 days after the occurrence of an Event of
Default, transmit by mail, first class postage prepaid, to the Holders, notices of all Events of
Default actually known to a Responsible Officer of the Capital Guarantee Trustee, unless such
defaults have been cured before the giving of such notice;
provided
, that the Capital Guarantee
Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of
the Capital Guarantee Trustee in good faith determines that the withholding of such notice is in
the interests of the Holders.
(b) The Capital Guarantee Trustee shall not be deemed to have knowledge of any Event of
Default unless either the Capital Guarantee Trustee shall have received written notice, or a
Responsible Officer of the Capital Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge.
SECTION 2.8
Conflicting Interests
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The Declaration shall be deemed to be specifically described in this Capital Securities
Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
CAPITAL GUARANTEE TRUSTEE
SECTION 3.1
Powers and Duties of the Capital Guarantee Trustee
(a) This Capital Securities Guarantee shall be held by the Capital Guarantee Trustee for the
benefit of the Holders, and the Capital Guarantee Trustee shall not transfer its right, title and
interest in this Capital Securities Guarantee to any Person except a Holder exercising his or her
rights pursuant to Section 5.4(b) or to a Successor Capital Guarantee Trustee on acceptance by such
Successor Capital Guarantee Trustee of its appointment to act as Successor Capital Guarantee
Trustee. The right, title and interest of the Capital Guarantee Trustee shall automatically vest
in any Successor Capital Guarantee Trustee, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Capital Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the Capital Guarantee
Trustee has occurred and is continuing, the Capital Guarantee Trustee shall enforce this Capital
Securities Guarantee for the benefit of the Holders of the Capital Securities.
(c) The Capital Guarantee Trustee, before the occurrence of any Event of Default and after the
curing of all Events of Default that may have occurred, shall undertake to perform only such duties
as are specifically set forth in this Capital Securities Guarantee, and no implied covenants shall
be read into this Capital Securities Guarantee against the Capital Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6) and is
actually known to a Responsible Officer of the Capital Guarantee Trustee, the Capital Guarantee
Trustee shall exercise such of the rights and powers vested in it by this Capital Securities
Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Capital Securities Guarantee shall be construed to relieve the
Capital Guarantee Trustee from liability for its own negligent action, its own negligent failure to
act or its own willful misconduct, except that:
(i) Prior to the occurrence of any Event of Default and after the curing or
waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Capital Guarantee Trustee
shall be determined solely by the express provisions of this Capital
Securities Guarantee, and the Capital Guarantee Trustee shall not be
liable except for the performance of such duties and obligations as
are specifically set forth in this Capital Securities
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Guarantee, and
no implied covenants or obligations shall be read into this Capital
Securities Guarantee against the Capital Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Capital
Guarantee Trustee, the Capital Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates
or opinions furnished to the Capital Guarantee Trustee and
conforming to the requirements of this Capital Securities Guarantee;
but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the
Capital Guarantee Trustee, the Capital Guarantee Trustee shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Capital Securities Guarantee;
(ii) the Capital Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Capital Guarantee
Trustee, unless it shall be proved that the Capital Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Capital Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a Majority in liquidation amount of the
Capital Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Capital Guarantee Trustee, or exercising
any trust or power conferred upon the Capital Guarantee Trustee under this Capital
Securities Guarantee; and
(iv) no provision of this Capital Securities Guarantee shall require the
Capital Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Capital Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Capital Securities Guarantee or
indemnity, reasonably satisfactory to the Capital Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
SECTION 3.2
Certain Rights of Capital Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Guarantee Trustee may conclusively rely, and shall be fully
protected in acting or refraining from acting upon, any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document
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believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this Capital
Securities Guarantee shall be sufficiently evidenced by an Officers Certificate.
(iii) Whenever, in the administration of this Capital Securities Guarantee, the
Capital Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Capital Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and conclusively
rely upon an Officers Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor.
(iv) The Capital Guarantee Trustee shall have no duty to see to any recording,
filing or registration of any instrument (or any rerecording, refiling or
registration thereof).
(v) The Capital Guarantee Trustee may consult with counsel, and the written
advice or opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Capital Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of this Capital
Securities Guarantee from any court of competent jurisdiction.
(vi) The Capital Guarantee Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Capital Securities Guarantee at the
request or direction of any Holder, unless such Holder shall have provided to the
Capital Guarantee Trustee such security and indemnity, reasonably satisfactory to
the Capital Guarantee Trustee, against the costs, expenses (including attorneys
fees and expenses and the expenses of the Capital Guarantee Trustees agents,
nominees or custodians) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as may be
requested by the Capital Guarantee Trustee;
provided
that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Capital Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Capital Securities Guarantee.
(vii) The Capital Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or document,
but the Capital Guarantee Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit.
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(viii) The Capital Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through agents,
nominees, custodians or attorneys, and the Capital Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
(ix) Any action taken by the Capital Guarantee Trustee or its agents hereunder
shall bind the Holders of the Capital Securities, and the signature of the Capital
Guarantee Trustee or its agents alone shall be sufficient and effective to
perform any such action. No third party shall be required to inquire as to the
authority of the Capital Guarantee Trustee to so act or as to its compliance with
any of the terms and provisions of this Capital Securities Guarantee, both of which
shall be conclusively evidenced by the Capital Guarantee Trustees or its agents
taking such action.
(x) Whenever in the administration of this Capital Securities Guarantee the
Capital Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder, the
Capital Guarantee Trustee (i) may request instructions from the Holders of a
Majority in liquidation amount of the Capital Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such instructions
are received, and (iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(b) No provision of this Capital Securities Guarantee shall be deemed to impose any duty or
obligation on the Capital Guarantee Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Capital Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise any such right,
power, duty or obligation. No permissive power or authority available to the Capital Guarantee
Trustee shall be construed to be a duty.
SECTION 3.3
Not Responsible for Recitals or Issuance of Guarantee
The recitals contained in this Guarantee shall be taken as the statements of the Guarantor,
and the Capital Guarantee Trustee does not assume any responsibility for their correctness. The
Capital Guarantee Trustee makes no representation as to the validity or sufficiency of this Capital
Securities Guarantee.
ARTICLE IV
CAPITAL GUARANTEE TRUSTEE
SECTION 4.1
Capital Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
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(ii) be a corporation organized and doing business under the laws of the United
States of America or any State or Territory thereof or of the District of Columbia,
or a corporation or Person permitted by the Securities and Exchange Commission to
act as an institutional trustee under the Trust Indenture Act, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Capital Guarantee Trustee shall cease to be eligible to so act under
Section 4.1(a), the Capital Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Capital Guarantee Trustee has or shall acquire any conflicting interest within
the meaning of Section 310(b) of the Trust Indenture Act, the Capital Guarantee Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2
Appointment, Removal and Resignation of Capital Guarantee
Trustees
(a) Subject to Section 4.2(b), the Capital Guarantee Trustee may be appointed or removed
without cause at any time by the Guarantor except if an Event of Default shall have occurred and be
continuing.
(b) The Capital Guarantee Trustee shall not be removed in accordance with Section 4.2(a) until
a Successor Capital Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Capital Guarantee Trustee and delivered to the
Guarantor.
(c) The Capital Guarantee Trustee appointed to office shall hold office until a Successor
Capital Guarantee Trustee shall have been appointed or until its removal or resignation. The
Capital Guarantee Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing executed by the Capital Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Capital Guarantee Trustee has
been appointed and has accepted such appointment by instrument in writing executed by such
Successor Capital Guarantee Trustee and delivered to the Guarantor and the resigning Capital
Guarantee Trustee.
(d) If no Successor Capital Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 4.2 within 60 days after delivery to the Guarantor of an
instrument of resignation, the resigning Capital Guarantee Trustee may petition any court of
competent jurisdiction for appointment of a Successor Capital Guarantee Trustee.
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Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor
Capital Guarantee Trustee.
(e) No Capital Guarantee Trustee shall be liable for the acts or omissions to act of any
Successor Capital Guarantee Trustee.
(f) Upon termination of this Capital Securities Guarantee or removal or resignation of the
Capital Guarantee Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Capital
Guarantee Trustee all amounts accrued and owing to such Capital Guarantee Trustee to the date of
such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1
Guarantee
The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the
Guarantee Payments, as and when due, regardless of any defense, right of set-off or counterclaim
that the Issuer may have or assert. The Guarantors obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing
the Issuer to pay such amounts to the Holders.
SECTION 5.2
Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Capital Securities Guarantee and of
any liability to which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3
Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor under this Capital
Securities Guarantee shall in no way be affected or impaired by reason of the happening from time
to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the performance or observance
by the Issuer of any express or implied agreement, covenant, term or condition relating to the
Capital Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any portion of the
Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms
of the Capital Securities or the extension of time for the performance of any other obligation
under, arising out of, or in connection with, the Capital Securities;
(c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce,
assert or exercise any right, privilege, power or remedy conferred on the Holders
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pursuant to the
terms of the Capital Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any collateral,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a legal or equitable
discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations
of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain consent of, the
Guarantor with respect to the happening of any of the foregoing.
SECTION 5.4
Rights of Holders
(a) The Holders of a Majority in liquidation amount of the Capital Securities have the right
to direct the time, method and place of conducting any proceeding for any remedy available to the
Capital Guarantee Trustee in respect of this Capital Securities Guarantee or exercising any trust
or power conferred upon the Capital Guarantee Trustee under this Capital Securities Guarantee.
(b) If the Capital Guarantee Trustee fails to enforce its rights under this Capital Securities
Guarantee, any Holder may directly institute a legal proceeding against the Guarantor to enforce
the Capital Guarantee Trustees rights under this Capital Securities Guarantee, without first
instituting a legal proceeding against the Issuer, the Capital Guarantee Trustee or any other
Person or entity.
(c) A Holder of Capital Securities may also directly institute a legal proceeding against the
Guarantor to enforce such Holders right to receive payment under this Capital Securities Guarantee
without first (i) directing the Capital Guarantee Trustee to enforce the terms of this Capital
Securities Guarantee or (ii) instituting a legal proceeding directly against the Issuer or any
other Person or entity.
SECTION 5.5
Guarantee of Payment
This Capital Securities Guarantee creates a guarantee of payment and not of collection.
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SECTION 5.6
Subrogation
The Guarantor shall be subrogated to all (if any) rights of the Holders of Capital Securities
against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this
Capital Securities Guarantee;
provided
, however, that the Guarantor shall not (except to the extent
required by mandatory provisions of law) be entitled to enforce or exercise any right that it may
acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a
result of payment under this Capital Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Capital Securities Guarantee. If any amount shall be paid to
the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 5.7
Independent Obligations
The Guarantor acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Capital Securities, and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Capital
Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1
Limitation of Transactions
So long as any Capital Securities remain outstanding, if there shall have occurred any event
that would constitute an Event of Default or a Default under the Declaration, then (a) the
Guarantor shall not declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of its capital stock
or make any guarantee payment with respect thereto (other than (i) repurchases, redemptions or
other acquisitions of shares of capital stock of the Guarantor in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of employees, officers,
directors or consultants, (ii) repurchases of common stock of the Guarantor pursuant to a
contractually binding requirement to buy stock existing prior to the Event of Default or Default,
(iii) as a result of an exchange or conversion of any class or series of the Guarantors capital
stock for any other class or series of the Guarantors capital stock, (iv) the purchase of
fractional interests in shares of the Guarantors capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or exchanged) or (v)
purchase of the Guarantors capital stock in connection with the distribution thereof and (b) the
Guarantor shall not make any payment of interest on, or principal of (or premium, if any, on), or
repay, repurchase or redeem, any debt securities or guarantees issued by the Guarantor that rank
pari passu with or junior to the Debentures;
provided
, however, the Guarantor may declare and pay a
stock dividend where the dividend stock is the same stock as that on which the dividend is being
paid.
SECTION 6.2
Subordination
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The obligations of the Guarantor under this Capital Securities Guarantee will constitute
unsecured obligations of the Guarantor and will rank subordinate and junior in right of payment to
all Senior Indebtedness (as defined in the Indenture) of the Guarantor to the extent and in the
manner set forth in the Indenture with respect to the Debentures, and the provisions of Article
Fourteen of the Indenture will apply,
mutatis mutandis
, to the obligations of the Guarantor
hereunder. The obligations of the Guarantor hereunder do not constitute Senior Indebtedness (as
defined in the Indenture) of the Guarantor.
SECTION 6.3
Pari Passu Guarantees
The obligations of the Guarantor under this Capital Securities Guarantee shall rank pari passu
with the obligations of the Guarantor under (i) any similar guarantee agreements issued by the
Guarantor on behalf of the holders of preferred or capital securities issued by any Citigroup Trust
(as defined in the Indenture), (ii) the Indenture and the Securities (as defined therein) issued
thereunder, (iii) any expense agreements entered into by the Guarantor in connection with the
offering of preferred or capital securities by any Citigroup Trust (as defined in the Indenture),
and (iv) any other security, guarantee or other agreement or obligation that is by its terms pari
passu with the Securities (as defined in the Indenture) and, in the case of this clause (iv) only,
(x) is issued with the concurrence or approval of the staff of the Federal Reserve Bank of New York
or the staff of the Board of Governors of the Federal Reserve System or (y) does not at the time of
issuance prevent the Securities from qualifying for tier 1 capital treatment (irrespective of any
limits on the amount of the Companys tier 1 capital) under the applicable capital adequacy
guidelines, regulations, policies or published interpretations of the Board of Governors of the
Federal Reserve System.
ARTICLE VII
TERMINATION
SECTION 7.1
Termination
This Capital Securities Guarantee shall terminate upon (i) full payment of the Redemption
Price of all Capital Securities, (ii) the distribution of the Debentures to the Holders of all of
the Capital Securities or (iii) full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this Capital Securities
Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time
any Holder must restore payment of any sums paid under the Capital Securities or under this Capital
Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1
Exculpation
(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise
to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in accordance with this
Capital Securities Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such
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Indemnified Person by this Capital Securities Guarantee or by law, except that an Indemnified
Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified
Persons negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith upon the records
of the Guarantor and upon such information, opinions, reports or statements presented to the
Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such
other Persons professional or expert competence and who has been selected with reasonable care by
or on behalf of the Guarantor, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.2
Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified
Person harmless against, any loss, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses)
of defending itself against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The obligation to indemnify as
set forth in this Section 8.2 shall survive the termination of this Capital Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1
Successors and Assigns
All guarantees and agreements contained in this Capital Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to
the benefit of the Holders of the Capital Securities then outstanding.
SECTION 9.2
Amendments
Except with respect to any changes that do not adversely affect the rights of Holders (in
which case no consent of Holders will be required), this Capital Securities Guarantee may be
amended only with the prior approval of the Holders of not less than a Majority in aggregate
liquidation amount (including the stated amount that would be paid on redemption, liquidation or
otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are
determined) of all the outstanding Capital Securities. The provisions of Section 12.2 of the
Declaration with respect to meetings of Holders apply to the giving of such approval.
SECTION 9.3
Notices
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All notices provided for in this Capital Securities Guarantee shall be in writing, duly signed
by the party giving such notice, and shall be delivered, telecopied or mailed by registered or
certified mail, as follows:
(a) If given to the Capital Guarantee Trustee, at the Capital Guarantee Trustees mailing
address set forth below (or such other address as the Capital Guarantee Trustee may give notice of
to the Holders):
The Bank of New York
101 Barclay Street-8W
New York, New York 10286
Attn: Global Trust Administration
(b) If given to the Guarantor, at the Guarantors mailing address set forth below (or such
other address as the Guarantor may give notice of to the Holders):
Citigroup Inc.,
153 East 53rd Street
New York, NY 10043
Attention: Charles E. Wainhouse, Assistant Treasurer
(c) If given to any Holder, at the address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in person, telecopied with
receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 9.4
Benefit
This Capital Securities Guarantee is solely for the benefit of the Holders of the Capital
Securities and, subject to Section 3.1(a), is not separately transferable from the Capital
Securities.
SECTION 9.5
Governing Law
THIS CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED
BY SUCH LAWS WITHOUT REGARD FOR THE PRINCIPLES OF ITS CONFLICTS OF LAWS.
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THIS CAPITAL SECURITIES GUARANTEE is executed as of the day and year first above written.
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CITIGROUP INC.,
as Guarantor
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By:
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Name:
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Title:
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THE BANK OF NEW YORK,
as Capital Guarantee Trustee
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By:
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Name:
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Title:
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