TERMS AGREEMENT
February 22, 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 $28,500,000 aggregate principal amount of
its Principal-Protected Equity Linked Notes Based Upon the Dow Xxxxx Industrial
AverageSM with Potential Supplemental Interest at Maturity Due January 25, 2010
(the "Notes"). The payments due under the Notes 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 2,850,000 Notes for an amount equal to
$27,858,750 (97.75% of the aggregate principal amount). The Closing Date shall
be February 27, 2006 at 9:00 a.m. at the offices of Xxxxxx Xxxxxxxx Xxxxx &
Xxxxxxxx LLP, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
The Notes shall have the following terms:
Title: Principal-Protected Equity Linked Notes Based
Upon the Dow Xxxxx Industrial AverageSM with
Potential Supplemental Interest at Maturity Due
January 25, 2010.
Maturity: January 25, 2010.
Maturity Payment: Holders of the Notes will be entitled to
receive at maturity, for each $10 principal
amount of Notes such holders hold, a payment
equal to the sum of $10 and an index return
amount (as defined in the Prospectus Supplement
dated February 22, 2006 relating to the Notes).
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Interest Rate The Notes do not bear interest. No payments on
the Notes will be made until maturity
Initial Price To Public: 100% of the principal amount thereof
Redemption Provisions: The Notes are not redeemable by the Company
prior to maturity.
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 February 22, 2006, the Preliminary Final
Prospectus dated January 17, 2006, including the documents incorporated by
reference therein, and the documents listed in Schedule I hereto,
considered together with the amount, the public offering price, the
delivery date and the maturity date of the Securities, and the
participation rate, each as set forth on the front cover of the Final
Prospectus, and the starting value and valuation date, as set forth under
the heading "Summary Information--Q&A" in the Final Prospectus (except
as to the financial 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
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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 Prospectuses
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
Notes 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.
Please accept this offer no later than 9:00 p.m. on February 22, 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
February 22, 2006, to purchase the Notes 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
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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);
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(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 Supplement, subject to
completion, dated January 17, 2006, including the documents incorporated by
reference therein, and the documents 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
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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.
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SCHEDULE I
1. Offering Summary dated January 17, 2006, as first filed with the Commission
pursuant to Rule 433 under the Securities Act
2. Offering Summary dated February 22, 2006, as first filed with the Commission
pursuant to Rule 433 under the Securities Act
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