TERMS AGREEMENT
March 23, 2006
Citigroup Funding Inc.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Treasury Capital Markets
Ladies and Gentlemen:
We understand that Citigroup Funding Inc., a Delaware corporation (the
"Company"), proposes to issue and sell $55,400,000 aggregate principal amount of
its 7.5% Select EQUity Indexed NoteS (SEQUINS(SM)) Based Upon the Common Stock
of United Health Group Inc. Due April 10, 2007 (the "SEQUINS"). The payments due
under the SEQUINS will be fully and unconditionally guaranteed by Citigroup
Inc., a Delaware corporation (the "Guarantor"). Subject to the terms and
conditions set forth herein or incorporated by reference herein, Citigroup
Global Markets Inc. (the "Underwriter") offers to purchase 5,540,000 SEQUINS for
an amount equal to $54,153,500 (97.75% of the aggregate principal amount). The
Closing Date shall be March 28, 2006 at 9:00 a.m. at the offices of Xxxxxx
Xxxxxxxx Xxxxx & Xxxxxxxx LLP, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
The SEQUINS shall have the following terms:
Title: 7.5% Select EQUity Indexed NoteS (SEQUINS(SM))
Based Upon the Common Stock of United Health Group
Inc. Due April 10, 2007
Maturity: April 10, 2007
Maturity Payment: Holders of the SEQUINS will be entitled to receive
at maturity the Maturity Payment (as defined in
the Prospectus Supplement dated March 23, 2006
relating to the SEQUINS)
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Interest Rate: 7.5% per annum
Interest Payment Dates: The 10th day of each January, April, July and
October, or the immediately next business day,
commencing on July 10, 2006
Regular Record Dates: The fifth Business Day preceding each interest
payment date
Initial Price To Public: 100% of the principal amount thereof, plus accrued
interest from March 28, 2006 to date of payment
and delivery
Call Option: Beginning October 2, 2006, the Company may call
the SEQUINS in whole, and not in part, for cash in
an amount that, together with all other payments
made on the SEQUINS from the date of issuance to
and including the call date, will provide a yield
to call of 11.5% per annum (compounded annually)
Trustee: The Bank of New York
Indenture: Indenture, dated as of June 1, 2005
All the provisions contained in the document entitled "Citigroup Funding
Inc. - Debt Securities - Underwriting Agreement Basic Provisions" and dated May
3, 2005 (the "Basic Provisions"), a copy of which you have previously received,
are herein incorporated by reference in their entirety and shall be deemed to be
a part of this Terms Agreement to the same extent as if the Basic Provisions had
been set forth in full herein. Terms defined in the Basic Provisions are used
herein as therein defined.
Basic provisions varied with respect to this Terms Agreement:
(a) In Section 1, insert the following:
(c) As of 4:00 p.m. on March 23, 2006, the Preliminary Final
Prospectus dated February 15, 2006, including the documents incorporated
by reference therein, and the document listed in Schedule I hereto,
considered together with the amount, the public offering price, the
annual interest rate, the exchange ratio, the call date, the delivery
date and the maturity date of the Securities, each as set forth on the
front cover of the Final Prospectus (except as to the financial
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statements or other data of a financial or statistical nature contained
therein), does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) in Section 5, insert the following:
(i) Each of the Company and the Guarantor represents and agrees
that, unless it has obtained or will obtain, as the case may be, the
prior written consent of the Representative, and each of the
Underwriters, severally and not jointly, represents and agrees with the
Company and the Guarantor that, unless it has obtained or will obtain,
as the case may be, the prior written consent of the Company and the
Guarantor, it has not made and will not make any offer relating to the
Securities that would constitute an issuer free writing prospectus as
defined in Rule 433 under the Act ("Issuer Free Writing Prospectus") or
that would otherwise constitute a free writing prospectus as defined in
Rule 405 under the Act ("Free Writing Prospectus") required to be filed
by the Company or the Guarantor with the Commission or retained by the
Company or the Guarantor under Rule 433 under the Act; provided that the
prior written consent of the parties hereto shall be deemed to have been
given in respect of the Free Writing Prospectus included in Schedule I
hereto.
(c) delete the text of Section 6(b) (including subsections (i) through
(x)) and insert in lieu thereof the following:
(b) The Company and the Guarantor shall have requested and caused
the counsel for the Company and the Guarantor to have furnished to the
Representative an opinion, dated the Closing Date and addressed to the
Representative, to the effect set forth in Annex A hereto.
(d) in the tenth line of Section 8(a), delete "or the Final Prospectus"
and insert in lieu thereof ", the Final Prospectus or any Issuer Free Writing
Prospectus"
The Underwriter hereby agrees in connection with the underwriting of the
SEQUINS to comply with the requirements set forth in any applicable sections of
Section 2720 to the By-Laws of the National Association of Securities Dealers,
Inc.
Xxxxxxx X. Xxxxxxx, Esq. is General Counsel, Finance and Capital Markets
of the Guarantor and legal counsel to the Company. Xxxxxx Xxxxxxxx Xxxxx &
Xxxxxxxx LLP is counsel to the Underwriter. Xxxxxx Xxxxxxxx Xxxxx & Xxxxxxxx LLP
is special tax counsel to the Company and the Guarantor.
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Please accept this offer no later than 9:00 p.m. on March 23, 2006, by
signing a copy of this Terms Agreement in the space set forth below and
returning the signed copy to us, or by sending us a written acceptance in the
following form:
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"We hereby accept your offer, set forth in the Terms Agreement, dated
March 23, 2006, to purchase the SEQUINS on the terms set forth therein."
Very truly yours,
CITIGROUP GLOBAL MARKETS INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
ACCEPTED:
CITIGROUP FUNDING INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Vice President
and Assistant Treasurer
CITIGROUP INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Assistant Treasurer
ANNEX A
Form of Company Opinion to the Underwriters
(i) each of the Company and the Guarantor has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with full corporate power and
authority to own its properties and conduct its business as described in
the Prospectus;
(ii) each of the Company and the Guarantor is duly qualified to
do business as a foreign corporation in good standing in all
jurisdictions in which it owns or leases substantial properties or in
which the conduct of its business requires such qualification and the
failure to so qualify would have a material adverse effect on the
Company or the Guarantor, as applicable;
(iii) the Indenture has been duly authorized, executed and
delivered by the Company and the Guarantor, has been duly qualified
under the Trust Indenture Act and constitutes a legal, valid and binding
instrument enforceable against the Company and the Guarantor in
accordance with its terms (subject, as to enforcement, to applicable
bankruptcy, reorganization, insolvency, moratorium and other similar
laws affecting creditors' rights generally and to general principles of
equity regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(iv) the Securities have been validly authorized and, when duly
executed by the proper officers of the Company, duly authenticated by
the Trustee and delivered as contemplated by the Agreement and by the
Indenture, will be validly issued and outstanding obligations of the
Company enforceable in accordance with their terms and entitled to the
benefits of the Indenture (subject, as to enforcement, to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting creditors' rights generally and to general principles of
equity regardless of whether such enforceability is considered in a
proceeding in equity or at law) and conform in all material respects to
the description thereof in the Prospectus and any "issuer free writing
prospectus" (as defined in Rule 433 under the Act);
(v) the Guarantee has been duly authorized and constitutes a
legal, valid and binding obligation of the Guarantor enforceable in
accordance with its terms (subject, as to enforcement, to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting creditors' rights generally and to general principles of
equity regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(vi) the Indenture conforms in all material respects to the
description thereof in the Prospectus;
(vii) the Terms Agreement (including the provisions of this
Agreement) has been duly authorized, executed and delivered by the
Company and the Guarantor;
(viii) no consent, approval, authorization, filing with or order
of any court or governmental agency or body is required for the
consummation by the Company and the Guarantor of the transactions
contemplated herein or in the Indenture, except such as have been
obtained under the Act and the Trust Indenture Act and such as may be
required under the securities or blue sky laws of any jurisdiction in
connection with the sale of the Securities;
(ix) The execution, delivery and performance of the Indenture
and the Terms Agreement (including the provisions of this Agreement) and
the issuance and sale of the Securities in compliance with the terms and
provisions thereof, will not result in a breach of any of the terms and
provisions of, or constitute a default under, any of the agreements or
instruments of the Company and the Guarantor, as the case may be, filed
by the Guarantor with the Securities and Exchange Commission as exhibits
to the Registration Statement and to its (i) Annual Report on Form 10-K
for the fiscal year ended December 31, 2005; (ii) Current Reports on
Form 8-K filed from January 13, 2006 to the Closing Date; (iii)
registration statement on Form S-3 (Registration No. 333-117615); (iv)
registration statement on Form S-3 (Registration No. 333-126744); and
(v) registration statement on Form S-3 (Registration No. 333-106510), or
result in a violation of the charter or By-Laws of the Guarantor or any
of its material subsidiaries, including the Company, or any statute,
rule, regulation or order of any governmental agency or body or any
court having jurisdiction over the Guarantor or any of its material
subsidiaries, including the Company, or any of their properties;
provided, however, that no opinion is expressed in this paragraph with
respect to (i) the rights to indemnity and contribution contained in the
Terms Agreement (including the provisions of this Agreement), which may
be limited by federal or state securities laws or the public policy
underlying such laws; or (ii) any state securities or blue sky laws;
(x) such counsel has no reason to believe that as of 4:00 p.m.
on the date of the Terms Agreement, the Preliminary Final Prospectus,
subject to completion, dated February 15, 2006, including the documents
incorporated by reference therein, and the document listed in Schedule I
hereto (except as to the financial statements or other data of a
financial or statistical nature contained therein, as to which no
opinion is expressed), contained any untrue statement of a
material fact or omitted to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and
(xi) the Registration Statement was declared effective under the
Act, and, to the knowledge of such counsel, no stop order suspending its
effectiveness has been issued and no proceedings for that purpose have
been instituted or are pending or have been communicated by the
Commission to the Company as being contemplated by it under the Act. The
Registration Statement, as of its effective date, and the Final
Prospectus, as of its date and as of the Closing Date, comply as to form
in all material respects with the requirements of the Act, the Exchange
Act and the Trust Indenture Act and the applicable rules and regulations
thereunder (except as to the financial statements or other data of a
financial or statistical nature or the Statements of Eligibility (Forms
T-1) under the Trust Indenture Act of the Trustee, as to which no
opinion is expressed); and such counsel has no reason to believe that
the Registration Statement, as of its most recent effective date
determined pursuant to Rule 430B(f)(2) under the Act, contained any
untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Final Prospectus, as of its date or
on the Closing Date, contained or contains any untrue statement of a
material fact or omitted or omits to state any material fact required to
be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading
(except as to the financial statements or other data of a financial or
statistical nature, as to which no opinion is expressed). The
description in the Registration Statement and the Final Prospectus of
statutes, legal and governmental proceedings and contracts and other
documents are accurate and fairly present the information required to be
shown; and such counsel does not know of any legal or governmental
proceedings required to be described in the Final Prospectus which are
not described as required or of any contracts or documents of a
character required to be described in the Registration Statement or the
Final Prospectus or to be filed as exhibits to the Registration
Statement which are not described and filed as required.
In rendering such opinion, such counsel may rely (i) as to matters
involving the application of laws of any jurisdiction other than the
State of New York or the Federal laws of the United States, to the
extent they deem proper and specified in such opinion, upon the opinion
of other counsel of good standing whom they believe to be reliable and
who are satisfactory to counsel for the Underwriters and (ii) as to
matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and the Guarantor and public
officials.
References to the Final Prospectus in this paragraph (b) shall also
include any supplements thereto at the Closing Date.
SCHEDULE I
1. Offering Summary dated February 15, 2006, as first filed with the Commission
pursuant to Rule 433 under the Securities Act.
