Citigroup (C)

However, if the transaction that gives rise to an adjustment pursuant to this clause (3) is one pursuant to which the payment of a dividend or other distribution on Citigroup common stock consists of shares of capital stock of, or similar equity interests in, a subsidiary or other business unit of Citigroup’s (i.e., a spin-off) that are, or, when issued, will be, traded on a U.S. securities exchange or quoted on the Nasdaq Capital Market, then the conversion rate will instead be adjusted based on the following formula:

months in the case of an annual dividend (each such number, the “dividend threshold amount”), (b) any cash that is distributed as part of a distribution referred to in clause (3) above, and (c) any consideration payable in connection with a tender or exchange offer made by Citigroup or any of its subsidiaries referred to in clause (5) below, in which event, the conversion rate will be adjusted based on the following formula:

consideration paid or payable for shares validly tendered or exchanged and not withdrawn as of the expiration date (the “purchased shares”)

Notwithstanding the foregoing, in the event of an adjustment pursuant to clauses (4) or (5) above, in no event will the conversion rate following such adjustment exceed       , subject to adjustment pursuant to clauses (1), (2) and (3) above.  In addition, in no event will Citigroup adjust the conversion rate to the extent that the adjustment would reduce the conversion price below the par value per share of Citigroup common stock.

“Record date” means, for purpose of this section, with respect to any dividend, distribution or other transaction or event in which the holders of Citigroup common stock have the right to receive any cash, securities or other property or in which Citigroup common stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of Citigroup common stock entitled to receive such cash, securities or other property (whether such date is fixed by Citigroup’s board of directors or by statute, contract or otherwise).

“Current market price” of Citigroup common stock on any day, means the average of the VWAP of Citigroup common stock over each of the 10 consecutive trading days ending on the earlier of the day in question and the day before the “ex-date” or other specified date with respect to the issuance or distribution requiring such computation, appropriately adjusted to take into account the occurrence during such period of any event described in clauses (1) through (5) above.  For purposes of this section, “ex-date” means the first date on which the shares of Citigroup common stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive an issuance or distribution.

“VWAP” per share of Citigroup common stock on any trading day means the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “C UN <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the open of trading on the relevant trading day until the close of trading on the relevant trading day (or if such volume-weighted average price is unavailable, the market price of one share of Citigroup common stock on such trading days determined, using a volume-weighted average method, by a nationally recognized investment banking firm (unaffiliated with Citigroup) retained for this purpose by Citigroup).

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A “trading day” means, for purposes of determining a VWAP or closing price, a business day on which the relevant exchange or quotation system is scheduled to be open for business and a day on which there has not occurred or does not exist a market disruption event.  A “market disruption event” is defined as any of the following events that has occurred:

·                        any suspension of, or limitation imposed on, trading by the relevant exchange or quotation system during the one-hour period prior to the close of trading for the regular trading session on the exchange or quotation system (or for purposes of determining VWAP any period or periods aggregating one half-hour or longer) and whether by reason of movements in price exceeding limits permitted by the relevant exchange or quotation system or otherwise relating to Citigroup common stock or in futures or option contracts relating to Citigroup common stock on the relevant exchange or quotation system;

·                  any event (other than a failure to open or a closure as described below) that disrupts or impairs the ability of market participants during the one-hour period prior to the close of trading for the regular trading session on the exchange or quotation system (or for purposes of determining VWAP any period or periods aggregating one half-hour or longer) in general to effect transactions in, or obtain market values for, Citigroup common stock on the relevant exchange or quotation system or futures or options contracts relating to Citigroup common stock on any relevant exchange or quotation system; or

·                  the failure to open of the exchange or quotation system on which futures or options contracts relating to Citigroup common stock are traded or the closure of such exchange or quotation system prior to its respective scheduled closing time for the regular trading session on such day (without regard to after hours or other trading outside the regular trading session hours) unless such earlier closing time is announced by such exchange or quotation system at least one hour prior to the earlier of the actual closing time for the regular trading session on such day and the submission deadline for orders to be entered into such exchange or quotation system for execution at the actual closing time on such day.

Except as stated above, the conversion rate will not be adjusted for the issuance of Citigroup common stock or any securities convertible into or exchangeable for Citigroup common stock or carrying the right to purchase any of the foregoing or for the repurchase of Citigroup common stock.  An adjustment to the conversion rate also need not be made for a transaction referred to in clauses (1) through (5) above if holders of the Convertible Preferred Stock may participate in the transaction on a basis and with notice that the Citigroup board of directors determines to be fair and appropriate in light of the basis and notice on which holders of Citigroup common stock participate in the transaction.  In addition, no adjustment to the conversion rate need be made for a change in the par value or no par value of the Citigroup common stock.

Citigroup may, but shall not be required to, make such increases in the conversion rate, in addition to those that are required, as the board of directors of Citigroup considers to be advisable in order to avoid or diminish any income tax to any holders of shares of Citigroup common stock resulting from any dividend or distribution of stock or issuance of rights or

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warrants to purchase or subscribe for stock or from any event treated as such for income tax purposes or for any other reason.

To the extent that Citigroup has a rights plan in effect on any conversion date, you will receive, in addition to Citigroup common stock, the rights under the rights plan, unless, prior to the conversion date, the rights have separated from the common stock, in which case the conversion rate will be adjusted at the time of separation as if Citigroup made a distribution to all holders of Citigroup common stock of Citigroup capital stock, evidences of Citigroup indebtedness or Citigroup assets, as described in clause (3) above.

No adjustment in the conversion rate will be required unless such adjustment would require an increase or decrease of at least one percent; provided, however, that any such minor adjustments that are not required to be made will be carried forward and taken into account in any subsequent adjustment, and provided further that any such adjustment of less than one percent that has not been made will be made upon (x) the end of each fiscal year of Citigroup, (y) the date of any notice of a redemption or a make-whole acquisition and (z) any conversion date.

Adjustments to the conversion rate will be calculated to the nearest 1/10,000th of a share.

Whenever the conversion rate is adjusted, Citigroup must deliver to the conversion agent a certificate setting forth the conversion rate, detailing the calculation of the conversion rate and describing the facts upon which the adjustment is based.  In addition, Citigroup must notify the holders of the Convertible Preferred Stock of the adjustment within ten Business Days of any event requiring such adjustment and describe in reasonable detail the method by which the conversion rate was adjusted.