Citigroup (C)

TAX BENEFITS PRESERVATION PLAN

        As of June 30, 2009, Citigroup had recognized net deferred tax assets of approximately $42 billion, a portion of which is included in TCE. Citi's ability to utilize its deferred tax assets to offset future taxable income may be significantly limited if Citi experiences an "ownership change", as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"). In general, an ownership change will occur if there is a cumulative change in Citi's ownership by "5% shareholders" (as defined in the Code) that exceeds 50 percentage points over a rolling three-year period. As such, if the Company experiences an ownership change, its TCE may be reduced.

        While the common stock issued pursuant to the private and public exchange offers (described above) did not result in an ownership change under the Code, the common stock issued did increase the cumulative change percentage for Section 382 purposes. On June 9, 2009, the board of directors of Citigroup adopted a tax benefits preservation plan (the "Plan"). The purpose of the Plan is to minimize the likelihood of an ownership change occurring for Section 382 purposes and thus protect Citigroup's ability to utilize certain of its deferred tax assets, such as net operating loss and tax credit carry forwards, to offset future income.

        In connection with the adoption of the Plan, Citigroup's board of directors declared a dividend of one preferred stock purchase right (a "Right") for each outstanding (i) share of common and (ii) 1-millionth of a share of the interim securities. The dividend was paid to holders of record of Citigroup's common stock on June 22, 2009. Shares of Citigroup's common stock and interim securities issued after June 22, 2009 will be issued with the Right attached. The terms and conditions of the Rights are set forth in the Tax Benefits Preservation Plan attached as Exhibit 4.1 to Citigroup's Form 8-K filed with the SEC on June 10, 2009.