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These excerpts taken from the C 8-K filed Jun 10, 2009. Acquiring Person” means, in
general, any person or group that has become a “5-percent shareholder” of
Citigroup, other than (A) Citigroup or any subsidiary or employee benefit plan
or compensation arrangement of Citigroup; (B) the United States government; (C)
certain existing “5-percent shareholders” (including certain persons who are
“5-percent shareholders” following the previously announced exchange offers with
Citigroup) so long as each such shareholder does not acquire more than a
specified number of additional shares of Citigroup’s stock; (D) certain other
“grandfathered persons” (as described in the Plan), so long as such
“grandfathered persons” satisfy the applicable requirements in the Plan; (E) any
person or group that Citigroup’s board of directors determines, in its sole
discretion, has inadvertently become a “5-percent shareholder” (or inadvertently
failed to continue to qualify as a “grandfathered person”), so long as such
person or group promptly divests sufficient shares so as to no longer own 5% of
Citigroup’s stock; (F) any person or group that has become a “5-percent
shareholder” (or failed to qualify as a “grandfathered person”) solely as a
result of certain “in-kind distributions,” so long as such person or group
satisfies the applicable requirements set forth in the Plan; (G) any person or
group that Citigroup’s board of directors determines, in its sole discretion,
has not jeopardized or endangered Citigroup’s utilization of its Tax Benefits,
so long as each such shareholder does not acquire any additional shares of
Citigroup’s stock and so long as our board of directors does not, in its sole
discretion, make a contrary determination; and (H) any person that acquires at
least a majority of Citigroup’s common stock (and, for so long as the Interim
Securities remain outstanding, at least a majority of the Interim Securities) in
connection with an offer to acquire 100% of Citigroup’s common stock then
outstanding (and, for so long as the Interim Securities remain outstanding, 100%
of the Interim Securities).
At any
time after any person has become an Acquiring Person (but before any person
becomes the beneficial owner of 50% or more of the outstanding shares of
Citigroup’s common stock), Citigroup’s board of directors may generally exchange
all or part of the Rights (other than Rights beneficially owned under certain
U.S. tax rules by an Acquiring Person) for shares of Series R Preferred Stock at
an exchange ratio of one one-millionth of a share of Series R Preferred Stock
per Right.
The
issuance of the Rights is not taxable to holders of Citigroup’s common stock or
Interim Securities for U.S. federal income tax purposes.
Upon
conversion of the Interim Securities into common stock, any Rights associated
with such Interim Securities will be extinguished and the common stock issued
upon such conversion will be issued with Rights attached thereto.
Citigroup’s
board of directors may redeem all of the Rights at a price of $0.00001 per Right
at any time before a Distribution Date.
Prior to
the Distribution Date, the Rights will be evidenced by the certificates for (or
current ownership statements issued with respect to uncertificated shares in
lieu of certificates for) and will be transferred with, Citigroup’s common stock
and Interim Securities, and the registered holders of Citigroup’s common stock
and Interim Securities will be deemed to be the registered holders of the
Rights. After the Distribution Date, the rights agent will mail
separate certificates evidencing the Rights to each record holder of Citigroup’s
common stock and Interim Securities as of the close of business on the
Distribution Date, and thereafter the Rights will be transferable separately
from Citigroup’s common stock and Interim Securities. The Rights will
expire on June 10, 2012, unless earlier exchanged or redeemed.
At any
time prior to the Distribution Date, the Plan may be amended in any
respect. At any time after the occurrence of a Distribution Date, the
Plan may be amended in any respect that does not adversely affect Rights holders
(other than any Acquiring Person).
A Rights
holder has no rights as a stockholder of Citigroup, including the right to vote
and to receive dividends.
The Plan
includes antidilution provisions designed to maintain the effectiveness of the
Rights.
The above
summary of the Plan is qualified by the full text of the Plan being filed as
Exhibit 4.1 to this Form 8-K and incorporated herein by reference in its
entirety.
Item
1.01. Entry into a Material Definitive Agreement.
Item
3.02. Unregistered Sales of Equity Securities.
On June
10, 2009, Citigroup announced that it had entered into definitive exchange
agreements (the “ Acquiring Person” means any
Person who or which is or becomes a 5% Shareholder (other than by reason of
Treasury Regulation Section 1.382-2T(j)(3)(i) or solely as a result of a
transaction in which no “5-percent shareholder” (as defined in Section 382 of
the Code and Treasury Regulations thereunder) experiences an increase in its
percentage stock ownership interest of the Company, as determined in accordance
with Treasury Regulation Sections 1.382-2(a), 1.382- 2T(g), (h), (j) and (k)),
whether or not such Person continues to be a 5% Shareholder, but shall not
include:
(i)
any
Exempt Person;
(ii)
any
Grandfathered Person;
(iii) the U.S.
Government;
(iv) any
Person who or which the Board determines, in its sole discretion, has
inadvertently become a 5% Shareholder (or has either inadvertently failed to
continue to qualify as a Grandfathered Person or inadvertently failed to be
excluded from the definition of an “Acquiring Person” pursuant to clause (vii)
below), so long as such Person promptly enters into, and delivers to the
Company, an irrevocable commitment promptly to divest and thereafter promptly
divests (without exercising or retaining any power, including voting, with
respect to such securities), sufficient Company Securities so that such Person’s
Percentage Stock Ownership is less than 5% (or, in the case of any Person who or
which has inadvertently failed to continue to qualify as a Grandfathered Person
or inadvertently failed to be excluded from the definition of an “Acquiring
Person” pursuant to clause (vii) below, the Company Securities that caused such
Person to so fail to qualify as a Grandfathered Person or fail to be excluded
from the definition of an “Acquiring Person” pursuant to clause (vii)
below);
(v) any
Person that has become a 5% Shareholder if the Board in good faith determines
that such Person’s attainment of 5% Shareholder status has not jeopardized or
endangered the Company’s utilization of the Tax Benefits; provided that such Person
does not increase its Percentage Stock Ownership over such Person’s lowest
Percentage Stock Ownership immediately following such determination by the
Board, other than any increase pursuant to or as a result of (A) a stock
dividend, stock split, reverse stock split or similar transaction effected by
the Company or (B) any redemption of Company Securities by the Company; and
provided
4
(vi) any
Person if, on the date that would have been (absent this clause (vi) of the
definition of “Acquiring Person”) a Stock Acquisition Date with respect to such
Person, such Person does not Beneficially Own any Company
Securities;
(vii) any
Person who or which has become a 5% Shareholder (or failed to continue to
qualify as a Grandfathered Person) solely as a result of an in-kind distribution
of Company Securities (whether or not in redemption of a Fund Vehicle interest)
to such Person (or to an Affiliate) from a Fund Vehicle (or the receipt of cash
in lieu of such in-kind distribution); provided that either (A) (1)
the Person (or Affiliate) is not and does not control the general partner or
investment manager of the Fund Vehicle and is not otherwise principally
responsible for the investment decisions of the Fund Vehicle and (2) the Person
(or Affiliate) was not otherwise able, using commercially reasonable efforts, to
prevent the Fund Vehicle from distributing Company Securities to such Person (or
Affiliate), including by electing wherever possible to not have its interest in
such Fund Vehicle redeemed, (B) the Person (or Affiliate) is not and does not
control the general partner or investment manager of the Fund Vehicle and is not
otherwise principally responsible for the investment decisions of the Fund
Vehicle and the Person (or Affiliate) receives only cash in lieu of an in-kind
distribution of Company Securities from a Fund Vehicle or (C) the Person (or
Affiliate) is or controls the general partner or investment manager of the Fund
Vehicle or is otherwise principally responsible for the investment decisions of
the Fund Vehicle and (1) the Fund Vehicle does not offer its investors the right
to elect cash in lieu of an in-kind distribution of Company Securities and (2)
only cash in lieu of an in-kind distribution of Company Securities is made to
the Person (or Affiliate) (a distribution described in (A), (B) or (C), an
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