1
REGISTRATION NO. 333-
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 10, 2001JULY 20, 2005
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
SALOMON SMITH BARNEY NEW YORK 11-2418067
HOLDINGSCITIGROUP FUNDING INC. DELAWARE 13-410572242-1658283
CITIGROUP INC. DELAWARE 52-1568099
TARGETS TRUST XII DELAWARE 13-4105724
TARGETS TRUST XIII DELAWARE 13-4105725
TARGETS TRUST XIV DELAWARE 13-4105726
TARGETS TRUST XV DELAWARE 13-4105728
TARGETS TRUST XVI DELAWARE 13-7235205
TARGETS TRUST XVII DELAWARE 13-7303518
TARGETS TRUST XVIII DELAWARE 52-7211962
TARGETS TRUST XIX DELAWARE 52-7211963
TARGETS TRUST XX DELAWARE 52-7211964
TARGETS TRUST XXI DELAWARE 52-7211965
TARGETS TRUST XXII DELAWARE 52-7211966
TARGETS TRUST XXIII DELAWARE 52-7211968
TARGETS TRUST XXIVXXV DELAWARE 52-7211969
TARGETS TRUST XXVXXVI DELAWARE 52-7211970
TARGETS TRUST XXVIXXVII DELAWARE 52-7211972
TARGETS TRUST XXVII
(EXACT NAME OF REGISTRANT AS (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
SPECIFIED IN CHARTER) OF IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
388 GREENWICH STREET399 PARK AVENUE
NEW YORK, NEW YORK 1001310043
(212) 816-6000559-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
JOAN GUGGENHEIMER,------------------------
JOHN R. DYE, ESQ.
GENERAL COUNSEL SALOMON SMITH BARNEY HOLDINGS--CAPITAL MARKETS
CITIGROUP INC.
388 GREENWICH STREET399 PARK AVENUE
NEW YORK, NEW YORK 1001310043
(212) 816-6000559-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WITH COPIESCOPY TO:
MICHAEL A. ROSS, ESQ. ALAN L. BELLER, ESQ.
CITIGROUP INC. CLEARY, GOTTLIEB, STEEN & HAMILTON
399 PARK AVENUEJEFFREY D. KARPF, ESQ.
CLEARY GOTTLIEB STEEN & HAMILTON LLP
ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10043
NEW YORK, NEW YORK 10006
Approximate date of commencement of proposed sale to public:(212) 225-2000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such
time (from time to time) after the effective date of this Registration Statement
as agreed upon by Salomon Smith Barney HoldingsCitigroup Funding Inc. and the underwritersUnderwriters in light of market
conditions.
If the only securities being registered on this Formform are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box:box. [ ]
If any of the securities being registered on this Formform are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box:box. [X]
If this Formform is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering:offering. [ ] ____________________________
If this Formform is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering:offering. [ ] ____________________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box:box. [ ]
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(continued on the following page)
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF PROPOSED MAXIMUMAMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1)REGISTERED(1) PER UNIT(2) PRICE(3)(4) REGISTRATION FEEFEE(8)
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Targeted Growth Enhanced Terms
Securities ("TARGETS") of the
Trusts(2).................................................Trusts(5).....................
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Forward Contracts of Salomon Smith Barney HoldingsCitigroup
Funding Inc.(2)...................................................(5)...............
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Guarantees of Salomon Smith Barney HoldingsCitigroup Funding
Inc. with respect to the
Targeted Growth Enhanced Terms SecuritiesTARGETS of the Trusts(3)..........................................Trusts(6)......
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Totals.............................................. $1,000,000,000 $250,000--------------------------------------------------------------------------------------------------------------------
Guarantees of Citigroup
Inc.(7)....................... -- -- -- --
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Total........................... $300,000,000 $300,000,000 $35,310
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(1) EstimatedIncludes an indeterminate number of guaranteed TARGETS, forward contracts
and guarantees of TARGETS by Citigroup Funding Inc. and Citigroup Inc. that
may be offered or sold by affiliates of the Registrants in market making
transactions.
(2) The proposed maximum offering price per unit of guaranteed TARGETS, forward
contracts and guarantees of TARGETS by Citigroup Funding Inc. and Citigroup
Inc. will be determined from time to time by each Trust in connection with
the issuance by it of the TARGETS, forward contracts and guarantees of
TARGETS by Citigroup Funding Inc. and Citigroup Inc. registered hereunder.
(3) The proposed maximum aggregate offering price has been estimated solely for
the purpose of determiningcalculating the registration fee pursuant to Rule 457(o)
under the Securities Act of 1933, as amended. (2)The aggregate public offering
price of guaranteed TARGETS, forward contracts and guarantees of TARGETS by
Citigroup Funding Inc. and Citigroup Inc. registered hereby will not exceed
$300,000,000.
(4) Exclusive of accrued interest, distributions and dividends, if any.
(5) Subject to the Proposed Maximum Aggregate Offering Price, there is being
registered hereunder an indeterminate number of Targeted Growth Enhanced
Terms Securities ("TARGETS") of TARGETS Trust XII, TARGETS Trust XIII,
TARGETS Trust XIV, TARGETS Trust XV, TARGETS Trust XVI, TARGETS Trust XVII,
TARGETS Trust XVIII, TARGETS Trust XIX, TARGETS Trust XX, TARGETS Trust XXI,
TARGETS Trust XXII, TARGETS Trust XXIII, TARGETS Trust XXIV, TARGETS Trust
XXV, TARGETS Trust XXVI and
TARGETS Trust XXVII (each, a "Trust") and forward contracts of Salomon Smith Barney HoldingsCitigroup
Funding Inc. as may from time to time be issued at indeterminate prices.
Includes TARGETS which may be purchased by underwriters to cover
over-allotments, if any.
(3)(6) Includes the rights of holders of the TARGETS under any guarantees and
certain back-up undertakings, comprised of the obligations of Salomon Smith
Barney HoldingsCitigroup
Funding Inc. to provide certain indemnities in respect of, and pay and be
responsible for certain costs, expenses, debts and liabilities of, each
Trust (other than with respect to the TARGETS) and such obligations of
Salomon Smith Barney HoldingsCitigroup Funding Inc. as set forth in the amended and restated declaration
of trust of each Trust and the indenture, in each case as further described
in the Registration Statement. The Guarantees,guarantees, when taken together with
Salomon Smith Barney HoldingsCitigroup Funding Inc.'s obligations under the forward contracts, the
indenture and the amended and restated declarations of trust, will provide a
full and unconditional guarantee by Salomon Smith
Barney HoldingsCitigroup Funding Inc. of the Trusts'
obligations under the TARGETS. No separate consideration will be received
for any guarantees or such back-up obligations.
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PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE
PROSPECTUS INCLUDED IN THIS REGISTRATION STATEMENT ALSO RELATES TO THE(7) No separate consideration will be received for the Citigroup Inc.
guarantees.
(8) TARGETS FORWARD CONTRACTS AND GUARANTEES PREVIOUSLY REGISTERED UNDER REGISTRATION
STATEMENT NO. 333-32792 ON FORM S-3. THIS REGISTRATION STATEMENT ALSO
CONSTITUTES POST-EFFECTIVE AMENDMENT NO. 2 TO REGISTRATION STATEMENT NO.
333-32792 ON FORM S-3. THE $24,561,486 OFTrust XXV, TARGETS FORWARD CONTRACTS AND
GUARANTEES REMAINING UNSOLD FROM REGISTRATION STATEMENT 333-32792 WILL BE
COMBINED WITH THETrust XXVI, TARGETS Trust XXVII and Citigroup
Global Markets Holdings Inc., a wholly owned subsidiary of Citigroup Inc.,
previously paid a filing fee of $250,000 in respect of $1,000,000,000 AGGREGATE AMOUNT OF TARGETS, FORWARD CONTRACTS
AND GUARANTEES TO BE REGISTERED PURSUANT TO THIS REGISTRATION STATEMENT TO
ENABLE SALOMON SMITH BARNEY HOLDINGS INC. AND THE TRUSTS TO OFFER AN AGGREGATE
AMOUNT OF $1,024,561,486 OF TARGETS, FORWARD CONTRACTS AND GUARANTEES. A FILING
FEE OF $132,000 WAS PAID IN CONNECTION WITH $24,561,486 OF SECURITIES THAT
REMAIN ELIGIBLE TO BE SOLD UNDER THE REGISTRATION STATEMENT ON FORM S-3 (NO.
333-32792) OF SALOMON SMITH BARNEY HOLDINGS INC. AS OF SEPTEMBERof
securities registered under Registration Statement No. 333-69230, initially
filed on September 10, 2001. $300,000,000 of the $1,000,000,000 of
securities registered on Registration Statement No. 333-69230 remain unsold
and, accordingly, $75,000 of such $250,000 filing fee remains unused.
Accordingly, pursuant to Rule 457(p) under the Securities Act, no filing fee
is submitted with this Registration Statement and the unused portion of the
previously paid filing fee is reduced to $39,690.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THISTHE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THEA
REGISTRATION STATEMENT RELATING TO THESE SECURITIES THAT HAS BEEN FILED WITH THE
SECURITIES AND EXHANGE COMMISSION
IS EFFECTIVE.EXCHANGE COMMISSION. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED __________________
[Cover Page Background: Salomon Smith Barney trading floor], [2005]
PROSPECTUS
TARGETS
TRUST [XII][XXV]
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TARGETED GROWTH WITH RESPECT TO THE COMMON STOCK OF
ENHANCED TERMS SECURITIES [MOTOROLA, INC.]
(TARGETS(R)) PROSPECTUS
With respect to the common stock of
Due on
$[10.00] perDUE ON
$10.00 PER TARGETS
Payments Due FromPAYMENTS DUE FROM TARGETS
Trust [XII]
Guaranteed by
Salomon Smith Barney Holdings Inc.TRUST [XXV] GUARANTEED BY
CITIGROUP FUNDING INC.
PAYMENTS DUE FROM CITIGROUP
FUNDING INC. GUARANTEED BY
CITIGROUP INC.
- --- Preferred securities of a trust paying:
1. Quarterly distributions in the amount of $___$ (except $____
_________________,$ on
[November 15, 2005]), and
2. A maturity payment based on the market price of the common stock of
______________________[Motorola, Inc.].
- --- We will apply to list hethe TARGETS on ____________________the American Stock Exchange under the
symbol "___""[TGM]."
INVESTING IN THE TARGETS INVOLVES A NUMBER OF RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 13.
______________________9.
[Motorola, Inc.] is not involved in any way in this offering and has no
obligations relating to the TARGETS or to holders of the TARGETS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the TARGETS or determined that this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
PerPER TARGETS TotalTOTAL
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Public Offering Price $ $
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Underwriting Discount to be paid by Salomon Smith Barney HoldingsCitigroup Funding Inc. $ $
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Proceeds to TARGETS Trust [XII][XXV] before expenses $ $ - ----------------------------------------------------------------------------------------------------$
TARGETS Trust [XII] has granted to Salomon Smith Barney Inc., as underwriter,
an option, exercisable for 30 days from the date of this prospectus, to
purchase up to_____additional TARGETS at the public offering price.
Salomon Smith BarneyCitigroup Global Market Inc. expects to deliver the TARGETS to purchasers on
or about _______ ,[2001], [2005].
[SALOMONSMITHBARNEYInvestment Products Not FDIC Insured May Lose Value No Bank Guarantee
[CITIGROUP LOGO]
-------------------------
A member of citigroup(umbrella logo)
,2001, [2005]
3
TARGETS(R) (TARGETED GROWTH ENHANCED TERMS SECURITIES)
SUMMARY
This summary highlights selected information from this prospectus to help you
understand the TARGETS with respect to the common stock of ________________.[Motorola, Inc.]. You
should carefully read the entire prospectus to understand fully understand the terms of the
TARGETS as well as the principal tax and other considerations that are important
to you in making a decision about whether to invest in the TARGETS. You should,
in particular, carefully review the section entitled "Risk Factors",Factors," which
highlights a number of risks, to determine whether an investment in the TARGETS
is appropriate for you. All of the information set forth below is qualified in
its entirety by the more detailed explanation set forth elsewhere in this
prospectus. GENERAL
TARGETS are preferred securities issued by a trust that offer a potential
growth and income investment opportunity. TARGETS provide the growth potential
of a particular stock in any given monthly period up to an appreciation cap of
approximately [5%]% subject to automatic resets, while limiting potential loss in
any given monthly period to a depreciation floor of % subject to automatic
resets. Although the growth potential of an investment in the TARGETS is capped,
TARGETS investors receive quarterly distributions with a yield greater than the
underlying stock's current dividend yield. TARGETS have a term of approximately
3 years. SELECTED PURCHASE CONSIDERATIONS
- - Growth Potential -- TARGETSPotential--TARGETS allow you to participate in approximately the
first [5%]% of appreciation in the price of the common stock on which they are
based in the period between the issue date and the 15th dayreset date of the
following month and in any subsequent monthly period during the term of
the TARGETS.
- - Current Income -- TARGETSIncome--TARGETS pay quarterly distributions with a yield set at
a rate that is significantly higher than the dividend yield currently paid
by the company on whose common stock the TARGETS are based.
- - Tax Advantage -- ForAdvantage--For most investors, a significant portion of the TARGETS'
quarterly distributions will be considered a return of principal. This tax
advantage of the TARGETS has the potential effect of producing a higher
after-tax return than would be produced by a more conventional
income-
generatingincome-generating security. In addition, the TARGETS generally will give
rise to a capital gain or loss upon sale or at maturity.
- - Exchange Listing -- AlthoughListing--Although the TARGETS are expected to be "buy and hold"
investments, they are listed on a major exchange.
SELECTED RISK CONSIDERATIONS
An investment in the TARGETS involves significant risks. These risks are
explained in more detail in the "Risk Factors" section of this prospectus. Some
are summarized here.
- - Your Investment in the TARGETS Will Result in a Loss if the Price of the
Common Stock Declines -- Since the maturity payment on the TARGETS will depend
on the price of the underlying stock, if the price of the underlying stock
at maturity is less than its price at issuance, the maturity payment will be
less than your initial investment, and may be zero, even if the price of the
underlying stock at some point over the life of the TARGETS exceeds the price
of the underlying stock at the time of your initial investment.
- - Your Investment in the TARGETS May Result in a Loss even if the Price of the
Common Stock Rises -- TheLoss--The maturity
payment on the TARGETS is dependent on the compounded value of the
periodic capped returns on the common stock for each reset period during
the term of the TARGETS. The first reset period begins on the date the
TARGETS are issued and ends on a date determined at the 15th daytime of pricing
the following
month.TARGETS for initial sale to the public. Subsequent reset periods end
on the 15ththat day of each month, with the last reset period ending at maturity.
If the price of the common stock declines in any reset period, the
periodic capped return for that reset period will be negative, and the
compounded value of the periodic capped returns will decrease. If the
price of the common stock declines in enough reset periods, or if the decrease in the price of the common stock in any
reset period is sufficiently large, the compounded
value will be negative. As a result, the amount of any maturity payments
may be less than the amount you paid for your TARGETS even if the price of
the common stock increases during one or more reset periods or the price
of the common stock at some point over the life of your TARGETS or at
maturity is equal to, or higher than, the price of the common stock at the
time you bought your TARGETS.
- - The Appreciation of Your Investment in the TARGETS Will be Capped --Be Capped--
TARGETS may provide less opportunity for equity appreciation than a direct
investment in the common stock because the periodic capped return will
operate to limit the portion of any appreciation in the price of the common stock in
which you will share to approximately the first [5%]% of the increase in the
period between the issue date and the first quarterly distributionreset date and in any
subsequent quarter,monthly period, but will not limit your exposure in any periodexpose you to the first % of any
depreciation in the price of the common stock.stock during any such period. If
the price of the common stock increases by more than [5%]approximately % in
any such period during the term of the TARGETS, your return on the TARGETS
may be less than your return on a similar security that was directly
linked to the common stock but was not subject to a cap on appreciation.
- - You Have No Rights Against ________________the Issuer of the Common Stock even though the
Maturity Payment on the TARGETS Is Based on the Price of __________________the Common Stock
-- The--The market price of the TARGETS at any time will be affected primarily
by changes in the price of the underlyingcommon stock. The yield on the TARGETS is
set at a rate that is higher than the current dividend yield on the underlyingcommon
stock, but may not remain higher through the term of the TARGETS if _______________the
issuer of the common stock increases its dividends. __________________dividends or the price of the
common stock decreases. The issuer of the common stock is not involved
in this offering and has no obligations relating to the TARGETS.
- - You May Not Be Able to Sell Your TARGETS if an Active Trading Market for
the TARGETS Does Not Develop --Develop--The TARGETS will be listed on a major
exchange, but there can be no guarantee of liquidity in the secondary
market. Although Salomon Smith BarneyCitigroup Global Markets Inc. intends to make a market in
the TARGETS, it is not obligated to do so.
- - The Price at Which You Will Be Able to Sell Your TARGETS Prior to Maturity
May Be Substantially Less Than the Amount You Originally Invest -- Due to
changes in the price of and the dividend yield on the underlyingcommon stock,
interest rates, other economic conditions and Salomon Smith Barney Holdings'Citigroup Funding and
Citigroup's perceived creditworthiness, the TARGETS may trade at prices
below their initial issue price and you could receive substantially less
than the amount of your original investment if you sell your TARGETS prior
to maturity.
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4SUMMARY INFORMATION -- Q&A
WHAT IS TARGETS TRUST [XII][XXV]?
TARGETS Trust [XII][XXV] is a Delaware businessstatutory trust. Salomon Smith Barney
HoldingsCitigroup Funding will
own all of the common securities of Trust [XII][XXV].
The common
securities will comprise at least 3% of Trust [XII]'s capital.
Trust [XII][XXV] will not engage in any activities except:
- issuing its trust securities, which are limited to TARGETS and
common securities,
- investing approximately 85% to 90% of the proceeds of the offering in a
forward contract of Salomon Smith Barney HoldingsCitigroup Funding relating to the common stock of
[Motorola],
- investing approximately 10% to 15% of the proceeds of the offering in
stripped self-amortizing U.S. treasury securities, and
- activities incidental to the above.
Trust [XII][XXV] will not issue any securities except the common securities and
the TARGETS.
Trust [XII][XXV] will be managed by trustees elected by Salomon Smith Barney
Holdings,Citigroup Funding, as
the holder of the common securities. The holders of the TARGETS have no right to
elect or remove trustees. Salomon Smith Barney HoldingsCitigroup Funding will pay all costs, expenses, debts
and liabilities of Trust [XII][XXV], including fees and expenses related to the
offering of the TARGETS, but not including payments under the TARGETS.
The address and telephone number of Trust [XII][XXV] are:
TARGETS Trust [XII][XXV]
c/o Salomon Smith Barney HoldingsCitigroup Funding Inc.
388 Greenwich Street399 Park Avenue
New York, NY 1001310043
(212) 816-6000559-1000
WHAT ARE THE TARGETSTARGETS?
The TARGETS are preferred undivided interests in Trust [XII][XXV]. The TARGETS
mature on , but will be subject to acceleration to an accelerated
maturity date upon the occurrence of one of the acceleration events described
below. If an acceleration event occurs or Salomon Smith Barney HoldingsCitigroup Funding or Citigroup
defaults on its guarantee, holders of the TARGETS will have a preference over
holders of the common securities for payments.
The TARGETS are designed to provide you with a higher yield than the
current dividend yield paid on the common stock of while[Motorola]. They also providingprovide
the opportunity for you to share in approximately the first [5%]% of any
appreciation while limiting your potential loss to approximately the first
% of any depreciation in the price of the common stock in the period
between the issue date and the first reset date and in any subsequent monthly
period during the term of the TARGETS, but will not limit your exposure to any depreciation in
the price of the common stock.TARGETS.
WILL I RECEIVE QUARTERLY DISTRIBUTIONS ON THE TARGETS?
You will receive cash distributions of $ per quarter on each
TARGETS (except that the quarterly distribution payment payable on November 15,
2005 will be $ per TARGETS), payable on each February 15, May 15,
August 15 and November 15, beginning .November 15, 2005.
Trust [XII][XXV] will make quarterly distribution payments out of:
- payments received on the treasury securities, and
- any yield enhancement payments received from Salomon Smith Barney
HoldingsCitigroup Funding under the
forward contract.
Depending on market conditions at the time of pricing the TARGETS for
initial sale to the public, the amount of the yield enhancement payments may be
zero or a nominal amount.
3
5
The ability of Trust [XII][XXV] to make quarterly distributions on the TARGETS
is entirely dependent on receipt by Trust [XII][XXV] of payments under the treasury
securities and yield enhancement payments, if any, under the forward contract.
Salomon Smith Barney HoldingsCitigroup Funding may elect not to make yield enhancement payments, if any, on
the date they are due under the forward contract, and is permitted to delay
making those payments, with interest, until maturity. You should refer to the
sections "Risk Factors -- You may not receive yield enhancement paymentsMay Not Receive Yield Enhancement Payments on the
date they are due because they can be deferred"Date They Are Due Because They Can Be Deferred" and "Description of the
TARGETS -- Quarterly Distributions" in this prospectus.
WHAT WILL I RECEIVE AT MATURITY PAYMENTOF THE TARGETS?
At maturity, you will receive for each TARGETS the maturity payment and the
final quarterly distribution. The maturity payment per TARGETS will equal the
sum of (A) the initial principal amount of $[10.00]$10.00 per TARGETS and (B) the stock
return payment, which may be positive, zero or negative.
HOW WILL THE STOCK RETURN PAYMENT BE CALCULATED?
The stock return payment will equal the product of:
Initial Principal Amount of $[10.00]$10.00 per TARGETS x Stock Return
The stock return will equal the compounded value of the periodic capped
returns for each reset period computed in the following manner, and is presented
in this prospectus as a percentage:
Product of [(1.00 + the periodic capped return) for each reset period] -
1.00
The periodic capped return for any reset period (including the reset period
ending at maturity) will equal the following fraction:
Ending Value - Starting Value
---------------------------------
Starting Value
Reset dates occur on the 15th day of each month beginning , and we2005,
except that the final reset date will occur at maturity. We refer to theeach period
between any two consecutive reset dates (or the issue date and the first reset
date) as a reset periods.period. The periodic capped return for any reset period will
not in any circumstances be greater than a value to be
determined on the date the TARGETS are priced, which value is expected to be
approximately [5%].% or less than
approximately %.
The stock return will be calculated by compounding the product of the
periodic capped returns for each reset period. Assuming a hypothetical 4.5% cap
on appreciation and a hypothetical 11% floor on depreciation in each reset
period and a total of 36 reset periods, the stock return cannot be more than
approximately 387.74% (a maximum value that represents an increase in the price
of the common stock of at least 4.5% in each reset period) and may be as little
as - 98.49% (a minimum value that represents a decrease in the price of the
common stock of at least 11% in each reset period).
The ending value for any reset period other than the reset period ending at
maturity will be the closing saletrading price of the common stock on the reset date at the
end of the period or, if that day is not a trading day, the closing saletrading price of the
common stock on the most recentnext following trading day. The ending value for the reset
period ending at maturity will be the average daily closing saletrading price of the common
stock for the 10 trading days immediately priorup to but notand including the date one business daythree
trading days before the maturity date.
The starting value for the initial reset period will be the closing saletrading price
of the common stock on the date the TARGETS are priced for initial sale to the
public. We will disclose the initial starting value to you in the final
prospectus delivered to you in connection with sales of the TARGETS. The
starting value for each subsequent reset period (including the reset period
ending on maturity) will equal the ending value for the immediately preceding
reset period.
A trading day means a day, as determined by Citigroup Funding, on which
trading is generally conducted (or was scheduled to have been generally
conducted, but for the occurrence of a market disruption event) on the New York
Stock Exchange, the American Stock Exchange, the Nasdaq National Market, the
Chicago Mercantile Exchange and the Chicago Board Options Exchange, and in the
over-the-counter market for equity securities in the United States.
4
A market disruption event means the occurrence or existence of any
suspension of or limitation imposed on trading (by reason of movements in price
exceeding limits permitted by any exchange or market or otherwise) of, or the
unavailability, through a recognized system of public dissemination of
transaction information, of accurate price, volume or related information in
respect of, (1) the shares of [Motorola] common stock on any exchange or market,
or (2) any options contracts or futures contracts relating to the shares of
[Motorola] common stock, or any options on such futures contracts, on any
exchange or market if, in each case, in the determination of Citigroup Funding,
any such suspension, limitation or unavailability is material.
The trading price of [Motorola] common stock (or any other security for
which a trading price must be determined) on any date of determination will be
(1) if the common stock or other security is listed on a national securities
exchange on that date of determination, the closing sale price or, if no closing
sale price is reported, the last reported sale price on that date on the
principal U.S. exchange on which the common stock or other security is listed or
admitted to trading, (2) if the common stock or other security is not listed on
a national securities exchange on that date of determination, or if the closing
sale price or last reported sale price is not obtainable (even if the common
stock or other security is listed or admitted to trading on such exchange), and
the common stock or other security is quoted on the Nasdaq National Market, the
closing sale price or, if no closing sale price is reported, the last reported
sale price on that date as reported on the Nasdaq, and (3) if the common stock
or other security is not quoted on the Nasdaq on that date of determination or,
if the closing sale price or last reported sale price is not obtainable (even if
the common stock or other security is quoted on the Nasdaq), the last quoted bid
price for the common stock or other security in the over-the-counter market on
that date as reported by the OTC Bulletin Board, the National Quotation Bureau
or a similar organization. The determination of the trading price on any trading
day may be deferred by Citigroup Funding for up to five consecutive trading days
on which a market disruption event is occurring, but not past the trading day
prior to maturity. If no sale price is available pursuant to clauses (1), (2) or
(3) above or if there is a market disruption event, the trading price on any
date of determination, unless deferred by Citigroup Funding as described in the
preceding sentence, will be the arithmetic mean, as determined by Citigroup
Funding, of the bid prices of the common stock or other security obtained from
as many dealers in such stock or other security (which may include Citigroup
Global Markets Inc. or any of its other affiliates), but not exceeding three
such dealers, as will make such bid prices available to Citigroup Funding. A
security "quoted on the Nasdaq National Market" will include a security included
for listing or quotation in any successor to such system and the term "OTC
Bulletin Board" will include any successor to such service.
The periodic capped return is subject to adjustment upon the occurrence of
certain events involving [Motorola] and its capital structure.
The stock return payment payable to you at maturity is dependent on the
return on the common stock during the period between the issue date and the
first reset date and during each subsequent monthly period. The stock return
payment that you receive on the maturity date may be positive, zero or negative.
If the stock return is negative, the maturity payment you receive will be less
than the amount of your original investment, and may be zero.investment. If the stock return is zero, the
maturity payment you receive will equal the amount of your original investment.
If the closing sale price ofending value for the common stock over the 10-day calculationreset period prior toending at maturity is less than
the price of the common stock upon issuance of the TARGETS, the maturity payment
on each
4
6 TARGETS will be less than the amount you originally invested. As
demonstrated by some of the hypothetical examples provided below, the
possibility exists that an investment in the TARGETS will result in a loss even
if the closing sale price
ofending value for the common stock over the 10-day calculationreset period prior toending at maturity is greater than the
price of the common stock when the TARGETS are issued.
The TARGETS provide less opportunity for appreciation than a direct
investment in the common stock because the periodic capped returnsreturn will operate
to limit the
portion of any appreciation in the price of the common stock in which you will
share to approximately the first [5%]% of any increase in the price of the
common stock during any reset period, but there is no limit on your
exposurewill expose you to approximately the
first % of any depreciation in the price of the common stock induring any given
reset period.
The maturity payment with respect to each TARGETS will be paid by Trust
[XII][XXV] out of the funds received by Trust [XII][XXV] from Salomon Smith Barney
HoldingsCitigroup Funding under the
forward contract. Trust [XII][XXV]'s ability to make
5
the maturity payments is entirely dependent upon Trust [XII][XXV] receiving payments
under the forward contract from Salomon Smith Barney Holdings.Citigroup Funding.
WHERE CAN I FIND EXAMPLES OF HYPOTHETICAL MATURITY PAYMENTS?
For a table setting forth hypothetical maturity payments, see "Description
of the TARGETS -- Maturity Payment -- Hypothetical Examples
Because the stock return is dependent on the price of the common stock on
each reset date and over the 10-day calculation period prior to maturity, and
the value of the common stock may be subject to significant variations over the
term of the TARGETS, it is not possible to present a chart or table illustrating
a complete range of possible payments at maturity. The examples of hypothetical
maturity payment calculations that follow are intended to illustrate the effect
of possible general trendsExamples" in the price of the common stock on the amount
payable on the TARGETS at maturity. All of the hypothetical examples assume that
the initial price to the public of each TARGETS is $10, that the price of the
common stock on the date of issuance is $40, that the periodic capped return
cannot exceed 5% and that the maturity date is August 15, 2004.
EXAMPLE 1: THE PRICE OF THE COMMON STOCK AT MATURITY IS GREATER THAN ITS
PRICE AT ISSUANCE AND THE COMMON STOCK APPRECIATED BY 4% (AN
AMOUNT LESS THAN THE 5% PERIODIC APPRECIATION CAP) DURING EACH
RESET PERIOD THROUGHOUT THE TERM OF THE TARGETS:
2001 2002 2003 2004
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
January............... 48.67 4.00% 77.92 4.00% 124.75 4.00%
February.............. 50.61 4.00% 81.03 4.00% 129.74 4.00%
March................. 52.64 4.00% 84.27 4.00% 134.93 4.00%
April................. 54.74 4.00% 87.64 4.00% 140.32 4.00%
May................... 56.93 4.00% 91.15 4.00% 145.94 4.00%
June.................. 59.21 4.00% 94.80 4.00% 151.77 4.00%
July.................. 61.58 4.00% 98.59 4.00% 157.84 4.00%
August................ 64.04 4.00% 102.53 4.00% 164.16 4.00%
September............. 41.60 4.00% 66.60 4.00% 106.63 4.00%
October............... 43.26 4.00% 69.27 4.00% 110.90 4.00%
November.............. 44.99 4.00% 72.04 4.00% 115.33 4.00%
December.............. 46.79 4.00% 74.92 4.00% 119.95 4.00%
STOCK RETURN = [(1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X
(1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X
(1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X
(1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X
(1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X
(1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X
(1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X (1.00 + 0.04) X
(1.00 + 0.04) X (1.00 + 0.04)] - 1 = 310.39%.
STOCK RETURN PAYMENT = $10.00 X 3.1039 = $31.04
5
7
MATURITY PAYMENT = $10.00 + $31.04 = $41.04 PER TARGETS.
EXAMPLE 2: THE PRICE OF THE COMMON STOCK AT MATURITY IS GREATER THAN ITS
PRICE AT ISSUANCE AND THE COMMON STOCK APPRECIATED BY 5% (AN
AMOUNT EQUAL TO THE PERIODIC APPRECIATION CAP) DURING EACH RESET
PERIOD THROUGHOUT THE TERM OF THE TARGETS:
2001 2002 2003 2004
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
January............... 51.05 5.00% 91.68 5.00% 164.65 5.00%
February.............. 53.60 5.00% 96.26 5.00% 172.88 5.00%
March................. 56.28 5.00% 101.08 5.00% 181.52 5.00%
April................. 59.10 5.00% 106.13 5.00% 190.60 5.00%
May................... 62.05 5.00% 111.44 5.00% 200.13 5.00%
June.................. 65.16 5.00% 117.01 5.00% 210.13 5.00%
July.................. 68.41 5.00% 122.86 5.00% 220.64 5.00%
August................ 71.83 5.00% 129.00 5.00% 231.67 5.00%
September............. 42.00 5.00% 75.43 5.00% 135.45 5.00%
October............... 44.10 5.00% 79.20 5.00% 142.23 5.00%
November.............. 46.31 5.00% 83.16 5.00% 149.34 5.00%
December.............. 48.62 5.00% 87.31 5.00% 156.81 5.00%
STOCK RETURN = [(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05)] - 1 = 479.18%.
STOCK RETURN PAYMENT = $10.00 X 4.7918 = $47.92
MATURITY PAYMENT = $10.00 + $47.92 = $57.92 PER TARGETS, WHICH IS THE MAXIMUM
POSSIBLE MATURITY PAYMENT.
EXAMPLE 3: THE PRICE OF THE COMMON STOCK AT MATURITY IS GREATER THAN ITS
PRICE AT ISSUANCE AND THE COMMON STOCK APPRECIATED BY 8% (AN
AMOUNT GREATER THAN THE 5% PERIODIC APPRECIATION CAP) DURING
EACH RESET PERIOD THROUGHOUT THE TERM OF THE TARGETS:
2001 2002 2003 2004
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
January............... 58.77 5.00% 148.00 5.00% 372.69 5.00%
February.............. 63.47 5.00% 159.84 5.00% 402.51 5.00%
March................. 68.55 5.00% 172.63 5.00% 434.71 5.00%
April................. 74.04 5.00% 186.44 5.00% 469.48 5.00%
May................... 79.96 5.00% 201.35 5.00% 507.04 5.00%
June.................. 86.36 5.00% 217.46 5.00% 547.61 5.00%
July.................. 93.27 5.00% 234.86 5.00% 591.41 5.00%
August................ 100.73 5.00% 253.65 5.00% 638.73 5.00%
September............. 43.20 5.00% 108.78 5.00% 273.94 5.00%
October............... 46.66 5.00% 117.49 5.00% 295.85 5.00%
November.............. 50.39 5.00% 126.89 5.00% 319.52 5.00%
December.............. 54.42 5.00% 137.04 5.00% 345.08 5.00%
6
8
STOCK RETURN = [(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05)] - 1 = 479.18%.
STOCK RETURN PAYMENT = $10.00 X 4.7918 = $47.92
MATURITY PAYMENT = $10.00 + $47.92 = $57.92 PER TARGETS, THE MAXIMUM POSSIBLE
MATURITY PAYMENT.
EXAMPLE 4: SIGNIFICANT DECLINES IN THE PRICE OF THE COMMON STOCK IN A SMALL
NUMBER OF RESET PERIODS CAN RESULT IN A MATURITY PAYMENT THAT IS
LESS THAN YOUR INVESTMENT, EVENthis prospectus.
WHAT HAPPENS IF THE PRICE INCREASES STEADILY
IN OTHER RESET PERIODS. AS AN EXTREME EXAMPLE, THE PRICE OF THE
COMMON STOCK AT MATURITY IS GREATER THAN ITS PRICE AT ISSUANCE,
THE PRICE OF THE COMMON STOCK INCREASED THROUGHOUT ALL BUT ONE
OF THE RESET PERIODS DURING THE TERM OF THE TARGETS, BUT THERE
WAS A DECLINE IN THE PRICE OF THE COMMON STOCK RESULTING IN A
PERIODIC CAPPED RETURN OF APPROXIMATELY -82% DURING ONE RESET
PERIOD (IF THISACCELERATION EVENT OCCURS THE MATURITY PAYMENT WILL ALWAYS BE LESS
THAN THE AMOUNT OF YOUR INITIAL INVESTMENT):
2001 2002 2003 2004
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
January............... 51.05 5.00% 91.68 5.00% 164.65 5.00%
February.............. 53.60 5.00% 96.26 5.00% 172.88 5.00%
March................. 56.28 5.00% 101.08 5.00% 31.12 -82.00%
April................. 59.10 5.00% 106.13 5.00% 32.67 5.00%
May................... 62.05 5.00% 111.44 5.00% 34.31 5.00%
June.................. 65.16 5.00% 117.01 5.00% 36.02 5.00%
July.................. 68.41 5.00% 122.86 5.00% 37.82 5.00%
August................ 71.83 5.00% 129.00 5.00% 40.09 5.00%
September............. 42.00 5.00% 75.43 5.00% 135.45 5.00%
October............... 44.10 5.00% 79.20 5.00% 142.23 5.00%
November.............. 46.31 5.00% 83.16 5.00% 149.34 5.00%
December.............. 48.62 5.00% 87.31 5.00% 156.81 5.00%
STOCK RETURN = [(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 - 0.82) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05)] - 1 = -0.71%.
STOCK RETURN PAYMENT = $10.00 X -0.0071 = -$0.07
MATURITY PAYMENT = $10.00 - $0.07 = $9.93 PER TARGETS, LESS THAN THE AMOUNT OF
YOUR INITIAL INVESTMENT (EVEN THOUGH THE PRICE OF THE COMMON STOCK AT MATURITY
IS GREATER THAN ITS PRICE AT ISSUANCE).
The following two examples 5 and 6 show that if the price of the common
stock fluctuates over the term of the TARGETS and is greater at maturity than at
issuance, the maturity payment on the TARGETS may be less or more than the
amount of your initial investment, depending on the size of the increases and
decreases in the price of the TARGETS during each reset period.
7
9
EXAMPLE 5: THE PRICE OF THE COMMON STOCK AT MATURITY IS GREATER THAN ITS
PRICE AT ISSUANCE AND THE PRICE OF THE COMMON STOCK FLUCTUATED
DURING THE TERM OF THE TARGETS, ENDING BELOW THE INITIAL
STARTING VALUE ON MORE THAN ONE RESET DATE:
2001 2002 2003 2004
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
January............... 41.79 5.00% 37.25 5.00% 40.55 5.00%
February.............. 43.88 5.00% 39.11 5.00% 42.58 5.00%
March................. 41.69 -5.00% 41.06 -5.00% 40.45 -5.00%
April................. 39.60 -5.00% 43.12 5.00% 38.43 -5.00%
May................... 37.62 -5.00% 40.96 -5.00% 36.51 -5.00%
June.................. 35.74 -5.00% 38.91 -5.00% 38.33 5.00%
July.................. 37.53 5.00% 36.97 -5.00% 36.42 -5.00%
August................ 39.40 5.00% 38.82 5.00% 40.79 5.00%
September............. 42.00 5.00% 37.43 5.00% 40.76 5.00%
October............... 44.10 5.00% 39.31 -5.00% 38.72 -5.00%
November.............. 41.90 -5.00% 41.27 -5.00% 36.78 -5.00%
December.............. 39.80 -5.00% 39.21 5.00% 38.62 5.00%
STOCK RETURN = [(1.00 + 0.05) X (1.00 + 0.05) X (1.00 - 0.05) X (1.00 - 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 - 0.05) X (1.00 - 0.05) X (1.00 - 0.05) X
(1.00 - 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 - 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 - 0.05) X (1.00 - 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 - 0.05) X (1.00 - 0.05) X (1.00 - 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 - 0.05) X (1.00 - 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 - 0.05) X (1.00 - 0.05) X (1.00 - 0.05) X (1.00 + 0.05) X
(1.00 - 0.05) X (1.00 + 0.05)] - 1 = -4.41%.
STOCK RETURN PAYMENT = $10.00 X -0.0441 = -$0.44
MATURITY PAYMENT = $10.00 - $0.44 = $9.56 PER TARGETS, LESS THAN THE AMOUNT OF
YOUR INITIAL INVESTMENT (EVEN THOUGH THE PRICE OF THE COMMON STOCK AT MATURITY
IS GREATER THAN ITS PRICE AT ISSUANCE).
EXAMPLE 6: THE PRICE OF THE COMMON STOCK AT MATURITY IS GREATER THAN ITS
PRICE AT ISSUANCE, AND THE PRICE OF THE COMMON STOCK FLUCTUATED
DURING THE TERM OF THE TARGETS, ENDING BELOW THE INITIAL
STARTING VALUE ON AT LEAST ONE RESET DATE:
2001 2002 2003 2004
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
January............... 39.59 -10.00% 63.88 5.00% 84.78 5.00%
February.............. 41.57 5.00% 67.07 5.00% 89.02 5.00%
March................. 43.65 5.00% 70.42 5.00% 93.47 5.00%
April................. 45.83 5.00% 63.38 -10.00% 88.80 -5.00%
May................... 41.25 -10.00% 66.55 5.00% 93.24 5.00%
June.................. 43.31 5.00% 69.88 5.00% 97.90 5.00%
July.................. 46.78 5.00% 67.78 -3.00% 88.11 -10.00%
August................ 49.11 5.00% 71.17 5.00% 92.51 5.00%
September............. 42.00 5.00% 51.57 5.00% 74.73 5.00%
October............... 44.10 5.00% 54.15 5.00% 78.47 5.00%
November.............. 46.31 5.00% 56.86 5.00% 82.39 5.00%
December.............. 43.99 -5.00% 59.70 5.00% 80.74 -2.00%
8
10
STOCK RETURN = [(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 - 0.05) X
(1.00 - 0.10) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 - 0.10) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 - 0.10) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 - 0.03) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 - 0.02) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 - 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 - 0.10) X (1.00 + 0.05)] - 1 = 120.66%.
STOCK RETURN PAYMENT = $10.00 X 1.2066 = $12.07
MATURITY PAYMENT = $10.00 + $12.07 = $22.07 PER TARGETS, MORE THAN THE AMOUNT OF
YOUR INITIAL INVESTMENT.
EXAMPLE 7: THE PRICE OF THE COMMON STOCK AT MATURITY IS GREATER THAN ITS
PRICE AT ISSUANCE, THE PRICE OF THE COMMON STOCK FLUCTUATES
DURING THE TERM OF THE TARGETS AND THE FLUCTUATIONS IN EACH
RESET PERIOD EXCEED 5%:
2001 2002 2003 2004
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
January............... 43.42 5.00% 48.11 5.00% 52.71 5.00%
February.............. 40.81 -6.00% 45.22 -6.00% 49.02 -7.00%
March................. 44.89 5.00% 49.74 5.00% 53.92 5.00%
April................. 42.20 -6.00% 46.76 -6.00% 50.69 -6.00%
May................... 45.58 5.00% 50.50 5.00% 54.74 5.00%
June.................. 41.93 -8.00% 46.96 -7.00% 50.36 -8.00%
July.................. 46.12 5.00% 51.66 5.00% 55.40 5.00%
August................ 43.36 -6.00% 48.56 -6.00% 52.07 -6.00%
September............. 43.20 5.00% 46.82 5.00% 52.45 5.00%
October............... 38.88 -10.00% 43.08 -8.00% 47.20 -10.00%
November.............. 42.77 5.00% 47.39 5.00% 51.92 5.00%
December.............. 40.20 -6.00% 44.54 -6.00% 48.81 -6.00%
STOCK RETURN = [(1.00 + 0.05) X (1.00 - 0.10) X (1.00 + 0.05) X (1.00 - 0.06) X
(1.00 + 0.05) X (1.00 - 0.06) X (1.00 + 0.05) X (1.00 - 0.06) X (1.00 + 0.05) X
(1.00 - 0.08) X (1.00 + 0.05) X (1.00 - 0.06) X (1.00 + 0.05) X (1.00 - 0.08) X
(1.00 + 0.05) X (1.00 - 0.06) X (1.00 + 0.05) X (1.00 - 0.06) X (1.00 + 0.05) X
(1.00 - 0.06) X (1.00 + 0.05) X (1.00 - 0.07) X (1.00 + 0.05) X (1.00 - 0.06) X
(1.00 + 0.05) X (1.00 - 0.10) X (1.00 + 0.05) X (1.00 - 0.06) X (1.00 + 0.05) X
(1.00 - 0.07) X (1.00 + 0.05) X (1.00 - 0.06) X (1.00 + 0.05) X (1.00 - 0.08) X
(1.00 + 0.05) X (1.00 - 0.06)] - 1 = -33.53%.
STOCK RETURN PAYMENT = $10.00 X -0.3353 = -$3.35
MATURITY PAYMENT = $10.00 - $3.35 = $6.65 PER TARGETS LESS THAN THE AMOUNT OF
YOUR INITIAL INVESTMENT (EVEN THOUGH THE PRICE OF THE COMMON STOCK AT MATURITY
IS GREATER THAN ITS PRICE AT ISSUANCE).
9
11
EXAMPLE 8: THE PRICE OF THE COMMON STOCK AT MATURITY IS LESS THAN ITS PRICE
AT ISSUANCE:
2001 2002 2003 2004
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
January............... 41.82 -3.00% 44.69 -5.00% 48.76 5.00%
February.............. 40.99 -2.00% 43.35 -3.00% 46.32 -5.00%
March................. 40.58 -1.00% 42.48 -2.00% 44.93 -3.00%
April................. 40.98 1.00% 42.06 -1.00% 44.04 -2.00%
May................... 37.70 -8.00% 42.48 1.00% 43.59 -1.00%
June.................. 35.82 -5.00% 39.08 -8.00% 44.03 1.00%
July.................. 36.54 2.00% 37.13 -5.00% 41.83 -5.00%
August................ 37.63 3.00% 37.87 2.00% 38.48 -8.00%
September............. 40.80 2.00% 39.14 4.00% 39.01 3.00%
October............... 42.02 3.00% 41.09 5.00% 40.57 4.00%
November.............. 45.39 5.00% 43.56 5.00% 42.59 5.00%
December.............. 43.12 -5.00% 47.04 5.00% 45.15 5.00%
STOCK RETURN = [(1.00 + 0.02) X (1.00 + 0.03) X (1.00 + 0.05) X (1.00 - 0.05) X
(1.00 - 0.03) X (1.00 - 0.02) X (1.00 - 0.01) X (1.00 + 0.01) X (1.00 - 0.08) X
(1.00 - 0.05) X (1.00 + 0.02) X (1.00 + 0.03) X (1.00 + 0.04) X (1.00 + 0.05) X
(1.00 + 0.05) X (1.00 + 0.05) X (1.00 - 0.05) X (1.00 - 0.03) X (1.00 - 0.02) X
(1.00 - 0.01) X (1.00 + 0.01) X (1.00 - 0.08) X (1.00 - 0.05) X (1.00 + 0.02) X
(1.00 + 0.03) X (1.00 + 0.04) X (1.00 + 0.05) X (1.00 + 0.05) X (1.00 + 0.05) X
(1.00 - 0.05) X (1.00 - 0.03) X (1.00 - 0.02) X (1.00 - 0.01) X (1.00 + 0.01) X
(1.00 - 0.05) X (1.00 - 0.08)] - 1 = - 13.25%.
STOCK RETURN PAYMENT = $10.00 X -0.1325 = -$1.32
MATURITY PAYMENT = $10.00 - $1.32 = $8.68 PER TARGETS, LESS THAN THE AMOUNT OF
YOUR INITIAL INVESTMENT. THE PAYMENT AT MATURITY WILL ALWAYS BE LESS THAN THE
AMOUNT OF YOUR INITIAL INVESTMENT IF, AT MATURITY, THE PRICE OF THE COMMON STOCK
IS LESS THAN ITS PRICE AT ISSUANCE.
ACCELERATION OF MATURITY
If one of the acceleration events described below occurs, the treasury
securities will be sold and Trust [XII][XXV] will be liquidated. You will receive for
each TARGETS the accelerated maturity payment and a pro rata portion of the
proceeds of the sale of the treasury securities, plus any accrued and unpaid
yield enhancement payments.
The accelerated maturity payment per TARGETS will be calculated in the same
manner as the maturity payment and as though the date on which the acceleration
event occurred were the maturity date.
You will receive payment before holders of the common securities if an
acceleration event occurs or Salomon Smith Barney HoldingsCitigroup Funding defaults on any of its
obligations under its guarantee.
Any of the following will constitute an acceleration event:
- the occurrence of certain adverse tax consequences to Trust [XII][XXV],
- the classification of Trust [XII][XXV] as an "investment company" under the
Investment Company Act, or
- the initiation of bankruptcy proceedings regarding Salomon Smith Barney
Holdings.Citigroup Funding.
ARE PAYMENTS ON THE TARGETS PAYMENTS GUARANTEE
Salomon Smith Barney HoldingsGUARANTEED?
Citigroup Funding has guaranteed that if a payment on the forward contract
or the treasury securities is made to Trust [XII][XXV] but, for any reason, Trust
[XII][XXV] does not make the corresponding payment to you, then Salomon
Smith Barney HoldingsCitigroup Funding
will make the payment directly to you. In addition, Citigroup has guaranteed all
payments by Citigroup Funding to the same extent and in the same manner as
Citigroup Funding has guaranteed Trust [XXV]'s obligations under the TARGETS.
Citigroup has also fully and unconditionally guaranteed Citigroup Funding's
payment obligations under the forward contract. You should refer to the section
"Description of the Guarantee" in this prospectus.
10
12WHAT ARE MY VOTING RIGHTSRIGHTS?
You will have limited voting rights with respect to Trust [XII][XXV] and will
not be entitled to vote to appoint, remove or replace, or increase or decrease
the number of, the trustees. These voting rights will be held exclusively by
Salomon Smith Barney Holdings,Citigroup Funding, as the holder of the common securities. You will, however,
have the right to direct TheJPMorgan Chase Manhattan Bank, N.A., as trustee of Trust [XII][XXV]
and as holder of the forward contract and the treasury securities, to exercise
its rights as trustee and to direct the time, method and place of any proceeding
for any remedy available to the trustee.
You will have no voting rights and no ownership interest in any common
stock of [Motorola].
HISTORICAL PERFORMANCE OF THEHOW HAS [MOTOROLA] COMMON STOCK PERFORMED HISTORICALLY?
We have provided a table showing the high and low sales prices for the
common stock of [Motorola] and the cash dividends per share of common stock for
each quarter since the first quarter of 1996.2000. You can find this table in the
section "Historical Data on the Common Stock"Stock of [Motorola, Inc.]" in this
prospectus. We have provided this historical information to help you evaluate
the behavior of the[Motorola] common stock in recent years. However, past
performance is not necessarily indicative of how the[Motorola] common stock will
perform in the future. You should also refer to the section "Risk Factors -- You
have no rights against
even thoughHave No Rights Against [Motorola] Even Though the maturity paymentMaturity Payment on the
TARGETS is basedIs Based on the priceTrading Price of common stock"[Motorola] Common Stock" in this
prospectus.
6
The TARGETS are obligations of Trust [XII][XXV] and, to the extent of the
guarantee, of Salomon Smith Barney Holdings.Citigroup Funding and Citigroup. Even though the maturity payment
will reflect the market price of the[Motorola] common stock of at maturity, [Motorola]
has no obligations under the TARGETS or Salomon
Smith Barney Holdings'either Citigroup Funding's or
Citigroup's guarantee.
WHAT IS THE FORWARD CONTRACTCONTRACT?
The forward contract is a prepaid "cash-settled" forward contract under
which Citigroup Funding will settle its obligations in cash rather than in
securities. The forward contract will be issued under an indenture between
Salomon
Smith Barney HoldingsCitigroup Funding, Citigroup and TheJPMorgan Chase Manhattan Bank, N.A., as trustee.
Salomon Smith
Barney Holdings conductsCitigroup Funding and Citigroup conduct other business with TheJPMorgan Chase Manhattan Bank.Bank,
N.A.
Trust [XII][XXV] will purchase the forward contract from Salomon Smith Barney
HoldingsCitigroup Funding on
the date the TARGETS are issued. Under the forward contract, Salomon
Smith Barney HoldingsCitigroup Funding
will be required to pay to Trust [XII][XXV] the total maturity payments, or the total
accelerated maturity payments, and any yield enhancement payments. TheCitigroup
Funding's payment obligations under the forward contract is a prepaid "cash-settled" forward contract
under which Salomon Smith Barney Holdings will settle its obligations in cash
rather than in securities.be fully and
unconditionally guaranteed by Citigroup. The proceeds from the sale of the
forward contract will be used by Salomon Smith Barney HoldingsCitigroup Funding for general corporate
purposes. You should refer to the sections in this prospectus "Use of Proceeds
and Hedging Activities",Activities," "Description of the Forward Contract" and "Risk
Factors -- Because
purchases and sales by affiliates of Salomon Smith Barney Holdings may reduce
the priceThe Market Value of the common stock, your maturity paymentTARGETS May Be Affected by Purchases and
Sales of [Motorola] Common Stock or the price you receive if
you sell your TARGETS may be reduced".Derivative Instruments Related to [Motorola]
Common Stock by Affiliates of Citigroup Funding" in this prospectus.
WHAT ARE THE U.S. FEDERAL INCOME TAXESTAX CONSEQUENCES OF INVESTING IN THE TARGETS?
If you are a U.S. individual or taxable entity, you generally will be
required to pay taxes on only a portion of each quarterly cash distribution you
receive from Trust [XII][XXV], which will be ordinary income. The remaining portion
of each quarterly cash distribution that you receive from Trust [XII][XXV] will be
treated as a tax-free return of your investment in the TARGETS and will reduce
your tax basis in them. If you hold your TARGETS until they mature or if you
sell your TARGETS, you will have a capital gain or loss equal to the difference
between your tax basis in the TARGETS and the cash you receive. You should refer
to the section "United States Federal Income Tax Considerations" in this
prospectus.
11
13WILL THE TARGETS BE LISTED ON A STOCK EXCHANGE?
We will apply to list the TARGETS on the American Stock Exchange under the
symbol "[TGM]." You should be aware that the listing of the TARGETS on the
American Stock Exchange will not necessarily ensure that a liquid trading market
will be available for the TARGETS.
WHAT IS THE ROLE OF SALOMON SMITH BARNEY HOLDINGS' SUBSIDIARY, SALOMON SMITH BARNEYCITIGROUP FUNDING'S AND CITIGROUP'S AFFILIATE, CITIGROUP
GLOBAL MARKETS INC.
Salomon Smith Barney Holdings' subsidiary, Salomon Smith Barney?
Citigroup Funding's and Citigroup's affiliate, Citigroup Global Markets
Inc., is the underwriter for the offering and sale of the TARGETS.TARGETS and is
expected to receive compensation for activities and services provided in
connection with the offering. After the initial offering, Salomon Smith BarneyCitigroup Global
Markets Inc. and/or other broker-dealer affiliates of Salomon Smith Barney HoldingsCitigroup Funding intend
to buy and sell TARGETS to create a secondary market for holders of the TARGETS,
and may engage in other activities described below in the section
"Underwriting"."Underwriting." However, neither Salomon Smith
BarneyCitigroup Global Markets Inc. nor any of these
affiliates will be obligated to engage in any market-making activities, or
continue them once it has started. SALOMON SMITH BARNEY HOLDINGS
Salomon Smith Barney HoldingsCitigroup Global Markets Inc. will also act
as calculation agent for the TARGETS.
CAN YOU TELL ME MORE ABOUT CITIGROUP AND CITIGROUP FUNDING?
Citigroup is a diversified global financial services holding company that provides
investment banking, securities and commodities trading, brokerage, asset
management and otherwhose
businesses provide a broad range of financial services through its subsidiaries. Salomon Smith
Barney Holdingsto consumer and corporate
customers. Citigroup Funding is a wholly-owned subsidiary of Citigroup Inc., a diversified financial
services holding company.
Salomon Smith Barney Holdings' ratioswhose
business activities consist primarily of earningsproviding funds to Citigroup and its
subsidiaries for general corporate purposes.
7
Citigroup's consolidated ratio of income to fixed charges (Salomon
Smith Barney Holdings has no outstandingand consolidated
ratio of income to combined fixed charges including preferred stock) since 1996stock dividends
for the three months ended March 31, 2005 and each of the five most recent
fiscal years are as follows:
SIXTHREE MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
---------------- ------------------------------------ENDED ---------------------------------
MARCH 31, 2005 2004 2003 2002 2001 2000
1999 1998 1997 1996
---- ---- ---- ---- ---- ------------------ ----- ----- ----- ----- -----
Ratio of earningsincome to fixed charges..... 1.32 1.32 1.46 1.11 1.17 1.37charges (excluding
interest on deposits)...................... 2.67x 2.68x 3.38x 2.52x 1.95x 1.78x
Ratio of income to fixed charges (including
interest on deposits)...................... 2.04x 2.02x 2.45x 1.92x 1.60x 1.50x
Ratio of income to combined fixed charges
including preferred stock dividends
(excluding interest on deposits)........... 2.66x 2.66x 3.34x 2.50x 1.93x 1.77
Ratio of income to combined fixed charges
including preferred stock dividends
(including interest on deposits)........... 2.03x 2.01x 2.43x 1.90x 1.59x 1.49x
CAN YOU TELL ME MORE ABOUT THE EFFECT OF CITIGROUP FUNDING'S HEDGING ACTIVITY?
Citigroup Funding expects to hedge its obligations under the TARGETS
through it or one or more of its affiliates. This hedging activity will likely
involve trading in [Motorola] common stock or in other instruments, such as
options or swaps, based upon [Motorola] common stock. This hedging activity
could affect the market price of [Motorola] common stock and therefore the
market value of the TARGETS. The costs of maintaining or adjusting this hedging
activity could also affect the price at which Citigroup Funding's affiliate
Citigroup Global Markets Inc. may be willing to purchase your TARGETS in the
secondary market. Moreover, this hedging activity may result in Citigroup
Funding or its affiliates receiving a profit, even if the market value of the
TARGETS declines. You should refer to "Risk Factors -- Citigroup Funding's
Hedging Activity Could Result in a Conflict of Interest," " -- The Price at
Which You Will Be Able to Sell Your TARGETS Prior to Maturity Will Depend on a
Number of Factors and May Be Substantially Less Than the Amount You Originally
Invest" and "Use of Proceeds and Hedging Activities" in this prospectus.
DOES ERISA IMPOSE ANY LIMITATIONS ON PURCHASES OF THE TARGETS?
Employee benefit plans subject to ERISA, individual retirement accounts,
Keogh plans and other similar plans subject to Section 4975 of the Internal
Revenue Code, entities the assets of which may be deemed to be "plan assets"
under ERISA regulations, and governmental plans subject to any substantially
similar laws (collectively, "Pension Type Accounts") can generally purchase the
TARGETS. However, each such Pension Type Account should consider whether
purchase of the TARGETS is prudent and consistent with the documents governing
such account. The fiduciary rules governing Pension Type Accounts are complex
and individual considerations may apply to a particular account. Accordingly,
any fiduciary of a Pension Type Account should consult with its legal advisers
to determine whether purchase of the TARGETS is permissible under the fiduciary
rules. Each Purchaser will be deemed to have made certain representations
concerning its purchase or other acquisition of the TARGETS. You should refer to
the section "ERISA Considerations" in this prospectus.
12ARE THERE ANY RISKS ASSOCIATED WITH MY INVESTMENT?
Yes, the TARGETS are subject to a number of risks. Please refer to the
section "Risk Factors" in this prospectus.
8
14
RISK FACTORS
You should carefully consider the following risk factors in addition to the
other information contained in this prospectus before investing in the TARGETS.
Hypothetical examples illustrating certain of the risks described in each of the
first four risk factors can be found abovebelow in the section "Maturity Payment --
Hypothetical Examples".
YOUR INVESTMENT IN THE TARGETS WILL RESULT IN A LOSS IF THE PRICE OF THE COMMON
STOCK DECLINES
The amount that you receive at maturity will depend on the price of the
common stock on the first and last day of each reset period and over the 10-day
calculation period prior to maturity. The amount of the maturity payment may be
less than the amount you paid for your TARGETS, and may be zero, except to the
extent of any quarterly distributions. For example, if the price of the common
stock over the 10-day calculation period prior to maturity is less than the
price of the common stock at the time the TARGETS are issued (even if the price
of the common stock had been greater than that value at some time during the
term of the TARGETS), the maturity payment for each TARGETS will be less than
the initial offering amount of each TARGETS, in which case your investment in
the TARGETS will result in a loss, except to the extent of any quarterly
distributions. If the value of the stock return is zero on the final scheduled
distribution date, you will receive only the principal amount per TARGETS. If
becomes insolvent or bankrupt, an investment in the TARGETS
could result in a loss of the amount invested, except to the extent of any
quarterly distributions.Examples."
YOUR INVESTMENT IN THE TARGETS MAY RESULT IN A LOSS EVEN IF THE TRADING PRICE OF
THE[MOTOROLA] COMMON STOCK RISESDECLINES
If the trading price of the common stock declines during the period between
the issue date and the first reset date or in any subsequent monthlyreset period during
the term of the TARGETS, the value of the periodic capped return for that reset
period will be negative. Because the amount of the payment to you at maturity is
based on the compounded value of the periodic capped return for the reset
periods during the term of the TARGETS, the likelihood that the value of the
stock return will be negative increases as the number of periodic capped returns
with negative values increases and as the size of the decline in the trading
price of the common stock in any reset period increases.increases (down to the %
depreciation floor). As demonstrated by some of the hypothetical examples in the
section "Maturity Payment" above,"Description of the TARGETS -- Maturity Payment -- Hypothetical
Examples," the maturity payment may be less than the amount of your investment
even if the price of the common stock has increased during one or more monthly
periods during the term of the TARGETS or if the trading price of the common
stock as of the maturity date is greater than its price at issuance. In fact,
assuming a [5%]hypothetical 4.5% cap on appreciation and a hypothetical 11% floor
for depreciation in each reset period and a total of [36]36 reset periods, if the
trading price of the common stock declines in any singleat least 10 reset periodperiods by
approximately [82%]11% or more, the maturity payment amount will be less than the
amount of your investment, even if the trading price of the common stock
increases by at least 4.5% in every other reset period. In addition, assuming a
hypothetical 11% depreciation floor, the maturity payment amount can be as low
as $0.15 per TARGETS if the trading price of the common stock declines by 11% or
more in each reset period.
THE APPRECIATION OF YOUR INVESTMENT IN THE TARGETS WILL BE CAPPED
The TARGETS may provide less opportunity for equity appreciation than a
direct investment in the common stock because the periodic capped return will operate
to
limit the portion of any appreciation in the price of the common stock in which
you will share to approximately the first [5%]% of the increase in any reset
period, but will not limit your exposure in any reset periodexpose you to the first % of any depreciation in the price of
the common stock.stock during any given reset period. If the trading price of the
common stock increases by more than approximately [5%]% in any reset period during
the term of the TARGETS, your return on the TARGETS willmay be less than your return
on a similar security that was directly linked to the common stock but was not
subject to a cap on appreciation.
There is no cap or limit on the amount of
depreciation during any reset period.
YOU HAVE NO RIGHTS AGAINST [MOTOROLA] EVEN THOUGH THE MATURITY PAYMENT ON THE
TARGETS IS BASED ON THE TRADING PRICE OF 'S[MOTOROLA] COMMON STOCK
The historical common stock price is not an indicator of the future
performance of the common stock during the term of the TARGETS. Changes in the
price of the common stock will affect the trading price of the TARGETS, but it
is impossible to predict whether the price of the common stock will rise or
fall.
13
15
The yield on the TARGETS is higher than the current dividend yield on the
common stock. However, it may not remain higher through the term of the TARGETS
if [Motorola] increases its dividends.dividends or the price of common stock decreases. In
addition, you will not receive dividends or other distributions paid on the
common stock.
[Motorola] is not in any way involved with this offering and has no
obligations relating to the TARGETS or holders of the TARGETS. In addition, you
will have no voting rights with respect to the common stock of [Motorola].
[Motorola] is currently subject to SEC reporting requirements, and
distributes reports proxy statements and other information to its stockholders. In the event that
[Motorola] ceases to be subject to these reporting requirements, pricing
information for the TARGETS may be more difficult to obtain and the value,
trading price and liquidity of the common stock and the TARGETS may be reduced.
9
THE PRICE AT WHICH YOU WILL BE ABLE TO SELL YOUR TARGETS PRIOR TO MATURITY WILL
DEPEND ON A NUMBER OF FACTORS AND MAY BE SUBSTANTIALLY LESS THAN THE AMOUNT YOU
ORIGINALLY INVEST
We believe that the trading value of your TARGETS in the secondary market will be
affected by the supply of and demand for the TARGETS, will depend on the pricevalue of the[Motorola]
common stock and on a number of other factors. Some of these factors are
interrelated in complex ways. As a result, the effect of any one factor may be
offset or magnified by the effect of another factor. The price at which you will
be able to sell the TARGETS prior to maturity may be substantially less than the
amount you originally invest if the value of the common stock at that time is
less than the price of the common stock when the TARGETS are purchased. The
following paragraphs
describe what we expect to be the impact on the market value of the TARGETS of a
change in a specific factor, assuming all other conditions remain constant.
Common Stock Price.COMMON STOCK PRICE. We expect that the market value of the TARGETS will
depend substantially on the amount, if any, by which the price of [Motorola]
common stock price changes from the price of the common stock when the TARGETS are
issued. However, changes in the price of [Motorola] common stock may not always
be reflected, in full or in part, in the market value of the TARGETS. If you
choose to sell your TARGETS when the price of [Motorola] common stock price exceeds
the common stock price at the time the TARGETS were issued, you may receive
substantially less than the amount that would be payable at maturity based on
that common stock
price because of expectations that the price of [Motorola] common stock
will continue to fluctuate untilbetween that time and the time when the maturity
payment is determined. IncreasesIn addition, significant increases in the pricevalue of
the[Motorola] common stock above the cap of approximately [5%]% on monthly
appreciation may not be reflected in the trading price of the TARGETS. If you
choose to sell your TARGETS when the price of [Motorola] common stock price is below
the common stock price at the time the TARGETS were issued, you can expect tomay receive less
than the amount you originally invested, except to the extent of any quarterly
distributions. Because of the cap on monthly appreciation, the price at which
you will be able to sell your TARGETS prior to maturity may be substantially
less than the amount originally invested, even if the price of the[Motorola] common
stock when you sell your TARGETS is equal to, or higher than, the price of the
common stock at the time you bought your TARGETS.
Trading pricesThe value of the[Motorola] common stock will be influenced by [Motorola]'s
results of operations and by complex and interrelated political, economic,
financial and other factors that can affect the capital markets generally 'sand
the market segment and the stock exchange onof which the common stock[Motorola] is traded. Salomon Smith Barney Holdings'a part. Citigroup Funding's hedging
activities in the common stock of its obligations under the forward contract,
the issuance of securities similar to the TARGETS and other trading activities
by Salomon Smith
Barney Holdings,Citigroup Funding, its affiliates and other market participants can also
affect the price of the[Motorola]'s common stock.
The priceVOLATILITY OF [MOTOROLA] COMMON STOCK. Volatility is the term used to
describe the size and frequency of 'smarket fluctuations. If the volatility of
[Motorola] common stock has been volatile in
recent months. You should refer tochanges during the section "Historical Data on the Common
Stock" in this prospectus.
Interest Rates. Becauseterm of the TARGETS, pay quarterly distributions, wethe market value
of the TARGETS may decrease.
EVENTS INVOLVING [MOTOROLA] COMMON STOCK. General economic conditions and
the earnings results of [Motorola] and real or anticipated changes in those
conditions or results may affect the market value of the TARGETS. In addition,
if the dividend yield on [Motorola] common stock increases, the market value of
the TARGETS may decrease because the value of the payment you receive at
maturity will not reflect the value of such dividend payments. Conversely, if
the dividend yield on [Motorola] common stock decreases, the market value of the
TARGETS may increase.
INTEREST RATES. We expect that the tradingmarket value of the TARGETS will be
affected by changes in U.S. interest rates. In general, if U.S. interest rates
increase, the tradingmarket value of the TARGETS may decrease. Ifdecrease, and if U.S. interest
rates decrease, the tradingmarket value of the TARGETS may increase.
InterestTIME PREMIUM OR DISCOUNT. As a result of a "time premium or discount," the
TARGETS may trade at a value above or below that which would be expected based
on the level of interest rates may also affectand the U.S. economy and, in
turn,value of [Motorola] common stock the
pricelonger the time remaining to maturity. A "time premium or discount" results from
expectations concerning the value of [Motorola] common stock during the period
prior to the maturity of the common stock, which, forTARGETS. However, as the reasons discussed above,
would affecttime remaining to maturity
decreases, this time premium or discount may diminish, increasing or decreasing
the market value of the TARGETS.
Rising U.S. interest rates may resultCITIGROUP FUNDING'S HEDGING ACTIVITIES. Hedging activities in a lower[Motorola]
common stock by Citigroup Funding or one or more affiliates of Citigroup Funding
will likely involve trading in [Motorola]common stock or in other instruments,
such as options or swaps, based upon [Motorola] common stock. This hedging
activity
10
could affect the market price of [Motorola] common stock and thus, a lowertherefore the
market value of the TARGETS. Falling U.S.
interest ratesIt is possible Citigroup Funding or its affiliates
may result in a higher common stock price and, thus, a higher
value ofprofit from its hedging activity, even if the TARGETS.
Dividend Yields. If the dividend yield on the common stock increases, we
expect that themarket value of the TARGETS
may decrease, since the TARGETS do not
incorporate the value of such payments. Conversely, if the dividend yield on the
common stock decreases, the value of the TARGETS may increase.
14
16
Salomon Smith Barney Holdings' Credit Ratings, Financial Condition and
Results.declines.
CITIGROUP FUNDING AND CITIGROUP'S CREDIT RATINGS, FINANCIAL CONDITION AND
RESULTS. Actual or anticipated changes in Salomon Smith Barney Holdings'our credit ratings, financial
condition or results may affect the market value of the TARGETS.
Economic Conditions and Earnings Performance of . General
economic conditions andWe want you to understand that the earnings results of and real or
anticipated changes in such conditions or results may affect the market value of
the TARGETS.
The impact of one of the factors specified
above, such as an increase in interest rates, may offset some or all of any
change in the tradingmarket value of the TARGETS attributable to another factor, such
as an increase in the pricevalue of the[Motorola] common stock.
In general, assuming all relevant factors are held constant, we expect that
the effect on the tradingmarket value of the TARGETS of a given change in most of the
factors listed above may be less if it occurs later in the term of the TARGETS
than if it occurs earlier in the term of the TARGETS.
BECAUSE THE MATURITY OF THE TARGETS CAN BE ACCELERATED, THE TRADING PRICE OF THE TARGETS MAY BE LESS THAN YOU WOULD OTHERWISE EXPECT
BECAUSE THE MATURITY OF THE TARGETS CAN BE ACCELERATED
If an acceleration event occurs, the maturity of the TARGETS will be
accelerated and you will receive with respect to each TARGETS the accelerated
maturity payment and a pro rata portion of the proceeds of the sale of the
treasury securities. Because the amount that would be payable on the accelerated
maturity date is uncertain, since it would depend on when an acceleration event
occurs, the trading pricemarket value of the TARGETS may be less than what you would
otherwise expect based on the price of the[Motorola] common stock and the level of
interest rates at a particular time.
YOU MAY NOT RECEIVE YIELD ENHANCEMENT PAYMENTS ON THE DATE THEY ARE DUE BECAUSE
THEY CAN BE DEFERRED
The failure by Salomon Smith Barney HoldingsCitigroup Funding to make any yield enhancement payments on
the date they are due will not constitute an acceleration event. Salomon Smith Barney HoldingsCitigroup
Funding will be allowed under the forward contract to delay making any unpaid
yield enhancement payments until the maturity date or the accelerated maturity
date.
YOU WILL HAVE LIMITED VOTING RIGHTS WITH RESPECT TO TRUST [XII][XXV] AND THE TRUSTEES
You will have limited voting rights with respect to Trust [XII][XXV] and will
not be entitled to vote to appoint, remove or replace, or increase or decrease
the number of, the trustees. These voting rights will be held exclusively by
Salomon Smith Barney Holdings,Citigroup Funding, as the holder of the common securities of Trust [XII][XXV]. You
should refer to the section "Description of the TARGETS -- Voting Rights" in
this prospectus.
THE MATURITY PAYMENT ON THE TARGETS MAY BE REDUCED UNDER SOME CIRCUMSTANCES IF THE[MOTOROLA]
COMMON STOCK IS DILUTED BECAUSE THE MATURITY PAYMENT WILL NOT BE ADJUSTED FOR
ALL EVENTS THAT DILUTE THE[MOTOROLA] COMMON STOCK
The maturity payment and accelerated maturity payment are subject to
adjustment for a number of events arising from stock splits and combinations,
stock dividends, a number of other actions of [Motorola] that modify its capital
structure and a number of other transactions involving [Motorola], as well as
for athe liquidation, dissolution or winding up of [Motorola]. You should refer
to the section "Description of the TARGETS -- Dilution Adjustments". in this
prospectus. The maturity payment and accelerated maturity payment will not be
adjusted for other events that may adversely affect the price of the[Motorola]
common stock, such as offerings of common stock for cash or in connection with
acquisitions. Because of the relationship of the maturity payment and
accelerated maturity payment to the price of the[Motorola] common stock, such other
events may reduce the maturity payment on the TARGETS.
IF THE INTERNAL REVENUE SERVICE ASSERTS THAT OURUNITED STATES FEDERAL INCOME TAX CHARACTERIZATIONCONSEQUENCES OF THE TARGETS IS INCORRECT, YOU MAY BE REQUIRED TO PAY TAXES ON INCOME BEFORE YOU
ACTUALLY RECEIVE IT OR AT A HIGHER RATE THAN YOU WOULD OTHERWISE EXPECTARE UNCERTAIN
No statutory, judicial or administrative authority directly addresses the
characterization of the TARGETS or instruments similar to the TARGETS for U.S. federal income tax purposes. As a
result, significant aspects of the U.S. federal income tax consequences of an
investment in the TARGETS are not 15
17
certain. ThereNo ruling is no rulingbeing requested from the
Internal Revenue Service with respect to the TARGETS and no assurance can be
given that the Internal
11
Revenue Service may notwill agree with the conclusions expressed under the section
"United"Certain United States Federal Income Tax Considerations" in this prospectus.
YOU MAY NOT BE ABLE TO SELL YOUR TARGETS IF AN ACTIVE TRADING MARKET FOR THE
TARGETS DOES NOT DEVELOP
We will apply to listThere is currently no secondary market for the TARGETS on . However,
there may not beTARGETS. Even if a secondary
market in the TARGETS and, if there is a secondary
market,does develop, it may not be liquid.liquid any may not continue for the term of
the TARGETS. If the secondary market for the TARGETS is limited, there may be
few buyers should you choose to sell your TARGETS prior to maturity. This may
affect the price you receive.
In addition, any market that develops for theTHE MARKET VALUE OF THE TARGETS may influence and is
likely to be influenced by the market for the common stock. For example, the
price of the common stock could be affected by
- sales of common stock by investors who view the TARGETS as a more
attractive means of equity participation in and
- hedging or arbitrage trading activity that may develop involving the
TARGETS and the common stock.
BECAUSEMAY BE AFFECTED BY PURCHASES AND SALES OF
[MOTOROLA] COMMON STOCK OR DERIVATIVE INSTRUMENTS RELATED TO [MOTOROLA] COMMON
STOCK BY AFFILIATES OF SALOMON SMITH BARNEY HOLDINGS MAY
REDUCE THE PRICE OF THE COMMON STOCK, YOUR MATURITY PAYMENT OR THE PRICE YOU
RECEIVE IF YOU SELL YOUR TARGETS MAY BE REDUCED
Salomon Smith Barney Holdings'CITIGROUP FUNDING
Citigroup Funding's and Citigroup's affiliates, including Salomon Smith BarneyCitigroup Global
Markets Inc., may from time to time buy or sell the[Motorola] common stock or
derivative instruments relating to the[Motorola] common stock for their own
accounts in connection with their normal business practices or in connection
with hedging Salomon Smith
Barney Holdings'Citigroup Funding's obligations under the forward contract. These
transactions could affect the price of [Motorola] common stock and therefore the
common stock.market value of the TARGETS. You should refer to the section "Use of Proceeds
and Hedging Activities" in this prospectus.
Salomon Smith BarneyCITIGROUP GLOBAL MARKETS INC., AN AFFILIATE OF CITIGROUP FUNDING AND CITIGROUP,
IS THE CALCULATION AGENT, WHICH COULD RESULT IN A CONFLICT OF INTEREST
Citigroup Global Markets Inc. or, which is acting as the calculation agent for
the TARGETS, is an affiliate of Citigroup Funding and Citigroup. As a result,
Citigroup Global Markets Inc.'s duties as calculation agent, including with
respect to certain determinations and judgments that the calculation agent must
make in determining amounts due to you, may enter intoconflict with its interest as an
affiliate of Citigroup Funding and Citigroup.
CITIGROUP FUNDING'S HEDGING ACTIVITY COULD RESULT IN A CONFLICT OF INTEREST
Citigroup Funding expects to hedge its obligations under the TARGETS
through it one or more of its affiliates. This hedging activity will likely
involve trading in [Motorola] common stock or in other instruments, such as
options or swaps, based upon [Motorola] common stock. This hedging activity may
present a swap agreement
with oneconflict between your interest in the TARGETS and the interests
Citigroup Funding and its affiliates have in executing, maintaining and
adjusting its hedge transactions because it could affect the market price of
Salomon Smith Barney Holdings' other[Motorola] common stock and therefore the market value of the TARGETS. It could
also be adverse to your interest if it affects the price at which Citigroup
Funding's affiliate Citigroup Global Markets Inc. may be willing to purchase
your TARGETS in the secondary market. Since hedging Citigroup Funding's
obligation under the TARGETS involves risk and may be influenced by a number of
factors, it is possible that Citigroup Funding or its affiliates in connection withmay profit from
its hedging activity, even if the salemarket value of the TARGETS and may earn additional income as a result of payments
pursuant to the swap or related hedge transactions.declines.
THE PAYMENTS YOU RECEIVE ON THE TARGETS WILL LIKELY BE DELAYED OR REDUCED IN THE
EVENT OF A BANKRUPTCY OF SALOMON SMITH BARNEY HOLDINGSCITIGROUP FUNDING
Although the TARGETS are securities of Trust [XII][XXV], the ability of Trust
[XII][XXV] to make payments under the TARGETS depends upon its receipt from Salomon
Smith Barney HoldingsCitigroup
Funding under the forward contract of (1) the total maturity payments or total
accelerated maturity payments and (2) any yield enhancement payments. The
ability of Salomon Smith Barney HoldingsCitigroup Funding to meet its obligations under the forward contract
and, in turn, the ability of Trust [XII][XXV] to meet its obligations under the
TARGETS, therefore depends on the solvency and creditworthiness of Salomon Smith Barney Holdings.Citigroup
Funding. In the event of a bankruptcy of Salomon Smith Barney Holdings,Citigroup Funding, any recovery by the
holders of TARGETS will likely be substantially delayed and may be less than
each holder's pro rata portion of the forward contract.
1612
18
AVAILABLE INFORMATION
Salomon Smith Barney HoldingsCitigroup files annual, quarterly and specialcurrent reports
proxy statements and other information (File No. 1-4346)
with the SEC. You may read and copy any document Salomon Smith Barney HoldingsCitigroup files at the SEC's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. You can also request copies of the
documents, upon payment of a duplicating fee, by writing the Public Reference
Section of the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Salomon Smith Barney Holdings'room. These SEC filings are also available
to the public from the SEC's home page on the world wide web site at
http://www.sec.gov.
Separate financial statements of Trust [XII][XXV] have not been included in this
prospectus. Salomon Smith Barney HoldingsCitigroup does not believe that these financial statements would be
material to you because
- Salomon Smith Barney Holdings,Citigroup, an SEC reporting company, is the sole stockholder of Citigroup
Funding,
- Citigroup, through Citigroup Funding, indirectly owns all the voting
securities of Trust [XII][XXV],
- Trust [XII][XXV] has no independent operations,
- Salomon Smith Barney HoldingsCitigroup Funding is the obligor under the forward contract,
and
- Salomon Smith Barney HoldingsCitigroup Funding has fully and unconditionally guaranteed Trust [XII][XXV]'s
obligations under the TARGETS to the extent that Trust [XII][XXV] has funds
available to meet its obligations.obligations, and
- Citigroup has fully and unconditionally guaranteed Citigroup Funding's
guarantee obligations to the same extent and in the same manner as
Citigroup Funding has guaranteed Trust [XXV]'s obligations under the
TARGETS.
In its future filings under the Securities Exchange Act of 1934, a footnote to
Salomon Smith Barney Holdings'Citigroup's annual financial statements will state
- that Trust [XII] is consolidated with Salomon Smith Barney Holdings,
- that the sole assets of Trust [XII][XXV] are the forward contract and the
treasury securities, and
- that the guarantee, when taken together with the forward contract, the
related indenture, the declaration of trust of Trust [XII][XXV] and Salomon
Smith Barney Holdings'Citigroup
Funding's and Citigroup's obligations to pay all fees and expenses of
Trust [XII][XXV], constitutes a full and unconditional guarantee by Salomon Smith
Barney HoldingsCitigroup
Funding and Citigroup of Trust [XII][XXV]'s obligations under the TARGETS.
Salomon Smith Barney HoldingsCitigroup, Citigroup Funding and Trust [XII][XXV] have filed with the SEC a
registration statement (No. 333- ) which contains additional information
not included in this prospectus. A copy of the registration statement can be
obtained from the SEC as described above or from Salomon Smith Barney Holdings.Citigroup.
The SEC allows Salomon Smith Barney HoldingsCitigroup to "incorporate by reference" the information it
files with the SEC, which means that Salomon Smith Barney Holdingsit can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, andprospectus. Information that
Citigroup files later information filed with the SEC will automatically update and supersedeinformation in this
information. We incorporateprospectus. In all cases, you should rely on the later information over
different information included in this prospectus. Citigroup incorporates by
reference the documents filed by Salomon
Smith Barney Holdings listed below and any future filings made by Salomon Smith
Barney Holdings with the SEC
under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act until the later of the completion of the offering of the
TARGETS and the cessation of market-making activities in the TARGETS by Salomon
Smith Barney Inc. and its broker-dealer affiliates:1934:
- Annual Report on Form 10-K for the year ended December 31, 2000,2004;
- Current Report on Form 8-K filed on June 7, 2005 (including exhibits
thereto which contain updated historical audited financial statements
conformed to reflect a discontinued operation and updated business
segment disclosures);
- Quarterly ReportsReport on Form 10-Q for the quartersquarter ended March 31, 2001
and June 30, 2001,2005;
and
- Current Reports on Form 8-K filed on January 14, 2005, January 19,
2005, January 20, 2005, January 21, 2005, January 24, 2005, January
31, 2005, February 4, 2005, February 11, 2005, February 22, 2005,
March 2, 2005, March 15, 2005, March 16, 2005, April 14, 2005, April
15, 2005, April 20, 2005, May 2, 2005, May 18, 2005, May 24, 2005, May
26, 2005, May 31, 2005,
13
June 1, 2005, June 2, 2005, June 6, 2005, June 9, 2005, June 10, 2005,
June 16, 2005, June 17, 2001, February 2,
2001, February 28, 2001, March 6, 2001 (as amended on March2005, June 24, 2005, June 29, 2001),
March 23, 2001, April 17, 2001, May2005, June 30,
20012005, July 1, 2005, July 14, 2005, July 18, 2005 and July 17, 2001.
17
19, 2005.
All documents Citigroup files pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 after the date of this prospectus and
before the later of (1) the completion of the offering of the securities
described in this prospectus and (2) the date the broker-dealer subsidiaries or
affiliates of Citigroup stop offering securities pursuant to this prospectus
shall be incorporated by reference in this prospectus from the date of filing of
such documents.
You may request a copy of these filings, at no cost, by writing or
telephoning Salomon Smith Barney HoldingsCitigroup at the following address:
Treasurer
Salomon Smith Barney Holdings Inc.
388 GreenwichCitigroup Document Services
140 58th Street, New York,Suite 8G
Brooklyn, NY 10013
212-816-600011220
(877) 936-2737 (toll free)
(718) 765-6514 (outside the U.S.)
You should rely only on the information incorporated by reference or
provided in this prospectus. We haveprospectus, as
well as the information incorporated by reference. None of Citigroup, Citigroup
Funding or Trust [XXV] has authorized no oneanyone to provide you with different
information. We areIf anyone provides you with different or inconsistent information,
you should not rely on it. None of Citigroup, Citigroup Funding or Trust [XXV]
is making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
documents incorporated by reference is accurate as of any date other than the
date on the front of the applicable document. 18Citigroup, Citigroup Funding and
Trust [XXV]'s business, financial condition, results of operations and prospects
may have changed since that date.
14
20
SALOMON SMITH BARNEY HOLDINGS
Salomon Smith Barney Holdings operates through its subsidiaries in two
business segments, Investment Services and Asset Management. Salomon Smith
Barney Holdings provides investment banking, securities and commodities trading,
capital raising, asset management, advisory, research and brokerage services to
its customers, other financial services and executes proprietary trading
strategies on its own behalf. As used in this section, unless the context
otherwise requires, Salomon Smith Barney Holdings refers to Salomon Smith Barney
Holdings Inc. and its consolidated subsidiaries.CITIGROUP INC.
Citigroup Inc., Salomon Smith Barney Holdings' parent, is a diversified global financial services holding company
whose businesses provide a broad range of financial services to consumer and
corporate customers around the world. Citigroup Inc.'swith some 200 million customer accounts doing business in
more than 100 countries. Citigroup's activities are conducted through the Global
Consumer, Global Corporate Global Investment
Management and Private Banking, and Investment Activities.
Salomon Smith Barney Holdings is a global, full-service investment banking
and securities brokerage firm. Salomon Smith Barney Holdings provides a full
range of financial advisory, research and capital raising services to
corporations, governments and individuals. The firm's more than 12,100 Financial
Consultants, located in more than 510 offices across the United States, service
approximately 7.3 million client accounts, representing approximately $977
billion in assets.
Salomon Smith Barney Holdings' global investment banking services encompass
a full range of capital market activities, including the underwriting and
distribution of debt and equity securities for United States and foreign
corporations and for state, local and other governmental and government
sponsored authorities. Salomon Smith Barney Holdings frequently acts as an
underwriter or private placement agent in corporate and public securities
offerings and provides alternative financing options. It also provides financial
advice to investment banking clients on a wide variety of transactions including
mergers and acquisitions, divestitures, leveraged buyouts, financial
restructurings and a variety of cross-border transactions.
The Private Client Division provides investment advice and financial
planning and brokerage services for approximately 7.3 million client accounts,
primarily through the network of Salomon Smith Barney Financial Consultants.
The AssetBanking, Global Wealth Management, segment is comprised of two primary asset management
business platforms: Salomon Brothers Asset
Management, and Smith Barney Asset
Management. These platforms offerAlternative Investments business segments.
Citigroup is a broad range of asset management productsholding company and services its obligations primarily with
dividends and advances that it receives from global investment centers, including mutual funds, closed-end
funds,subsidiaries. Citigroup's
subsidiaries that operate in the banking, insurance and managed accounts. In addition,securities business can
only pay dividends if they are in compliance with the Asset Management group offersapplicable regulatory
requirements imposed on them by federal and state bank regulatory authorities,
state insurance departments and securities regulators. Citigroup's subsidiaries
may be party to credit agreements that also may restrict their ability to pay
dividends. Citigroup currently believes that none of these regulatory or
contractual restrictions on the ability of its subsidiaries to pay dividends
will affect Citigroup's ability to service its own debt. Citigroup must also
maintain the required capital levels of a broad rangebank holding company before it may pay
dividends on its stock. Each of unit investment trusts.Citigroup's major operating subsidiaries
finances its operations on a stand-alone basis consistent with its
capitalization and ratings.
Under longstanding policy of The Board of Governors of the Federal Reserve
System, a bank holding company is expected to act as a source of financial
strength for its subsidiary banks and to commit resources to support such banks.
As a result of that policy, Citigroup may be required to commit resources to its
subsidiary banks.
The principal officesoffice of Salomon Smith Barney Holdings areCitigroup is located at 388
Greenwich Street,399 Park Avenue, New York,
New York 10013,NY 10043, and its telephone number is (212) 816-6000. Salomon Smith Barney Holdings,559-1000.
CITIGROUP FUNDING INC.
Citigroup Funding Inc. is a wholly-owned subsidiary of Citigroup,
incorporated on January 13, 2005, and organized under the laws of the State of
Delaware. Its principal executive offices are located at 399 Park Avenue, New
York, corporation, was
incorporated in 1977.
19NY 10043, and its telephone number is (212) 559-1000. Its business
activities consist primarily of providing funds to Citigroup and its
subsidiaries for general corporate purposes.
15
21
USE OF PROCEEDS AND HEDGING ACTIVITIES
Trust [XII][XXV] will use approximately 85% to 90% of the total proceeds from
the sale of the TARGETS and the common securities to buy the forward contract
from Salomon Smith Barney Holdings,Citigroup Funding, and approximately 10% to 15% of the proceeds to buy the
treasury securities. Salomon Smith Barney HoldingsCitigroup Funding will use a portion of the net proceeds
from the sale of the forward contract for general corporate purposes, which may include capital contributionsprimarily
to subsidiaries of Salomon
Smith Barney Holdings and/or the reduction or refinancing of borrowings of
Salomon Smith Barney Holdings orfund Citigroup and its subsidiaries. In order to fund its business Salomon Smith Barney Holdingsand the
business of Citigroup's subsidiaries, Citigroup Funding expects to incur
additional debt in the future. To the extent that any TARGETS the underwriter is
purchasing for resale are not sold, the aggregate proceeds to Salomon Smith Barney HoldingsCitigroup Funding
and its subsidiariesaffiliates would be reduced. Salomon Smith Barney HoldingsCitigroup Funding or an affiliate may enter
into a swap agreement with one of Salomon Smith Barney Holdings'Citigroup Funding's affiliates in connection
with the sale of the TARGETS and may earn additional income as a result of
payments pursuant to such swap or related hedge transactions.
Salomon Smith Barney HoldingsCitigroup Funding or one or more of its subsidiariesaffiliates will use the remainder
of the net proceeds from the sale of the forward contract for hedging activities
related to Salomon Smith Barney Holdings'Citigroup Funding's obligations under the forward contract. On or
prior to the closing date of the TARGETS offering, Salomon Smith Barney Holdings,Citigroup Funding, directly
or through its subsidiaries,affiliates, will hedge its anticipated exposure under the forward
contract by the purchase or sale of common stock of [Motorola] or options,
futures contracts, forward contracts or swaps or options on the foregoing, or
other derivative or synthetic instruments related to, the common stock.
From time to time after the initial sale of the TARGETS and prior to the
maturity date or accelerated maturity date, depending on market conditions,
including the price of the[Motorola] common stock, Salomon Smith Barney HoldingsCitigroup Funding expects that
it or its subsidiariesaffiliates will increase or decrease their initial hedge positions
through various transactions and may purchase or sell [Motorola] common stock or
options, swaps, futures contracts, forward contracts or other derivative or
synthetic instruments related to the[Motorola] common stock. In addition, Salomon Smith
Barney HoldingsCitigroup
Funding and its subsidiariesaffiliates may purchase or sell the TARGETS from time to time.
Salomon Smith Barney HoldingsCitigroup Funding or its subsidiariesaffiliates may also take positions in other types of
appropriate financial instruments that may become available in the future.
To the extent that Salomon Smith Barney HoldingsCitigroup Funding or its subsidiariesaffiliates have a long or short
hedge position in the[Motorola] common stock or options, swaps, futures contracts,
forward contracts or other derivative or synthetic instruments related to
the[Motorola] common stock, they may liquidate all or a portion of their holdings
close to maturity of the forward contract and the TARGETS. Depending on, among
other things, future market conditions, the aggregate amount and composition of
those positions are likely to vary over time. Profits or losses from any of
those positions cannot be determined until the position is closed out and any
offsetting position or positions are taken into account. Although Salomon Smith Barney HoldingsCitigroup
Funding has no reason to believe that this hedging activity will have a material
effect on the price of the TARGETS or options, swaps, futures contracts, forward
contracts or other derivative or synthetic instruments, or on the value of
the[Motorola] common stock, the hedging activities of Salomon Smith Barney HoldingsCitigroup Funding and its
subsidiariesaffiliates may affect those prices or value.
2016
22
ISSUER OF THE COMMON STOCK[MOTOROLA, INC.]
According to publicly available documents, [Motorola, Inc.] is [brief
descriptiona provider
of issuerwireless, broadband and automotive communications technologies and embedded
electronic products. Motorola provides wireless handsets, develops, manufactures
and markets public and enterprise wireless infrastructure communications
systems, including hardware and software, and provides customized,
mission-critical radio communications and information system. Motorola also
develops and deploys end-to-end digital broadband entertainment, communication
and information systems for the home and for the office. In addition, Motorola
develops and provides embedded telematics systems that enable automated roadside
assistance, navigation and advanced safety features for automobiles, and
provides integrated electronics for the powertrain, chassis, sensors and
interior controls. Motorola is also a producer of embedded processing and
connectivity products for the common stock].automotive, networking and wireless communications
industries. [Motorola] is currently subject to the informational requirements of
the Securities Exchange Act. Accordingly, [Motorola] files reports (including
its Annual Report on Form 10-K for the fiscal year ended December 31, 2004 and
its Quarterly ReportsReport on Form 10-Q for the fiscal quartersquarter ended ),April 2, 2005),
proxy statements and other information with the SEC. Copies of [Motorola]'s
registration statements, reports, proxy statements and other information may be
inspected and copied at offices of the SEC at the locations listed above under
"Available Information".Information."
None of Citigroup, Citigroup Funding or Trust [XXV] has participated in the
preparation of [Motorola]'s publicly available documents or made any due
diligence investigation or inquiry of [Motorola] in connection with the offering
of TARGETS. None of Citigroup, Citigroup Funding or Trust [XXV] makes any
representation that the publicly available information about [Motorola] is
accurate or complete.
[Motorola] is not affiliated with Trust [XII][XXV], will not receive any of the
proceeds from the sale of the TARGETS and will have no obligations with respect
to the TARGETS, the treasury securities or the forward contract. This prospectus
relates only to the TARGETS offered hereby and does not relate to [Motorola] or
the[Motorola] common stock.
2117
23
HISTORICAL DATA ON THE COMMON STOCK OF MOTOROLA, INC.
The common stock is listedtraded on the New York Stock Exchange under the symbol
"[MOT]." ". The following table sets forth, for each of the quarterly periods
indicated, the high and low sales prices for [Motorola] common stock, as well as
the dividends paid per share of [Motorola] common stock, as reported on the New
York Stock Exchange, and adjusted to reflect stock splits and stock dividends.splits.
DIVIDEND
DECLARED
HIGH LOW PER SHARE
---- ---------- ------- ---------
1996
Quarter
First.................................................. $ $ $
Second.................................................
Third..................................................
Fourth.................................................
1997
Quarter
First..................................................
Second.................................................
Third..................................................
Fourth.................................................
1998
Quarter
First..................................................
Second.................................................
Third..................................................
Fourth.................................................
1999
Quarter
First..................................................
Second.................................................
Third..................................................
Fourth.................................................
2000
Quarter
First..................................................
Second.................................................
Third..................................................
Fourth.................................................First................................................. 55.0818 36.3980 0.0400
Second................................................ 47.1197 25.6763 0.0400
Third................................................. 35.3538 24.5575 0.0400
Fourth................................................ 26.6832 14.2086 0.0400
2001
Quarter
First..................................................
Second.................................................First................................................. 22.4877 12.4678 0.0400
Second................................................ 15.2156 9.3978 0.0400
Third................................................. 17.4442 12.0650 0.0400
Fourth................................................ 16.8535 12.7542 0.0400
2002
Quarter
First................................................. 14.5353 9.3978 0.0400
Second................................................ 15.3230 11.7697 0.0400
Third................................................. 13.8283 8.7803 0.0400
Fourth................................................ 10.9642 6.5337 0.0400
2003
Quarter
First................................................. 9.0219 6.8739 0.0400
Second................................................ 8.7713 6.7933 0.0400
Third................................................. 11.3938 7.7689 0.0400
Fourth................................................ 12.7632 10.6061 0.0400
2004
Quarter
First................................................. 16.9161 12.7095 0.0400
Second................................................ 18.6793 14.4906 0.0400
Third................................................. 16.4597 12.3783 0.0400
Fourth................................................ 18.6500 14.6338 0.0400
2005
Quarter
First................................................. 17.5200 14.6900 0.0400
Second................................................ 19.2300 14.4900 0.0400
Third (through , 2001)..........................July 19, 2005)......................... 19.9400 18.0500 0.0000
The closing price of the common stock on , 2001July 19, 2005 was $ .$19.85.
According to [Motorola]'s Quarterly Report on Form 10-Q for the fiscal
quarter ended ,April 2, 2005, as of ,April 2, 2005, there were 2,452,226,214
shares of common stock outstanding. During the period reflected in the above
table, [Motorola] split its common stock 3 for 1 on .June 1, 2000. The data
appearing in the above table has been adjusted to reflect this split.
Holders of the TARGETS will not be entitled to any rights with respect to
the[Motorola] common stock (including, without limitation, voting rights or rights
to receive dividends or other distributions in respect thereof).
2218
24
TARGETS TRUST [XII][XXV]
Trust [XII][XXV] is a statutory business trust formed under Delaware law pursuant to a
declaration of trust executed by Salomon Smith Barney Holdings,Citigroup Funding, as sponsor, and the trustees
of TARGETS Trust [XII][XXV] (as described below), and the filing of a certificate of
trust with the Secretary of State of the State of Delaware. The declaration will
be amended and restated in its entirety substantially in the form filed as an
exhibit to the registration statement of which this prospectus forms a part. The
amended and restated declaration of trust will be qualified as an indenture
under the Trust Indenture Act of 1939. Upon issuance of the TARGETS, the
purchasers thereof will own all the TARGETS. Salomon Smith Barney HoldingsCitigroup Funding will directly or
indirectly acquire all of the common securities in an aggregate amount equal to 3% or more of the total
capital of Trust [XII][XXV].
Trust [XII][XXV] will use all the proceeds derived from the issuance of the
TARGETS and the common securities to purchase the forward contract and treasury
securities and, accordingly, the assets of Trust [XII][XXV] will consist solely of
the forward contract and treasury securities. Of the total proceeds from the
sale of the trust securities, approximately 85% to 90% will be invested by Trust
[XII][XXV] in the forward contract and approximately 10% to 15% will be invested by
Trust [XII][XXV] in the treasury securities. Trust [XII][XXV] exists for the exclusive
purposes of
- issuing its trust securities representing undivided beneficial interests
in the assets of Trust [XII][XXV],
- investing the gross proceeds of its trust securities in the forward
contract and the treasury securities, and
- engaging only in activities incidental to the above.
Trust [XII][XXV]'s business and affairs are conducted by its trustees, each
appointed by Salomon Smith Barney HoldingsCitigroup Funding as holder of the common securities. Pursuant to
the declaration, the number of trustees of Trust [XII][XXV] will be five:
- TheJPMorgan Chase Manhattan Bank, N.A., a New York banking corporationnational association that is unaffiliated
with Salomon Smith Barney Holdings,Citigroup Funding and Citigroup, as the institutional trustee,
- Chase Manhattan Bank USA National Association, a Delaware state banking corporation
with its principal place of business in the State of Delaware, as the
Delaware trustee, and
- three individual trustees who are employees or officers of or who are
affiliated with, Salomon Smith Barney Holdings. Initially,Citigroup Funding, as the individual trustees will be Barbara A. Yastine, Michael J. Day and Mark I. Kleinman,
each of whom is an officer of Salomon Smith Barney Holdings.trustees.
The institutional trustee will act as the sole indenture trustee under the
declaration for purposes of compliance with the Trust Indenture Act until it is
removed or replaced by the holder of the common securities. TheJPMorgan Chase Manhattan
Bank,
N.A. will also act as indenture trustee under each of the forward contract and
the guarantee that Salomon Smith Barney HoldingsCitigroup Funding and Citigroup will execute and deliver for
the benefit of the holders of TARGETS.
The institutional trustee will hold title to the forward contract for the
benefit of the holders of Trust [XII][XXV]'s trust securities and, in its capacity as
the holder, the institutional trustee will have the power to exercise all
rights, powers and privileges under the indenture pursuant to which the forward
contract is issued. In addition, the institutional trustee will maintain
exclusive control of a segregated non-interest bearing bank account to hold all
payments made in respect of the forward contract and the treasury securities for
the benefit of the holders of Trust [XII][XXV]'s trust securities. The institutional
trustee will make payments of distributions and payments on liquidation and
otherwise to the holders of the trust securities out of funds from the
segregated bank account.
The indenture trustee will act as trustee for the forward contract under
the indenture for purposes of compliance with the provisions of the Trust
Indenture Act.
The guarantee trustee will hold the guarantee for the benefit of the
holders of the TARGETS. Salomon Smith Barney Holdings,Citigroup Funding, as direct or indirect holder of all
the common securities, will have the right, subject to certain restrictions
contained in the declaration, to appoint, remove or replace any trustees and to
increase or 23
25
decrease the number of trustees. Salomon Smith Barney HoldingsCitigroup Funding will pay all fees
and expenses related to Trust [XII][XXV] and the offering of Trust [XII][XXV]'s trust
securities.
The rights of the holders of the TARGETS, including economic rights, rights
to information and voting rights, are set forth in the declaration, the Delaware
BusinessStatutory Trust Act and the Trust Indenture Act.
19
The location of the principal executive office of Trust [XII][XXV] is c/o
Salomon Smith Barney HoldingsCitigroup Funding Inc., 388 Greenwich Street,399 Park Avenue, New York, New York 1001310043 and its
telephone number is (212) 816-6000.559-1000.
DESCRIPTION OF THE TARGETS
The TARGETS will be issued pursuant to the terms of the amended and
restated declaration of trust. The amended and restated declaration of trust
will be qualified as an indenture under the Trust Indenture Act. The
institutional trustee, TheJPMorgan Chase Manhattan Bank, N.A., will act as the institutional
trustee for the TARGETS under the amended and restated declaration of trust for
purposes of compliance with the provisions of the Trust Indenture Act. The terms
of the TARGETS will include those stated in the amended and restated declaration
of trust and those made part of the amended and restated declaration of trust by
the Trust Indenture Act. Pursuant to the amended and restated declaration of
trust, every holder of the TARGETS will be deemed to have expressly assented and
agreed to the terms of, and will be bound by, the amended and restated
declaration of trust. The following is a summary of the terms and provisions of
the TARGETS. This summary does not describe all of the terms and provisions of
the amended and restated declaration of trust and the guarantee. You should read
the forms of these documents, which are filed as exhibits to the registration
statement.
GENERAL
The amended and restated declaration of trust authorizes the individual
trustees to issue the trust securities on behalf of Trust [XII][XXV]. The trust
securities represent undivided beneficial interests in the assets of Trust
[XII][XXV]. All of the common securities of Trust [XII][XXV] will be owned, directly or
indirectly, by Salomon Smith Barney Holdings.Citigroup Funding. The common securities rank pari passu with the
TARGETS and payments will be made on the common securities on a pro rata basis
with the TARGETS, except that upon the occurrence of an acceleration event, the
rights of the holders of the common securities to receive payments will be
subordinated to the rights of the holders of the TARGETS. The amended and
restated declaration does not permit the issuance by Trust [XII][XXV] of any
securities other than its trust securities or the incurrence of any debt by
Trust [XII][XXV]. Pursuant to the amended and restated declaration, the institutional
trustee will hold title to the forward contract and the treasury securities for
the benefit of the holders of the trust securities. The payment of distributions
out of money held by Trust [XII][XXV] and payments upon maturity of the TARGETS out
of money held by Trust [XII][XXV] are guaranteed by Salomon Smith Barney HoldingsCitigroup Funding and Citigroup
to the extent described under "Description of the Guarantee".Guarantee." The guarantee will
be held by TheJPMorgan Chase Manhattan Bank, N.A., the guarantee trustee, for the benefit of
the holders of the TARGETS. The guarantee does not cover payment of
distributions when Trust [XII][XXV] does not have sufficient available funds to pay
such distributions. In such event, the remedies of a holder of the TARGETS are
to
- vote to direct the institutional trustee to enforce the institutional
trustee's rights under the forward contract and treasury securities,
- if the institutional trustee fails to enforce its rights against
Salomon
Smith Barney Holdings,Citigroup Funding, initiate a proceeding against Salomon Smith Barney
HoldingsCitigroup Funding to
enforce the institutional trustee's rights under the forward contract, or
- if the failure by Trust [XII][XXV] to pay distributions is attributable to the
failure of Salomon Smith Barney HoldingsCitigroup Funding to pay amounts in respect of the forward
contract, institute a proceeding directly against Salomon Smith
Barney HoldingsCitigroup Funding for
enforcement of payment to such holder of the amounts owed on such
holder's pro rata interest in the forward contract.
The aggregate number of TARGETS to be issued will be , as described in
"Underwriting"."Underwriting." The TARGETS will be issued in fully registered form. The TARGETS
will not be issued in bearer form. See "-- Book-Entry Only Issuance".
24
26 below.
PAYMENT AT MATURITY PAYMENT
The TARGETS will mature on , subject to acceleration
to the accelerated maturity date upon an acceleration event. See
"-- Acceleration of Maturity Date; Enforcement of Rights". below. On the maturity
date, holders of the TARGETS will be entitled to receive, to the extent Trust
[XII][XXV] has assets
20
available, the maturity payment with respect to each TARGETS. On the maturity
date, holders of the TARGETS will also receive a final quarterly distribution
with respect to each TARGETS, plus any accrued and unpaid yield enhancement
payments.
The maturity payment per TARGETS will equal the sum of (A) the initial
principal amount of $[10.00]$10.00 per TARGETS and (B) the stock return payment, which
may be positive, zero or negative.
STOCK RETURN PAYMENT
The stock return payment will equal the product of:
Initial Principal Amount of $[10.00]$10.00 per TARGETS Xx Stock Return.
The stock return will equal the compounded value of the capped returns for
each period, computed in the following manner, and expressed in this prospectus
as a percentage:
Product of [(1.00 + the periodic capped return) for each reset period] -
1.00
The periodic capped return for a reset period (including the period ending
at maturity) will equal the following fraction:
Ending Value - Starting Value
----------------------------------
Starting Value
Reset dates occur on the 15th day of each month, beginning ,
and we2005, except that the final reset date will occur at maturity. We refer to the
period between any two consecutive reset dates (or the issue date and the first
reset date) as reset periods. The periodic capped return for any reset period
will not in any circumstance be greater than a value to be
determined on the date the TARGETS are priced, which value is expected to be
approximately [5%].% or less than %.
The stock return will be calculated by compounding the product of the
periodic capped returns for each reset period. Assuming a [5%]hypothetical 4.5% cap
on appreciation and a hypothetical 11% floor on depreciation in each reset
period and a total of [36]36 reset periods, the stock return cannot be more than
[479.18%]approximately 387.74% (a maximum value that represents an increase in the price
of the common stock of at least [5%]4.5% in each reset period) and may be as little
as -98.49% (a minimum value that represents a decrease in the price of the
common stock of at least 11% in each reset period).
The ending value for any reset period other than the reset period ending at
maturity will be the closingtrading price of the common stock on the reset date at the
end of the period or, if that day is not a trading day, the closingtrading price of the
common stock on the most recentnext following trading day. The ending value for the reset
period ending at maturity will be the ten day closingaverage daily trading price of the common
stock.stock for the 10 trading days immediately up to and including the date three
trading days before the maturity date.
The starting value for the initial reset period will be $ , which is
the closingtrading price
of the common stock on the date the TARGETS are priced for initial sale to the
public. We will disclose the initial starting value to you in the final
prospectus delivered to you in connection with sales of the TARGETS. The
starting value for each subsequent reset period (including the reset period
ending on maturity) will equal the ending value for the immediately preceding
reset period.
A trading day means a day, as determined by Citigroup Funding, on which
trading is generally conducted (or was scheduled to have been generally
conducted, but for the occurrence of a market disruption event) on the New York
Stock Exchange, the American Stock Exchange, the Nasdaq National Market, the
Chicago Mercantile Exchange and the Chicago Board Options Exchange, and in the
over-the-counter market for equity securities in the United States.
A market disruption event means the occurrence or existence of any
suspension of or limitation imposed on trading (by reason of movements in price
exceeding limits permitted by any exchange or market or otherwise) of, or the
unavailability, through a recognized system of public dissemination of
transaction information, of accurate price, volume or related information in
respect of, (1) the shares of [Motorola] common stock on any exchange or market,
or (2) any options contracts or futures contracts relating to the
21
shares of [Motorola] common stock, or any options on such futures contracts, on
any exchange or market if, in each case, in the determination of Citigroup
Funding, any such suspension, limitation or unavailability is material.
The closingtrading price of the[Motorola] common stock (or any other security for
which a trading price must be determined) on any date of determination will be
(1) if the dailycommon stock or other security is listed on a national securities
exchange on that date of determination, the closing sale price or, if no closing
sale price is reported, the last reported sale price of the common stock as reported on the New York Stock
Exchange. If the common stock is not listed on the New York Stock Exchange on that date of determination, the closing price will be the last reported sale
price as reported in the composite transactions foron the
principal United Statesnational securities exchange on which the common stock or other
security is listed. Iflisted or admitted to trading, (2) if the common stock or other
security is not listed on a United States national or regional securities exchange on that date of
determination, or if the closing sale price will be theor last quoted bidreported sale price foris not
obtainable (even if the common stock inor other security is listed or admitted to
trading on such exchange), and the over-the-counter
market as reported bycommon stock or other security is quoted on
the Nasdaq StockNational Market, the National Quotation Bureau or
a similar organization. Upon the occurrence of certain events described under
" -- Dilution Adjustments" below, the closing price will be calculated by
substituting the relevant security for the common stock.
The ten day closing price used to calculate the ending value at maturity
will be the average daily closing sale price or, if no closing sale price
is reported, the last reported sale price of the common stock,on that date as reported on the
New York Stock Exchange for the 10 trading days immediately prior to but not
including the date one business day before the maturity date or the accelerated
maturity date, as the case may be. IfNasdaq, and (3) if the common 25
27
stock or other security is not listedquoted on the
New York Stock ExchangeNasdaq on anythat date of those dates,determination or, if the ten day closing sale price will be theor last
reported sale price as reported in the
composite transactions for the principal United States securities exchange on
whichis not obtainable (even if the common stock or other
security is listed. Ifquoted on the common stock is not listed on a United
States national or regional securities exchange, the ten day closing price will
beNasdaq), the last quoted bid price for the common
stock or other security in the over-the-counter market on that date as reported
by the Nasdaq Stock Market,OTC Bulletin Board, the National Quotation Bureau or a similar
organization. The determination of the trading price on any trading day may be
deferred by Citigroup Funding for up to five consecutive trading days on which a
market disruption event is occurring, but not past the trading day prior to
maturity. If no sale price is available pursuant to clauses (1), (2) or (3)
above or if there is a market disruption event, the trading price on any date of
determination, unless deferred by Citigroup Funding as described in the
preceding sentence, will be the arithmetic mean, as determined by Citigroup
Funding, of the bid prices of the common stock or other security obtained from
as many dealers in such stock or other security (which may include Citigroup
Global Markets Inc. or any of its other affiliates), but not exceeding three
such dealers, as will make such bid prices available to Citigroup Funding. A
security "quoted on the Nasdaq National Market" will include a security included
for listing or quotation in any successor to such system and the term "OTC
Bulletin Board" will include any successor to such service. Upon the occurrence
of certain events described under "-- Dilution Adjustments" below, the ten day closingtrading
price will be calculated by substituting the relevant security for the common
stock.
The periodic capped return is subject to adjustment upon the occurrence of
a number of events involving [Motorola] and its capital structure as described
further under "-- Dilution Adjustments" below.
MATURITY PAYMENT -- HYPOTHETICAL EXAMPLES
Because the stock return is dependent on the trading price of the common
stock on each reset date and over the 10-day calculation period prior to
maturity, and the value of the common stock may be subject to significant
variations over the term of the TARGETS, it is not possible to present a chart
or table illustrating a complete range of possible payments at maturity. The
examples of hypothetical maturity payment calculations that follow are intended
to illustrate the effect of possible general trends in the price of the common
stock on the amount payable on the TARGETS at maturity. All of the hypothetical
examples assume that the initial price to the public of each TARGETS is $10,
that the price of the common stock on the date of issuance is $18.91, that the
periodic capped return cannot exceed 4.5% or be less than -11% and that the
maturity date is August 15, 2008.
22
EXAMPLE 1: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS GREATER
THAN ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON
STOCK APPRECIATED BY 3.5% (AN AMOUNT LESS THAN THE ASSUMED 4.5%
PERIODIC APPRECIATION CAP) DURING EACH RESET PERIOD THROUGHOUT
THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
JANUARY.............. $22.27 3.50% $33.65 3.50% $50.85 3.50%
FEBRUARY............. $23.05 3.50% $34.83 3.50% $52.63 3.50%
MARCH................ $23.86 3.50% $36.05 3.50% $54.47 3.50%
APRIL................ $24.69 3.50% $37.31 3.50% $56.38 3.50%
MAY.................. $25.55 3.50% $38.61 3.50% $58.35 3.50%
JUNE................. $26.45 3.50% $39.97 3.50% $60.39 3.50%
JULY................. $27.37 3.50% $41.36 3.50% $62.50 3.50%
AUGUST............... $28.33 3.50% $42.81 3.50% $64.69 3.50%
SEPTEMBER............ $19.41 3.50% $29.32 3.50% $44.31 3.50%
OCTOBER.............. $20.09 3.50% $30.35 3.50% $45.86 3.50%
NOVEMBER............. $20.79 3.50% $31.41 3.50% $47.47 3.50%
DECEMBER............. $21.52 3.50% $32.51 3.50% $49.13 3.50%
Stock return = [(1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 +
0.035) X (1.00 + 0.035) X
(1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 +
0.035) X
(1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 +
0.035) X
(1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 +
0.035) X
(1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 +
0.035) X
(1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 +
0.035) X
(1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 + 0.035) X (1.00 +
0.035) X
(1.00 + 0.035)] - 1 = 245.03%.
Stock return payment = $10.00 X 2.4503 = $24.50
Maturity payment = $10.00 + $24.50 = $34.50 per TARGETS.
23
EXAMPLE 2: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS GREATER
THAN ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON
STOCK APPRECIATED BY 8% (AN AMOUNT GREATER THAN THE ASSUMED
4.5% PERIODIC APPRECIATION CAP) DURING EACH RESET PERIOD
THROUGHOUT THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
JANUARY.............. $27.55 4.50% $ 69.38 4.50% $174.70 4.50%
FEBRUARY............. $29.75 4.50% $ 74.93 4.50% $188.67 4.50%
MARCH................ $32.13 4.50% $ 80.92 4.50% $203.77 4.50%
APRIL................ $34.70 4.50% $ 87.39 4.50% $220.07 4.50%
MAY.................. $37.48 4.50% $ 94.38 4.50% $237.68 4.50%
JUNE................. $40.48 4.50% $101.94 4.50% $256.69 4.50%
JULY................. $43.72 4.50% $110.09 4.50% $277.23 4.50%
AUGUST............... $47.22 4.50% $118.90 4.50% $299.40 4.50%
SEPTEMBER............ $20.25 4.50% $50.99 4.50% $128.41 4.50%
OCTOBER.............. $21.87 4.50% $55.07 4.50% $138.68 4.50%
NOVEMBER............. $23.62 4.50% $59.48 4.50% $149.78 4.50%
DECEMBER............. $25.51 4.50% $64.24 4.50% $161.76 4.50%
Stock return = [(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X
(1.00 + 0.045)] - 1 = 387.74%.
Stock return payment = $10.00 X 3.8774 = $38.77
Maturity payment = $10.00 + $38.77 = $48.77 per TARGETS, which is the maximum
possible maturity payment.
24
EXAMPLE 3: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS LESS THAN
ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON STOCK
DEPRECIATED BY 8% (AN AMOUNT LESS THAN THE ASSUMED 11% PERIODIC
DEPRECIATION FLOOR) DURING EACH PERIOD THROUGHOUT THE TERM OF
THE TARGETS:
2005 2006 2007 2008
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
JANUARY.............. $12.36 -8.00% $4.54 -8.00% $1.67 -8.00%
FEBRUARY............. $11.37 -8.00% $4.18 -8.00% $1.54 -8.00%
MARCH................ $10.46 -8.00% $3.85 -8.00% $1.41 -8.00%
APRIL................ $ 9.62 -8.00% $3.54 -8.00% $1.30 -8.00%
MAY.................. $ 8.85 -8.00% $3.25 -8.00% $1.20 -8.00%
JUNE................. $ 8.14 -8.00% $2.99 -8.00% $1.10 -8.00%
JULY................. $ 7.49 -8.00% $2.75 -8.00% $1.01 -8.00%
AUGUST............... $ 6.89 -8.00% $2.53 -8.00% $0.93 -8.00%
SEPTEMBER............ $17.25 -8.00% $ 6.34 -8.00% $2.33 -8.00%
OCTOBER.............. $15.87 -8.00% $ 5.83 -8.00% $2.15 -8.00%
NOVEMBER............. $14.60 -8.00% $ 5.37 -8.00% $1.97 -8.00%
DECEMBER............. $13.43 -8.00% $ 4.94 -8.00% $1.82 -8.00%
Stock return = [(1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 +
- -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080)
X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00
+ -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 +
- -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080)
X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00
+ -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 +
- -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080) X (1.00 + -0.080)
X (1.00 + -0.080) X (1.00 + -0.080)] - 1 = -95.03%.
Stock return payment = $10.00 X -0.9503 = $-9.50
Maturity payment = $10.00 + $-9.50 = $0.50 per TARGETS.
25
EXAMPLE 4: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS LESS THAN
ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON STOCK
DEPRECIATED BY 15% (AN AMOUNT GREATER THAN THE ASSUMED 11%
PERIODIC DEPRECIATION FLOOR) DURING EACH RESET PERIOD
THROUGHOUT THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
JANUARY.............. $8.32 -11.00% $1.18 -11.00% $0.17 -11.00%
FEBRUARY............. $7.07 -11.00% $1.01 -11.00% $0.14 -11.00%
MARCH................ $6.01 -11.00% $0.85 -11.00% $0.12 -11.00%
APRIL................ $5.11 -11.00% $0.73 -11.00% $0.10 -11.00%
MAY.................. $4.34 -11.00% $0.62 -11.00% $0.09 -11.00%
JUNE................. $3.69 -11.00% $0.53 -11.00% $0.07 -11.00%
JULY................. $3.14 -11.00% $0.45 -11.00% $0.06 -11.00%
AUGUST............... $2.67 -11.00% $0.38 -11.00% $0.05 -11.00%
SEPTEMBER............ $15.94 -11.00% $2.27 -11.00% $0.32 -11.00%
OCTOBER.............. $13.55 -11.00% $1.93 -11.00% $0.27 -11.00%
NOVEMBER............. $11.51 -11.00% $1.64 -11.00% $0.23 -11.00%
DECEMBER............. $ 9.79 -11.00% $1.39 -11.00% $0.20 -11.00%
Stock return = [(1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 +
- -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110)
X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00
+ -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 +
- -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110)
X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00
+ -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 +
- -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110) X (1.00 + -0.110)
X (1.00 + -0.110) X (1.00 + -0.110)] - 1 = -98.49%.
Stock return payment = $10.00 X -0.9849 = $-9.85
Maturity payment = $10.00 + $-9.85 = $0.15 per TARGETS, which is the lowest
possible maturity payment.
26
The following two examples (5 and 6) show that if the trading price of the
common stock fluctuates over the term of the TARGETS and is less at maturity
than at issuance, the maturity payment on the TARGETS may be less or more than
the amount of your initial investment, depending on the size of the increases
and decreases in the trading price of the common stock during each reset period.
EXAMPLE 5: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS LESS THAN
ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON STOCK
FLUCTUATED DURING THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
JANUARY.............. $15.98 1.00% $23.18 4.50% $18.47 -11.00%
FEBRUARY............. $16.29 2.00% $23.64 2.00% $19.20 4.00%
MARCH................ $17.27 4.50% $24.35 3.00% $19.40 1.00%
APRIL................ $17.62 2.00% $25.08 3.00% $19.78 2.00%
MAY.................. $18.32 4.00% $26.34 4.50% $16.82 -11.00%
JUNE................. $18.51 1.00% $18.43 -11.00% $17.15 2.00%
JULY................. $18.88 2.00% $19.36 4.50% $17.32 1.00%
AUGUST............... $20.01 4.50% $20.13 4.00% $17.50 1.00%
SEPTEMBER............ $19.69 4.50% $20.41 2.00% $21.14 4.50%
OCTOBER.............. $20.28 3.00% $21.22 4.00% $21.35 1.00%
NOVEMBER............. $15.21 -11.00% $21.44 1.00% $21.78 2.00%
DECEMBER............. $15.82 4.00% $21.87 2.00% $23.08 4.50%
Stock return = [(1.00 + 0.045) X (1.00 + 0.030) X (1.00 + -0.110) X (1.00 +
0.040) X (1.00 + 0.010) X (1.00 + 0.020) X (1.00 + 0.045) X (1.00 + 0.020) X
(1.00 + 0.040) X (1.00 + 0.010) X (1.00 + 0.020) X (1.00 + 0.045) X (1.00 +
0.020) X (1.00 + 0.040) X (1.00 + 0.010) X (1.00 + 0.020) X (1.00 + 0.045) X
(1.00 + 0.020) X (1.00 + 0.030) X (1.00 + 0.030) X (1.00 + 0.045) X (1.00 +
- -0.110) X (1.00 + 0.045) X (1.00 + 0.040) X (1.00 + 0.045) X (1.00 + 0.010) X
(1.00 + 0.020) X (1.00 + 0.045) X (1.00 + -0.110) X (1.00 + 0.040) X (1.00 +
0.010) X (1.00 + 0.020) X (1.00 + -0.110) X (1.00 + 0.020) X (1.00 + 0.010) X
(1.00 + 0.010)] - 1 = 51.99%.
Stock return payment = $10.00 X 0.5199 = $5.20
Maturity payment = $10.00 + $5.20 = $15.20 per TARGETS, more than the amount of
your initial investment (even though the trading price of the common stock at
maturity is less than its price at issuance).
27
EXAMPLE 6: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS LESS THAN
ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON STOCK
FLUCTUATED DURING THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
JANUARY.............. $18.97 4.50% $17.23 -5.00% $17.46 4.50%
FEBRUARY............. $19.92 4.50% $18.09 4.50% $16.59 -5.00%
MARCH................ $18.92 -5.00% $19.00 4.50% $15.76 -5.00%
APRIL................ $17.98 -5.00% $19.95 4.50% $14.97 -5.00%
MAY.................. $17.08 -5.00% $18.95 -5.00% $14.22 -5.00%
JUNE................. $16.22 -5.00% $18.00 -5.00% $15.22 4.50%
JULY................. $17.04 4.50% $17.10 -5.00% $14.45 -5.00%
AUGUST............... $17.89 4.50% $17.96 4.50% $13.73 -5.00%
SEPTEMBER............ $19.69 4.50% $16.99 -5.00% $17.06 -5.00%
OCTOBER.............. $20.67 4.50% $17.84 4.50% $16.21 -5.00%
NOVEMBER............. $19.64 -5.00% $19.09 4.50% $15.40 -5.00%
DECEMBER............. $18.07 -8.00% $18.14 -5.00% $16.16 4.50%
Stock return = [(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.050) X (1.00 +
- -0.080) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.050) X (1.00 + -0.050) X
(1.00 + -0.050) X (1.00 + -0.050) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
- -0.050) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.050) X (1.00 + -0.050) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.050) X (1.00 +
- -0.050) X (1.00 + -0.050) X (1.00 + 0.045) X (1.00 + -0.050) X (1.00 + -0.050) X
(1.00 + -0.050) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.050) X (1.00 +
- -0.050) X (1.00 + -0.050) X (1.00 + -0.050) X (1.00 + 0.045) X (1.00 + -0.050) X
(1.00 + -0.050)] -1 = -36.17%.
Stock return payment = $10.00 X -0.3617 = $-3.62
Maturity payment = $10.00 + $-3.62 = $6.38 per TARGETS, less than the amount of
your initial investment.
28
The following two examples (7 and 8) show that if the trading price of the
common stock fluctuates over the term of the TARGETS and is greater at maturity
than at issuance, the maturity payment on the TARGETS may be less or more than
the amount of your initial investment, depending on the size of the increases
and decreases in the trading price of the common stock during each reset period.
EXAMPLE 7: THE TRADING PRICE OF THE COMMON STOCK AT MATURITY IS GREATER
THAN ITS PRICE AT ISSUANCE AND THE TRADING PRICE OF THE COMMON
STOCK FLUCTUATED DURING THE TERM OF THE TARGETS:
2005 2006 2007 2008
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
JANUARY.............. $20.46 -2.00% $20.02 -5.00% $23.68 4.50%
FEBRUARY............. $19.44 -5.00% $19.42 -3.00% $21.31 -10.0%
MARCH................ $19.24 -1.00% $19.03 -2.00% $22.38 4.50%
APRIL................ $19.63 2.00% $18.84 -1.00% $21.93 -2.00%
MAY.................. $19.04 -3.00% $19.50 3.50% $21.71 -1.00%
JUNE................. $18.09 -5.00% $18.92 -3.00% $22.80 4.50%
JULY................. $18.63 3.00% $17.59 -7.00% $20.75 -9.00%
AUGUST............... $19.19 3.00% $18.47 4.50% $20.64 -0.50%
SEPTEMBER............ $19.50 4.00% $19.96 4.00% $19.03 3.00%
OCTOBER.............. $20.09 3.00% $18.76 -6.00% $19.88 4.50%
NOVEMBER............. $21.09 4.50% $19.88 4.50% $20.88 4.50%
DECEMBER............. $20.88 -1.00% $21.08 4.50% $22.13 4.50%
Stock return = [(1.00 + 0.40) X (1.00 + 0.030) X (1.00 + 0.045) X (1.00 +
- -0.010) X (1.00 + -0.020) X (1.00 + -0.050) X (1.00 + -0.010) X (1.00 + 0.020) X
(1.00 + -0.030) X (1.00 + -0.050) X (1.00 + 0.030) X (1.00 + 0.030) X (1.00 +
0.040) X (1.00 + -0.060) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.050) X
(1.00 + -0.030) X (1.00 + -0.020) X (1.00 + -0.010) X (1.00 + 0.035) X (1.00 +
- -0.030) X (1.00 + -0.070) X (1.00 + 0.045) X (1.00 + 0.030) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.100) X (1.00 +
0.045) X (1.00 + -0.020) X (1.00 + -0.010) X (1.00 + 0.045) X (1.00 + -0.090) X
(1.00 + -0.005)] - 1 = 0.59%.
Stock return payment = $10.00 X 0.0059 = $0.06
Maturity payment = $10.00 + $0.06 = $10.06 per TARGETS, more than the amount of
your initial investment.
29
EXAMPLE 8: DESPITE THE ASSUMED 11% PERIODIC DEPRECIATION FLOOR, THE
MATURITY PAYMENT CAN BE LESS THAN YOUR INVESTMENT, EVEN IF THE
TRADING PRICE INCREASES IN MORE RESET PERIODS THAN IT
DECREASES. AS AN EXAMPLE, THE TRADING PRICE OF THE COMMON STOCK
AT MATURITY IS GREATER THAN ITS PRICE AT ISSUANCE, THE TRADING
PRICE OF THE COMMON STOCK INCREASED THROUGHOUT ALL BUT 10 OF
THE RESET PERIODS DURING THE TERM OF THE TARGETS, BUT THERE WAS
A DECLINE IN THE TRADING PRICE OF THE COMMON STOCK RESULTING IN
A PERIODIC CAPPED RETURN OF -11% DURING EACH OF THESE 10 RESET
PERIODS (IF THIS OCCURS, THE MATURITY PAYMENT WILL ALWAYS BE
LESS THAN THE AMOUNT OF YOUR INITIAL INVESTMENT):
2005 2006 2007 2008
------------------------ ------------------------ ------------------------ ------------------------
CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC CLOSING VALUE PERIODIC
OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED OF COMMON CAPPED
STOCK RETURN STOCK RETURN STOCK RETURN STOCK RETURN
------------- -------- ------------- -------- ------------- -------- ------------- --------
JANUARY.............. $20.06 4.50% $17.77 4.50% $15.74 4.50%
FEBRUARY............. $21.06 4.50% $18.66 4.50% $16.53 4.50%
MARCH................ $18.53 -11.00% $16.42 -11.00% $17.36 4.50%
APRIL................ $19.46 4.50% $17.24 4.50% $18.23 4.50%
MAY.................. $20.43 4.50% $18.10 4.50% $16.04 -11.00%
JUNE................. $17.98 -11.00% $15.93 -11.00% $16.84 4.50%
JULY................. $18.88 4.50% $16.73 4.50% $18.53 4.50%
AUGUST............... $19.82 4.50% $17.56 4.50% $19.45 4.50%
SEPTEMBER............ $19.69 4.50% $17.44 -11.00% $15.46 -11.00%
OCTOBER.............. $20.67 4.50% $18.32 4.50% $16.23 4.50%
NOVEMBER............. $21.71 4.50% $19.23 4.50% $17.04 4.50%
DECEMBER............. $19.10 -11.00% $16.92 -11.00% $14.99 -11.00%
Stock return = [(1.00 + 0.045) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
- -0.110) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.110) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + -0.110) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
- -0.110) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.110) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + -0.110) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
- -0.110) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 + -0.110) X (1.00 + 0.045) X
(1.00 + 0.045) X (1.00 + -0.110) X (1.00 + 0.045) X (1.00 + 0.045) X (1.00 +
0.045) X (1.00 + 0.045) X (1.00 + -0.110) X (1.00 + 0.045) X (1.00 + 0.045) X
(1.00 + 0.045)] - 1 = -2.07%.
Stock return payment = $10.00 X -0.0207 = $-0.21
Maturity payment = $10.00 + $-0.21 = $9.79 per TARGETS, less than the amount of
your initial investment (even though the trading price of the common stock at
maturity is greater than its price at issuance).
ACCELERATION OF MATURITY DATE; ENFORCEMENT OF RIGHTS
If at any time an acceleration event occurs, the individual trustees will
give written instructions to the institutional trustee to sell the treasury
securities, dissolve Trust [XII][XXV] and, after satisfaction of creditors of Trust
[XII][XXV], cause to be distributed, as soon as is practicable following the
occurrence of such acceleration event, to the holders of the TARGETS in
liquidation of such holders' interests in Trust [XII][XXV], the accelerated maturity
payment with respect to each TARGETS and a pro rata portion of the treasury
proceeds, plus any accrued and unpaid yield enhancement payments.
The accelerated maturity payment with respect to each TARGETS will be paid
out of amounts received by Trust [XII][XXV] from Salomon Smith Barney HoldingsCitigroup Funding in respect of the
forward contract and will be equal to the sum of (A) the initial principal
amount of $[10.00]$10.00 per TARGETS and (B) the stock return as of the accelerated
maturity date.
The accelerated maturity date will be the date of the occurrence of the
event or events constituting such acceleration event.
30
The treasury proceeds will be the amount received by Trust [XII][XXV] as
proceeds from the sale of the treasury securities upon the occurrence of an
acceleration event. The individual trustees will send the institutional trustee
written notice and instructions to liquidate the treasury securities on an
accelerated maturity date. Upon receiving such notice, the institutional trustee
will solicit at least three bids and sell and transfer the treasury securities
to the highest of the three bidders.
The amount of either any accelerated maturity payment or the treasury
proceeds which, in either case, may be distributed to holders of the TARGETS
upon a dissolution and liquidation of Trust [XII][XXV] is uncertain. Accordingly, the
amount that a holder of TARGETS may receive on the accelerated maturity date is
uncertain.
An acceleration event will occur upon the occurrence of (1) a "tax event",
(2) an "investment company event" or (3) a "bankruptcy event".event."
A tax event will occur if Salomon Smith Barney HoldingsCitigroup Funding or Citigroup requests, receives
and delivers to the individual trustees an opinion of nationally recognized
independent tax counsel experienced in such matters indicating that:
(1) on or after the date of this prospectus, one or more of the following
has occurred:
- an amendment to, change in or announced proposed change in the laws, or
any regulations thereunder, of the United States or any political
subdivision or taxing authority thereof or therein,
- a judicial decision interpreting, applying, or clarifying such laws or
regulations,
- an administrative pronouncement or action that represents an official
position, including a clarification of an official position, of the
governmental authority or regulatory body making such administrative
pronouncement or taking such action, or
- a threatened challenge asserted in connection with an audit of Salomon
Smith Barney HoldingsCitigroup
Funding, Citigroup or any of its subsidiariestheir respective affiliates or Trust [XII][XXV],
or a threatened challenge asserted in writing against any other taxpayer
that has raised capital through the issuance of securities that are
substantially similar to the forward contract or the TARGETS; and
26
28
(2) there is more than an insubstantial risk that:
- Trust [XII][XXV] is, or will be, subject to United States federal income tax
with respect to income accrued or received on the forward contract or the
treasury securities, or
- Trust [XII][XXV] is, or will be, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.
An investment company event will occur if Salomon Smith Barney HoldingsCitigroup Funding or Citigroup
requests, receives and delivers to the individual trustees an opinion of
nationally recognized independent legal counsel experienced in such matters
indicating that as a result of the occurrence on or after the date of this
prospectus of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, Trust [XII][XXV] is or will be considered an
investment company which is required to be registered under the Investment
Company Act of 1940.
A bankruptcy event will occur if either of the following takes place:
(1) the entry of a decree or order
- of relief in respect of Salomon Smith Barney HoldingsCitigroup Funding and Citigroup by a court having
jurisdiction in the premises in an involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law,
- appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of Salomon Smith Barney HoldingsCitigroup Funding and
Citigroup, or of any substantial part of itsthe property of Citigroup
Funding and Citigroup, or
31
- ordering the winding up or liquidation of its affairs of Citigroup Funding
and Citigroup, and, in each case, the continuance of any such decree or
order unstayed and in effect for a period of 90 consecutive days; or
(2) an action by Salomon Smith Barney HoldingsCitigroup Funding and Citigroup to:
- commence a voluntary case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or
- consent to the entry of an order for relief in an involuntary case under
any such law or to the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or other similar official of Salomon
Smith Barney HoldingsCitigroup
Funding and Citigroup, or of any substantial part of itsthe property of
Citigroup Funding and Citigroup, or
- make an assignment for the benefit of itstheir respective creditors, or
- admit in writing itstheir inability to pay itstheir respective debts generally
as they become due, or
- take corporate action in furtherance of any of the foregoing.
The phrase pro rata means, with respect to any payment, distribution, or
treatment, proportionately to each holder of trust securities according to the
aggregate beneficial interests in the assets of Trust [XII][XXV] represented by the
trust securities held by the relevant holder in relation to the aggregate
beneficial interests in the assets of Trust [XII][XXV] represented by all trust
securities outstanding. If an acceleration event has occurred and is continuing,
any funds available to make a payment will be paid first to each holder of the
TARGETS proportionately according to the aggregate beneficial interests in the
assets of Trust [XII][XXV] represented by the TARGETS held by the relevant holder
relative to the aggregate beneficial interests in the assets of Trust [XII][XXV]
represented by all TARGETS outstanding. Only after satisfaction of all amounts
owed to the holders of the TARGETS, will payment be paid to each holder of
common securities proportionately according to the aggregate beneficial
interests in the assets of Trust [XII][XXV] represented by the common securities held
by the relevant holder relative to the aggregate beneficial interests in the
assets of Trust [XII][XXV] represented by all common securities outstanding.
On the date fixed for any payment of the accelerated maturity payment or
the treasury proceeds, the TARGETS and the common securities will no longer be
deemed to be outstanding and each TARGETS and common security will be deemed to
represent the right to receive an accelerated maturity payment and a pro rata
portion of the treasury proceeds, plus any accrued and unpaid yield enhancement
payments. If the 27
29
accelerated maturity payments or any accrued and unpaid yield
enhancement payments can be paid only in part because Trust [XII][XXV] has
insufficient assets available to pay in full such amounts, then the amounts
payable directly by Trust [XII][XXV] in respect of the TARGETS will be paid on a pro
rata basis. In addition, in the case of a default by Salomon Smith Barney HoldingsCitigroup Funding on its
obligations under the guarantee, the holders of the TARGETS will have a
preference over the holders of the common securities with respect to amounts
owed on the trust securities.
Subject to the institutional trustee obtaining a tax opinion as described
below, the holders of a majority of the TARGETS have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the institutional trustee, or direct the exercise of any trust or power
conferred upon the institutional trustee under the amended and restated
declaration of trust, including the right to direct the institutional trustee,
as holder of the forward contract and the treasury securities, to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the indenture trustee, or exercising any trust or
power conferred on the indenture trustee with respect to the forward
contract,
- direct the time, method and place of conducting any proceeding for any
remedy available to the institutional trustee or exercise any trust or
power conferred on the institutional trustee with respect to the treasury
securities,
32
- waive the consequences of any acceleration event under the indenture that
are waivable under the indenture,
- exercise any right to rescind or annul a declaration that any accelerated
maturity payment will be due and payable or
- consent to any amendment, modification or termination of the indenture or
the forward contract, where such consent shall be required.
If a consent or action under the indenture would require the consent or act of
holders of a majority of the beneficial interests in the forward contract, only
the holders of at least a super majority of the TARGETS can direct the
institutional trustee to give the consent or take the action. The institutional
trustee will notify all holders of TARGETS of any notice of default received
from the indenture trustee with respect to the forward contract. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy available to the institutional trustee, the institutional trustee, as
holder of the forward contract and the treasury securities, will not take any of
the actions described above unless it has obtained an opinion of a nationally
recognized independent tax counsel experienced in such matters to the effect
that as a result of such action, Trust [XII][XXV] will not fail to be classified as a
grantor trust for United States federal income tax purposes.
If the institutional trustee fails to enforce its rights under the forward
contract, any holder of TARGETS can directly institute a legal proceeding
against Salomon Smith Barney HoldingsCitigroup Funding to enforce the institutional trustee's rights under
the forward contract, without first instituting a legal proceeding against the
institutional trustee or any other person or entity. If Salomon
Smith Barney HoldingsCitigroup Funding fails
to pay amounts owed on the forward contract on the date they are otherwise
payable, then a holder of TARGETS may also directly institute a direct action in
respect of the amounts owed on the holder's pro rata interest in the forward
contract on or after the due date specified in the forward contract, without
first directing the institutional trustee to enforce the terms of the forward
contract or instituting a legal proceeding directly against Salomon Smith Barney HoldingsCitigroup Funding to
enforce the institutional trustee's rights under the forward contract. The
holders of TARGETS will not be able to exercise directly any other remedy
available to the holder of the forward contract. In connection with a direct
action, Salomon Smith Barney HoldingsCitigroup Funding will be subrogated to the rights of a holder of
TARGETS under the declaration to the extent of any payment made by Salomon Smith Barney HoldingsCitigroup
Funding to that holder of TARGETS in such direct action.
A waiver of an acceleration event under the indenture by the institutional
trustee at the direction of the holders of the TARGETS will constitute a waiver
of the corresponding acceleration event under the amended and restated
declaration of trust.
28
30
Holders of TARGETS may give any required approval or direction at a
separate meeting of holders of TARGETS convened for this purpose, at a meeting
of holders of trust securities or by written consent. The individual trustees
will cause a notice of any meeting at which holders of TARGETS are entitled to
vote, or of any matter upon which action by written consent of the holders is to
be taken, to be mailed to each holder of record of TARGETS. Each notice will
include a statement setting forth the date of such meeting or the date by which
the action is to be taken, a description of any resolution proposed for adoption
at the meeting on which the holders are entitled to vote or of such matter upon
which written consent is sought and instructions for the delivery of proxies or
consents. No vote or consent of the holders of TARGETS will be required for
Trust [XII][XXV] to cancel TARGETS in accordance with the amended and restated
declaration of trust. It is anticipated that the only holder of TARGETS issued
in book-entry form will be Cede & Co., as nominee of The Depository Trust
Company, or DTC, and each beneficial owner of TARGETS will be permitted to
exercise the rights of holders of TARGETS only indirectly through DTC and its
participants.
Notwithstanding that holders of TARGETS are entitled to vote or consent
under any of the circumstances described above, any of the TARGETS that are
owned at that time by Salomon Smith Barney HoldingsCitigroup Funding or any entity directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
Salomon Smith Barney Holdings,Citigroup Funding, will not be entitled to vote or consent and will, for
purposes of such vote or consent, be treated as if they were not outstanding.
33
QUARTERLY DISTRIBUTIONS
Holders of TARGETS will be entitled to receive quarterly distributions at
the rate per TARGETS of $ per quarter (except that the quarterly
distribution payment payable on November 15, 2005 will be $ per
TARGETS), payable on each February 15, May 15, August 15 and November 15,
beginning .November 15, 2005.
The quarterly distributions will be paid by Trust [XII][XXV] out of payments
under the treasury securities and the yield enhancement payments made to Trust
[XII][XXV] by Salomon Smith Barney HoldingsCitigroup Funding under the forward contract. Of each quarterly
distribution payable to holders of the TARGETS, approximately % will be
paid out of payments received by Trust [XII][XXV] under the treasury securities and
approximately % will be paid out of yield enhancement payments received by
Trust [XII][XXV] from Salomon Smith Barney HoldingsCitigroup Funding under the forward contract.
The treasury securities and the forward contract will be the sole assets of
Trust [XII][XXV] and will be held by the institutional trustee on behalf of Trust
[XII][XXV]. The ability of Trust [XII][XXV] to make quarterly distributions on the TARGETS
is therefore entirely dependent on receipt by Trust [XII][XXV] of payments with
respect to both the treasury securities and the forward contract.
Under the forward contract, any yield enhancement payments which are
payable, but are not punctually paid, by Salomon Smith Barney HoldingsCitigroup Funding on their scheduled
due date will cease to be due and payable and may instead be paid, together with
interest at % per annum compounded quarterly, on a future date chosen by
Salomon Smith Barney HoldingsCitigroup Funding in its sole discretion. Any yield enhancement payments that
are not paid by Salomon Smith Barney HoldingsCitigroup Funding prior to maturity will become due and payable
on the maturity date or the accelerated maturity date, as the case may be.
Assuming quarterly distributions on the TARGETS with a hypothetical yield
of [11%]7.5% per annum, set forth below is an example of how the cash flows on the
TARGETS would be comprised. Trust [XII][XXV] will invest approximately 10% to 15% of
the proceeds of the offering in the treasury securities. Quarterly distributions
providing the assumed yield may require a larger cash flow than will be provided
by the treasury securities, in 29
31
which case yield enhancement payments would be
paid by the obligor of the forward contract pursuant to the following schedule
and based on the following:
Hypothetical Offering Size:................................................................ $100,000,000
Hypothetical Annual Cash Flow:.............................. 11.00%............................ 7.5%
Hypothetical Payment Frequency:........................................................ Quarterly
Hypothetical Settlement Date:............................. August 15, 2005
Hypothetical Maturity Date:............................... August 15, 2001
Hypothetical Maturity Date:................................. August 15, 20042008
TREASURY TREASURY TREASURY TREASURY YIELD
SECURITY SECURITY SECURITY SECURITY ENHANCEMENT ANNUALIZED
MATURITY UNIT PURCHASE CASH PAYMENTS TOTAL EQUIVALENT
DATE COST COST FLOW CASH FLOW CASH FLOW COUPON
- -------- -------- -------------- -------------- --------------------------- -------------- ----------
11/15/01 98.66%05 98.912% $ 1,322,312.131,302,111.03 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
02/15/02 98.03%06 98.087% $ 1,313,922.031,291,250.45 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
05/15/02 96.85%06 97.152% $ 1,298,080.021,278,941.80 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
08/15/02 95.92%06 96.190% $ 1,285,628.891,266,277.70 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
11/15/02 95.29%06 95.247% $ 1,277,104.761,253,863.73 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
02/15/03 93.79%07 94.342% $ 1,257,081.101,241,950.01 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
05/15/03 92.81%07 93.413% $ 1,243,933.041,229,720.34 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
08/15/03 91.75%07 92.557% $ 1,229,712.751,218,451.66 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
11/15/03 91.11%07 91.641% $ 1,221,068.001,206,393.13 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
02/15/04 89.43%08 90.770% $ 1,198,658.661,194,926.99 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
05/15/04 88.26%08 89.798% $ 1,182,923.871,182,131.25 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
08/15/04 87.26%08 89.029% $ 1,169,574.761,172,007.88 $ 1,340,271.771,316,433.83 $ 1,409,728.23558,566.17 $ 2,750,000.00 11%1,875,000.00 7.5%
-------------- -------------- ------------- --------------
--------------
$15,000,000.00 $16,083,261.26 $16,916,738.74 $33,000,000.00$14,838,025.98 $15,797,206.00 $6,702,794.00 $22,500,000.00
============== ============== =========================== ==============
34
A portion of each quarterly distribution should represent a return to you
of your initial investment in the TARGETS for tax purposes. In the final
prospectus, the following table will set forth information regarding the
distributions you will receive on the treasury securities to be acquired by
Trust [XII][XXV] with a portion of the proceeds received by Trust [XII][XXV] from the sale
of the TARGETS, the distributions you will receive from any yield enhancement
payments, the portion of each year's distributions that should constitute a
return of capital for U.S. federal income tax purposes, the amount of original
issue discount that should accrue on the treasury securities and the amount of
ordinary income that should accrue on any yield enhancement payments with
respect to a holder who acquires its trust securities at the issue price from
Salomon Smith BarneyCitigroup Global Markets Inc. pursuant to the original offering. See "United"Certain
United States Federal Income Tax Considerations". in this prospectus.
ANNUAL GROSS
DISTRIBUTIONS ANNUAL GROSS
FROM ANNUAL GROSS DISTRIBUTIONS FROM ANNUAL RETURN ANNUAL INCLUSION OF
ANNUAL GROSS YIELD DISTRIBUTIONS FROM YIELD ENHANCEMENT OF ORIGINAL ISSUE
DISTRIBUTIONS FROM ENHANCEMENT TREASURY SECURITIES PAYMENTS PER CAPITAL PER DISCOUNT IN INCOME
YEAR TREASURY SECURITIES PAYMENTS PER TARGETS TARGETS TARGETS PER TARGETS
- ---- ------------------- ----------------- ------------------- ------------------ ---------------- -------------------
ANNUAL INCLUSION OF
ORDINARY INCOME
FROM YIELD
ENHANCEMENT
PAYMENTS PER
YEAR TARGETS
- ---- -------------------
DILUTION ADJUSTMENTS
The calculation of the periodic capped return will be subject to adjustment
from time to time in certain situations. Any such adjustments could have an
impact on the maturity payments or accelerated maturity payments to be paid by
Salomon Smith Barney HoldingsCitigroup Funding to Trust [XII][XXV] upon maturity of the forward contract and,
therefore, on the maturity payments or accelerated maturity payments to be paid
by Trust [XII][XXV] to the holders of TARGETS.
If [Motorola], after the closing date of the offering contemplated hereby,
(1) pays a stock dividend or makes a distribution with respect to the
common stock in shares of such stock,
(2) subdivides or splits the outstanding shares of the common stock into a
greater number of shares,
(3) combines the outstanding shares of the common stock into a smaller
number of shares, or
30
32
(4) issues by reclassification of shares of the common stock any shares of
other common stock of [Motorola],
then, in each such case, the starting value for the calculation of the periodic
capped return for the reset period ending on the reset date next occurring reset period after
such event will be multiplied by a dilution adjustment equal to a fraction, the
numerator of which will be the number of shares of common stock outstanding
immediately before such event and the denominator of which will be the number of
shares of common stock outstanding immediately after such event, plus, in the
case of a reclassification referred to in (4) above, the number of shares of
other common stock of [Motorola]. In the event of a reclassification referred to
in (4) above as a result of which no common stock is outstanding, the periodic
capped return for each subsequent reset period will be determined by reference
to the other common stock of [Motorola] issued in the reclassification.
If [Motorola], after the closing date, issues, or declares a record date in
respect of an issuance of, rights or warrants to all holders of common stock
entitling them to subscribe for or purchase shares of common stock at a price
per share less than the then-current market price of the common stock, other
than rights to purchase common stock pursuant to a plan for the reinvestment of
dividends or interest, then, in each such case, the starting value for the
calculation of the periodic capped return for the reset period ending on the
reset date next occurring reset period after such event will be multiplied by a dilution
adjustment equal to a fraction, the numerator of which will be the number of
shares of common stock outstanding immediately before the adjustment is effected
by reason of the issuance of such rights or warrants, plus the number of
additional shares of common stock which the aggregate offering price of the
total number of shares of common stock so offered for subscription or purchase
pursuant to such rights or warrants would purchase at the then-current market
price
35
of the common stock, which will be determined by multiplying the total number of
shares so offered for subscription or purchase by the exercise price of such
rights or warrants and dividing the product so obtained by such then-current
market price, and the denominator of which will be the number of shares of
common stock outstanding immediately before the adjustment is effected, plus the
number of additional shares of common stock offered for subscription or purchase
pursuant to such rights or warrants. To the extent that, after the expiration of
such rights or warrants, the shares of common stock offered thereby have not
been delivered, the starting value for the calculation of the periodic capped
return for the reset period ending on the reset date next occurring reset period after such
event will be further adjusted to equal the starting value which would have been
in effect had such adjustment for the issuance of such rights or warrants been
made upon the basis of delivery of only the number of shares of common stock
actually delivered.
If [Motorola], after the closing date, declares or pays a dividend or makes
a distribution to all holders of common stock of any class of its capital stock,
the capital stock of one or more of its subsidiaries, evidences of its
indebtedness or other non-cash assets, excluding any dividends or distributions
referred to above, or issues to all holders of common stock rights or warrants
to subscribe for or purchase any of its or one or more of its subsidiaries'
securities, other than rights or warrants referred to above, then, in each such
case, the starting value for the calculation of the periodic capped return for
the reset period ending on the reset date next occurring reset period after such event will
be multiplied by a dilution adjustment equal to a fraction, the numerator of
which will be the then-current market price of one share of the common stock,
less the fair market value (as determined by a nationally recognized independent investment banking
firm retained for this purpose by Salomon Smith Barney Holdings, whose
determination will be final) as of the time the adjustment is effected of the
portion of the capital stock, assets, evidences of indebtedness, rights or
warrants so distributed or issued applicable to one share of the common stock,
and the denominator of which will be the then-current market price of one share
of the common stock. If any capital stock declared or paid as dividend or
otherwise distributed or issued to all holders of [Motorola] common stock
consists, in whole or in part, of marketable securities, then the fair market
value of such marketable securities will be determined by the calculation agent
by reference to the price per share of such capital stock on the principal
market on which it is traded as of the time the adjustment is effected. The fair
market value of any other distribution or issuance referred to in this paragraph
will be determined by a nationally recognized independent investment banking
firm retained for this purpose by Citigroup Funding, whose determination will be
final.
Notwithstanding the foregoing, in the event that, with respect to any
dividend or distribution to which the above paragraph would otherwise apply, the
numerator in the fraction referred to in the above formula is less than $1.00 or
is a negative number, then Salomon Smith Barney HoldingsCitigroup Funding may, at its option, elect to have
the adjustment provided by that paragraph not be made and in lieu of such
adjustment, on the maturity date, the holders of the TARGETS will be entitled to
receive an additional amount of cash equal to the product of the number of the
TARGETS held by such holder multiplied by the fair market value of such
indebtedness, assets, rights or warrants (determined, as of the date such
dividend or distribution is made, by a nationally recognized independent
investment banking firm retained for this purpose by Salomon Smith Barney
31
33
Holdings,Citigroup Funding, whose
determination will be final) so distributed or issued applicable to the number
of shares of common stock underlying one TARGETS.
If [Motorola], after the closing date, declares a record date in respect of
a distribution of cash, other than any permitted dividends described below, any
cash distributed in consideration of fractional shares of common stock and any
cash distributed in a reorganization event referred to below, by dividend or
otherwise, to all holders of the common stock, or makes an excess purchase
payment, then the starting value for the calculation of the periodic capped
return for the reset period ending on the reset date next occurring reset period after such
event will be multiplied by a dilution adjustment equal to a fraction, the
numerator of which will be the then-current market price of the common stock on
such record date less the amount of such distribution applicable to one share of
common stock which would not be a permitted dividend, or, in the case of an
excess purchase payment, less the aggregate amount of such excess purchase
payment for which adjustment is being made at such time divided by the number of
shares of common stock outstanding on such record date, and the denominator of
which will be such then-current market price of the common stock.
For purposes of these adjustments, a permitted dividend is any quarterly
cash
dividend in respect of the common stock, other than a quarterly cash dividend that exceeds
the immediately preceding quarterly cash dividend, and then only to the extent that the
per share amount of such dividend results in an annualized dividend yield on the
common stock
36
in excess of 10%. An excess purchase payment is the excess, if any, of (x) the
cash and the value (as determined by a nationally recognized independent
investment banking firm retained for this purpose by Salomon Smith Barney Holdings,Citigroup Funding, whose
determination will be final) of all other consideration paid by [Motorola] with
respect to one share of common stock acquired in a tender offer or exchange
offer by [Motorola], over (y) the then-current market price of the common stock.
Notwithstanding the foregoing, in the event that, with respect to any
dividend or distribution or excess purchase payment to which the sixth paragraph
in this section would otherwise apply, the numerator in the fraction referred to
in the formula in that paragraph is less than $1.00 or is a negative number,
then Salomon Smith Barney HoldingsCitigroup Funding may, at its option, elect to have the adjustment provided
by that paragraph not be made and in lieu of such adjustment, on the maturity
date, the holders of the TARGETS will be entitled to receive an additional
amount of cash equal to the product of the number of the TARGETS held by such
holder multiplied by the sum of the amount of cash plus the fair market value of
such other consideration (determined, as of the date such dividend or
distribution is made, by a nationally recognized independent investment banking
firm retained for this purpose by Salomon Smith Barney
Holdings,Citigroup Funding, whose determination will be
final) so distributed or applied to the acquisition of the common stock in such
a tender offer or exchange offer applicable to the number of shares of common
stock underlying one TARGETS.
Each dilution adjustment will be effected as follows:
- in the case of any dividend, distribution or issuance, at the opening of
business on the business day next following the record date for
determination of holders of common stock entitled to receive such
dividend, distribution or issuance or, if the announcement of any such
dividend, distribution, or issuance is after such record date, at the
time such dividend, distribution or issuance was announced by [Motorola],
- in the case of any subdivision, split, combination or reclassification,
on the effective date of such transaction,
- in the case of any excess purchase payment for which [Motorola]
announces, at or prior to the time it commences the relevant share
repurchase, the repurchase price per share for shares proposed to be
repurchased, on the date of such announcement, and
- in the case of any other excess purchase payment, on the date that the
holders of the repurchased shares become entitled to payment in respect
thereof.
All dilution adjustments will be rounded upward or downward to the nearest
1/10,000th or, if there is not a nearest 1/10,000th, to the next lower
1/10,000th. No adjustment in the starting value for the calculation of the
periodic capped return for any reset period will be required unless such
adjustment would require an increase or decrease of at least one percent
therein, provided, however, that any adjustments which by reason of this
sentence are not required to be made will be carried forward (on a percentage
basis) and taken into 32
34
account in any subsequent adjustment. If any announcement
or declaration of a record date in respect of a dividend, distribution, issuance
or repurchase requiring an adjustment as described herein is subsequently
canceled by [Motorola], or such dividend, distribution, issuance or repurchase
fails to receive requisite approvals or fails to occur for any other reason,
then, upon such cancellation, failure of approval or failure to occur, the
periodic capped return for the reset period ending on the reset date next
occurring reset period after such event will be further adjusted to the periodic capped
return which would then have been in effect had adjustment for such event not
been made. If a reorganization event described below occurs after the occurrence
of one or more events requiring an adjustment as described herein, the dilution
adjustments previously applied to the periodic capped return for the reset
period ending on the reset date next occurring reset period after such events will not be
rescinded but will be applied to the new periodic capped return provided for
below.
The then-current market price of the common stock, for the purpose of
applying any dilution adjustment, means the average closing price per share of
common stock for the 10 trading days immediately before such adjustment is
effected or, in the case of an adjustment effected at the opening of business on
the business day next following a record date, immediately before the earlier of
the date such adjustment is effected and the related ex-date.
37
The ex-date with respect to any dividend, distribution or issuance is the
first date on which the shares of the common stock trade regular way on their
principal market without the right to receive such dividend, distribution or
issuance.
A trading day is a day on which the common stock or the relevant security
(1) is not suspended from trading on any national or regional securities
exchange, securities market or association or over-the-counter market at the
close of business and (2) has traded at least once on the national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of such security.
In the event of any of the following reorganization events
- any consolidation or merger of [Motorola], or any surviving entity or
subsequent surviving entity of [Motorola], with or into another entity,
other than a merger or consolidation in which [Motorola] is the
continuing corporation and in which the common stock outstanding
immediately before the merger or consolidation is not exchanged for cash,
securities or other property of [Motorola] or another issuer,
- any sale, transfer, lease or conveyance to another corporation of the
property of [Motorola] or any successor as an entirety or substantially
as an entirety,
- any statutory exchange of securities of [Motorola] or any successor of
[Motorola] with another issuer, other than in connection with a merger or
acquisition, or
- any liquidation, dissolution or winding up of [Motorola] or any successor
of [Motorola],
the ending value used to calculate the periodic capped return for the reset
period ending on the reset date next occurring, reset period and the starting value and the
ending value used to calculate the period capped return for each reset period
thereafter (other than the reset period ending at maturity) will be based on the
transaction value described below rather than the closingtrading price of the common
stock, and the ending value used to calculate the periodic capped return for the
reset period ending at maturity will be based on the transaction value rather
than the ten
day closing10-day average trading price of the common stock.
The transaction value with respect to any reset period will be the sum of:
(1) for any cash received in a reorganization event, the amount of cash
received per share of common stock,
(2) for any property other than cash or marketable securities received in a
reorganization event, an amount equal to the market value on the date
the reorganization event is consummated of that property received per
share of common stock, as determined by a nationally recognized
independent investment banking firm retained for this purpose by
Salomon Smith Barney Holdings,Citigroup Funding, whose determination will be final, and
33
35
(3) for any marketable securities received in a reorganization event, (A)
with respect to all reset periods other than the reset period ending at
maturity, an amount equal to the closingtrading price per share of such
marketable securities on the reset date at the end of the relevant
reset period multiplied by the number of those marketable securities
received for each share of common stock or, if that day is not a
trading day, the closingtrading price on the most recentnext following trading day, and
(B) with respect to the reset period ending on maturity, an amount
equal to the average closingtrading price per share of those marketable
securities for the 10 trading days immediately prior to but not
including the date one business day before the maturity date or
accelerated maturity date multiplied by the number of such marketable
securities received for each share of common stock.
Marketable securities are any perpetual equity securities or debt
securities with a stated maturity after the maturity date, in each case that are
listed on a U.S. national securities exchange or reported by the Nasdaq Stock
Market, Inc. The number of shares of any equity securities constituting
marketable securities included in the calculation of transaction value pursuant
to clause (3) above will be adjusted if any event occurs with respect to the
marketable securities or the issuer of the marketable securities between the
time of the reorganization event and the maturity date or accelerated maturity
date that would have required an
38
adjustment as described above, had it occurred with respect to the common stock
of [Motorola]. Adjustment for those subsequent events will be as nearly
equivalent as practicable to the adjustments described above.
Salomon Smith Barney HoldingsCitigroup Funding will be responsible for the effectuation and calculation
of any adjustment described herein and will furnish the indenture trustee with
notice of any such adjustment.
PAYMENT PROCEDURES
Distributions on the TARGETS will be payable to the holders of the TARGETS
as they appear on the books and records of Trust [XII][XXV] at the close of business
on the relevant record dates. While the TARGETS remain in book-entry only form,
the relevant record dates for distributions of any maturity payments or
accelerated maturity payments and any accrued and unpaid yield enhancement
payments with respect to the TARGETS will be onefive business daydays prior to the
date Trust [XII][XXV] receives those maturity payments or accelerated maturity
payments, as the case may be, under the forward contract. While the TARGETS
remain in book-entry only form, the relevant record date for distribution of the
treasury proceeds to holders of TARGETS will be onefive business daydays prior to the
date Trust [XII][XXV] receives those treasury proceeds upon liquidation of the
treasury securities. While the TARGETS remain in book-entry only form, the
relevant record dates for any quarterly distributions will be onefive business daydays
prior to the relevant payment dates, which payment dates will correspond to the
dates on which Trust [XII][XXV] receives payments in respect of, and in accordance
with the terms of, the treasury securities and the forward contract. The
relevant record dates for the common securities will be the same record dates as
for the TARGETS.
If the TARGETS will not continue to remain in book-entry only form, the
relevant record dates will conform to the rules of any securities exchange on
which they are listed and, if none, will be 15 days before the relevant payment
dates, which payment dates will correspond to the dates on which payments are
made in respect of, and in accordance with the terms of, the treasury securities
and the forward contract.
Distributions payable on any TARGETS that are not punctually paid on any
payment date, as a result of either Salomon Smith Barney HoldingsCitigroup Funding having failed to make a
payment under the forward contract or the U.S. Government having failed to make
a payment in respect of the treasury securities, will cease to be payable to the
person in whose name the TARGETS are registered on the relevant record date. The
defaulted distribution will instead be payable to the person in whose name those
TARGETS are registered on a special record date which will be the date on which
Trust [XII][XXV] actually receives the amount of the defaulted distributions.
If any date on which distributions are payable on the TARGETS is not a
business day, then payment of the distribution payable on such date will be made
on the next succeeding day that is a business day and without any interest or
other payment in respect of any such delay, with the same force and effect as if
made on that date. If that business day is in the next succeeding calendar year,
the payment will be made on the immediately preceding business day, with the
same force and effect as if made on that date. A business day is
34
36 any day other
than a Saturday, Sunday or a day on which banking institutions in The City of
New York are authorized or required by law to close.
Payments in respect of the TARGETS represented by global certificates (as
defined below under "Book-Entry Only Issuance") will be made to DTC, which will
credit the relevant accounts at DTC on the scheduled payment dates. In the case
of TARGETS in the form of certificated securities, if any, the payments will be
made by check mailed to the holder's address as it appears on the register.
VOTING RIGHTS
Except as described in this prospectus under "-- Acceleration of Maturity
Date; Enforcement of Rights" and "Description of the Guarantee -- Modifications
of the Guarantee; Assignment",Assignment," and except as provided under the Delaware
BusinessStatutory Trust Act, the Trust Indenture Act and as otherwise required by law
and the amended and restated declaration of trust, the holders of the TARGETS
will have no voting rights.
In the event the consent of the institutional trustee, as the holder of the
forward contract, is required under the indenture with respect to any amendment,
modification or termination of the indenture, the institutional trustee will
request the written direction of the holders of the trust securities with
respect to the amendment, modification or termination and will vote with respect
to the amendment, modification or
39
termination as directed by a majority of the trust securities voting together as
a single class. If any amendment, modification or termination under the
indenture requires the consent of a super majority, the institutional trustee
may only give its consent at the direction of the holders of at least the
proportionate number of the trust securities represented by the relevant super
majority of the aggregate beneficial interests in the forward contract. The
institutional trustee will be under no obligation to take any such action in
accordance with the directions of the holders of the trust securities unless the
institutional trustee has obtained an opinion of a nationally recognized
independent tax counsel experienced in such matters to the effect that for
United States federal income tax purposes Trust [XII][XXV] will not be classified as
other than a grantor trust.
The procedures by which holders of the TARGETS may exercise their voting
rights are described below under "-- Book-Entry Only Issuance".Issuance."
Holders of the TARGETS will have no rights to appoint or remove the
trustees, who may be appointed, removed or replaced solely by Salomon Smith
Barney HoldingsCitigroup Funding
as the indirect or direct holder of all of the common securities.
MODIFICATION OF THE AMENDED AND RESTATED DECLARATION OF TRUST
The declaration may be modified and amended if approved by the individual
trustees, and in certain circumstances the institutional trustee and the
Delaware trustee, provided that, if any proposed amendment to the amended and
restated declaration of trust provides for, or the individual trustees otherwise
propose to effect,
(1) any action that would adversely affect the powers, preferences or
special rights of the trust securities, whether by way of amendment to
the amended and restated declaration of trust or otherwise, or
(2) the dissolution, winding-up or termination of Trust [XII][XXV] other than
pursuant to the terms of the amended and restated declaration of trust,
then the holders of the trust securities, voting together as a single class,
will be entitled to vote on the amendment or proposal and the amendment or
proposal will not be effective except with the approval of the holders of at
least a majority of the trust securities affected thereby. If any amendment or
proposal referred to in (1) above would adversely affect only the TARGETS or the
common securities, then only holders of the affected class will be entitled to
vote on the amendment or proposal and the amendment or proposal will not be
effective except with the approval of a majority of that class of trust
securities.
35
37
Notwithstanding the foregoing, no amendment or modification may be made to
the amended and restated declaration of trust if the amendment or modification
would
- cause Trust [XII][XXV] to fail to be classified as a grantor trust for United
States federal income tax purposes,
- reduce or otherwise adversely affect the powers of the institutional
trustee in contravention of the Trust Indenture Act or
- cause Trust [XII][XXV] to be deemed an investment company which is required to
be registered under the Investment Company Act.
MERGER, CONSOLIDATION OR AMALGAMATION OF TARGETS TRUST [XII][XXV]
Trust [XII][XXV] may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other entity, except as
described below. Trust [XII][XXV] may, with the consent of the individual trustees
or, if there are more than two, a majority of the individual trustees and
without the consent of the holders of the trust securities, the Delaware trustee
or the institutional trustee consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any state, provided that
- the successor entity either (A) expressly assumes all of the obligations
of Trust [XII][XXV] under the trust securities or (B) substitutes for the
TARGETS other successor securities having substantially the
40
same terms as the trust securities, so long as the successor securities
rank the same as the trust securities with respect to distributions and
payments upon liquidation, maturity and otherwise,
- Salomon Smith Barney HoldingsCitigroup Funding expressly acknowledges a trustee of such successor
entity possessing the same powers and duties as the institutional trustee
in its capacity as the holder of the forward contract and the treasury
securities,
- successor securities to the TARGETS are listed, or any successor
securities to the TARGETS will be listed upon notification of issuance,
on any national securities exchange or with any organization on which the
TARGETS are then listed or quoted,
- the merger, consolidation, amalgamation or replacement does not cause the
TARGETS, including any successor securities, to be downgraded by any
nationally recognized statistical rating organization,
- the merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the trust
securities, including any successor securities, in any material respect,
other than with respect to any dilution of the holder's interest in the
new entity,
- the successor entity has a purpose identical to that of Trust [XII][XXV],
- prior to the merger, consolidation, amalgamation or replacement, Trust
[XII][XXV] has received an opinion of a nationally recognized independent
counsel to Trust [XII][XXV] experienced in such matters to the effect that:
(A) the merger, consolidation, amalgamation or replacement will not
adversely affect the rights, preferences and privileges of the
holders of the trust securities, including any successor securities,
in any material respect, other than with respect to any dilution of
the holders' interest in the new entity,
(B) following the merger, consolidation, amalgamation or replacement,
neither Trust [XII][XXV] nor such successor entity will be required to
register as an investment company under the Investment Company Act,
and
(C) following the merger, consolidation, amalgamation or replacement,
Trust [XII][XXV] or the successor entity will continue to be classified
as a grantor trust for U.S. federal income tax purposes,
and
36
38
- Salomon Smith Barney HoldingsCitigroup Funding guarantees the obligations of the successor entity
under the successor securities at least to the extent provided by the
guarantee.guarantee, and
- Citigroup guarantees Citigroup Funding's obligations to the same extent
and in the same manner as Citigroup Funding guarantees the obligations of
the successor entity.
Notwithstanding the foregoing, Trust [XII][XXV] will not, without the consent of
holders of all of the trust securities, consolidate, amalgamate, merge with or
into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if, in the opinion of
a nationally recognized independent tax counsel experienced in such matters, the
consolidation, amalgamation, merger or replacement would cause Trust [XII][XXV] or
the successor entity to be classified as other than a grantor trust for United
States federal income tax purposes. In addition, so long as any TARGETS are
outstanding and are not held entirely by Salomon Smith Barney Holdings,Citigroup Funding, Trust [XII][XXV] may not
voluntarily liquidate, dissolve, wind-up or terminate except as described above
under "-- Acceleration of Maturity Date; Enforcement of Rights".Rights."
BOOK-ENTRY ONLY ISSUANCE
The Depository Trust Company will act as securities depositary for the
TARGETS. The TARGETS will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global TARGETS certificates, representing the total aggregate
number of TARGETS, will be issued and will be deposited with DTC.
41
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. These laws
may impair the ability to transfer beneficial interests in the global TARGETS as
represented by a global certificate.
DTC has advised Salomon Smith Barney HoldingsCitigroup Funding as follows: DTC is a limited-purpose
trust company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC holds securities that its participants
deposit with DTC. DTC also facilitates the settlement among participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct participants in DTC include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. DTC is owned
by a number of its direct participants and by the New York Stock Exchange, the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others, such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a direct participant, either directly or
indirectly. The rules applicable to DTC and its participants are on file with
the SEC.
Purchases of the TARGETS within the DTC system must be made by or through
direct participants, which will receive a credit for the TARGETS on DTC's
records. The ownership interest of each beneficial owner actually purchasing the
TARGETS will be recorded on the direct participants' and indirect participants'
records. Beneficial owners will not receive written confirmation from DTC of
their purchases, but beneficial owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the direct or indirect participants through
which the beneficial owners purchased the TARGETS. Transfers of ownership
interests in the TARGETS are to be accomplished by entries made on the books of
participants and indirect participants acting on behalf of beneficial owners.
Beneficial owners will not receive certificates representing their ownership
interests in the TARGETS, except in the event that use of the book-entry system
for the TARGETS is discontinued. Account holders in the Euroclear or
Clearstream, Luxembourg clearance systems may hold beneficial interests in the
TARGETS through the accounts each such system maintains as a participant in DTC.
To facilitate subsequent transfers, all the TARGETS deposited by
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of the TARGETS with DTC and their registration in the name of Cede &
Co. effect no change in beneficial ownership, and DTC has no knowledge of the
actual beneficial owners of the TARGETS. DTC's records reflect only the identity
of the direct participants to whose 37
39
accounts such TARGETS are credited, which
may or may not be the beneficial owners. The participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Although voting with respect to the TARGETS is limited, in those cases
where a vote is required, neither DTC nor Cede & Co. will itself consent or vote
with respect to TARGETS. Under its usual procedures, DTC would mail an Omnibus
Proxy to Trust [XII][XXV] as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co. consenting or voting rights for those direct
participants to whose accounts the TARGETS are credited on the record date,
identified in a listing attached to the Omnibus Proxy. Salomon Smith Barney
HoldingsCitigroup Funding and
Trust [XII][XXV] believe that the arrangements among DTC, direct and indirect
participants, and beneficial owners will enable the beneficial owners to
exercise rights equivalent in substance to the rights that can be directly
exercised by a holder of a beneficial interest in Trust [XII][XXV].
Payments on the TARGETS will be made to DTC. DTC's practice is to credit
direct participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
participants to beneficial owners will be governed by standing instructions and
customary practices, as is the
42
case with securities held for the account of customers in bearer form or
registered in "street name," and such payments will be the responsibility of
such participant and not of DTC, Trust [XII][XXV], Citigroup Funding or Salomon
Smith Barney Holdings,Citigroup,
subject to any statutory or regulatory requirements to the contrary that may be
in effect from time to time. Payment of distributions to DTC is the
responsibility of Trust [XII][XXV], disbursement of such payments to direct
participants is the responsibility of DTC, and disbursement of such payments to
the beneficial owners is the responsibility of direct and indirect participants.
Except as provided in the next paragraph, a beneficial owner in a global
TARGETS will not be entitled to receive physical delivery of TARGETS.
Accordingly, each beneficial owner must rely on the procedures of DTC to
exercise any rights under the TARGETS.
DTC may discontinue providing its services as securities depositary with
respect to the TARGETS at any time by giving reasonable notice to Trust [XII][XXV].
Under such circumstances, in the event that a successor securities depositary is
not obtained, TARGETS certificates are required to be printed and delivered.
Additionally, the individual trustees, with the consent of Salomon Smith Barney
Holdings,Citigroup Funding,
may decide to discontinue use of the system of book-entry transfers through DTC
or any successor depositary with respect to the TARGETS. In that event,
certificates for the TARGETS will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Salomon Smith Barney HoldingsCitigroup Funding and Trust [XII][XXV] believe to
be reliable, but neither Salomon Smith Barney HoldingsCitigroup Funding nor Trust [XII][XXV] takes responsibility
for the accuracy thereof.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The institutional trustee, prior to the occurrence of a default with
respect to the trust securities, and after the curing of all defaults that may
have occurred, undertakes to perform only the duties that are specifically set
forth in the amended and restated declaration of trust. If such a default occurs
and the institutional trustee has actual knowledge of it, the institutional
trustee will exercise the rights and powers vested in it by the amended and
restated declaration of trust and will use the same degree of care and skill in
the exercise of such rights and powers as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to those provisions, the
institutional trustee is under no obligation to exercise any of the rights or
powers vested in it by the amended and restated declaration of trust at the
request of any holder of TARGETS, unless offered reasonable security and
indemnity by the holder against the costs, expenses and liabilities which the
institutional trustee might incur thereby. Notwithstanding the foregoing, the
holders of TARGETS will not be required to offer the indemnity in the event the
holders, by exercising their voting rights, direct the institutional trustee to
take any action following an acceleration event.
38
40
PAYING AGENT
In the event that the TARGETS do not remain in book-entry only form, the
institutional trustee will act as paying agent for the TARGETS and may designate
an additional or substitute paying agent at any time. In addition, registration
of transfers of TARGETS will be effected without charge by or on behalf of Trust
[XII][XXV], but upon payment, with the giving of such indemnity as Trust [XII][XXV] or
Salomon Smith Barney HoldingsCitigroup Funding may require, in respect of any tax or other government charges
which may be imposed in relation to it.
GOVERNING LAW
The amended and restated declaration of trust and the TARGETS will be
governed by, and construed in accordance with, the internal laws of the State of
Delaware.
MISCELLANEOUS
The individual trustees are authorized and directed to operate Trust [XII][XXV]
in such a way so that Trust [XII][XXV] will not be required to register as an
investment company under the Investment Company Act or be characterized as other
than a grantor trust for United States federal income tax purposes. Salomon
Smith Barney HoldingsCitigroup
Funding and the individual trustees are authorized to take any action, not
inconsistent with applicable law, the
43
amended and restated declaration of trust or the restated certificate of incorporation of
Salomon
Smith Barney Holdings,Citigroup Funding, that each of Salomon Smith Barney HoldingsCitigroup Funding and the individual trustees in
their discretion deem to be necessary or desirable to achieve such end as long
as the action does not adversely affect the interests of the holders of the
TARGETS or vary the terms thereof.
Holders of the TARGETS have no preemptive rights.
DESCRIPTION OF THE FORWARD CONTRACT
Salomon Smith Barney HoldingsCitigroup Funding is also by this prospectus offering its related forward
contract with respect to the[Motorola] common stock. The terms of the forward
contract will be set forth in an indenture between Salomon Smith Barney
HoldingsCitigroup Funding, Citigroup
and TheJPMorgan Chase Manhattan Bank.Bank, N.A. The indenture will be qualified under the Trust
Indenture Act. The indenture trustee will act as trustee for the forward
contract under the indenture for purposes of compliance with the provisions of
the Trust Indenture Act. The terms of the forward contract will include those
stated in the indenture and those made part of the indenture by the Trust
Indenture Act. The forward contract will rank equally with all other unsecured
contractual obligations of Salomon Smith Barney HoldingsCitigroup Funding and the unsecured and
unsubordinated debt of Salomon Smith Barney Holdings. Since Salomon Smith Barney
Holdings is a holding company, the forward contract will be effectively
subordinated to the claims of creditors of Salomon Smith Barney Holdings'
subsidiaries.
Subject to certain anti-dilution adjustments, the forward contract relates
to an aggregate of shares of common stock.Citigroup Funding.
Under the forward contract, Salomon Smith Barney HoldingsCitigroup Funding will pay an amount equal to
the aggregate maturity payments or the aggregate accelerated maturity payments,
as the case may be, to Trust [XII][XXV] at maturity of the forward contract as
described above. The forward contract provides, among other things, for a
payment by Salomon Smith Barney HoldingsCitigroup Funding to Trust [XII][XXV] of an amount determined by reference
to the ten day closing10-day average trading price as of the maturity date or accelerated
maturity date, as the case may be. See "Description of the TARGETS". in this
prospectus.
Pursuant to the terms of the forward contract, Salomon Smith Barney
HoldingsCitigroup Funding will in appropriate cases, pay
yield enhancement payments, which are on the amount paid by Trust [XII][XXV] to
Salomon Smith Barney HoldingsCitigroup Funding for the forward contract. The yield enhancement payments will
take the form of quarterly cash payments in the amount of approximately
$ (except that the payment on November 15, 2005 will be approximately
$ ), accruing from the date of issuance of the TARGETS, computed on
the basis of a 360-day year of twelve 30-day months and for any period less than
a full calendar month, the number of days elapsed in such month. Depending on
market conditions at the time of pricing of the TARGETS for initial sale to the
public, the amount of the yield enhancement payments may be zero or a nominal
amount. The yield enhancement payments, together with distributions received by
Trust [XII][XXV] with respect to the treasury securities, will be used by the Trust
[XII][XXV] to pay the quarterly distributions to the holders of the TARGETS.TARGETS and the
holders of the common securities. See "Description of the TARGETS -- Quarterly
Distributions".
39
41 in this prospectus.
The forward contract is a contract in the form of an indenture between
the
Salomon Smith Barney HoldingsCitigroup Funding, Citigroup and a trustee for the benefit of the holder of the
interests in the forward contract. The forward contract is a prepaid
"cash-settled" forward contract, whereby the obligor settles its obligation in
cash rather than in securities. The indenture will provide that Salomon Smith
Barney HoldingsCitigroup
Funding will pay all fees and expenses related to
- the offering of the trust securities and the forward contract,
- the organization, maintenance and dissolution of Trust [XII][XXV],
- the retention of the trustees, and
- the enforcement by the institutional trustee of the rights of the holders
of the TARGETS.
The forward contract will be fully and unconditionally guaranteed by
Citigroup. If for any reason Citigroup Funding does not make any required
payment in respect of the forward contract when due, Citigroup will cause the
payment to be made at the same address at which Citigroup Funding is obligated
to make such payment. Trust [XXV] will be entitled to payment under the
Citigroup guarantee without taking any action whatsoever against Citigroup
Funding. Citigroup's obligations under its guarantee are unconditional,
irrespective of any (i) extension, amendment, modification or renewal of any
required payment; (ii) any waiver of any event of default, extension of time or
failure to enforce any required payment; or (iii) any extension, moratorium or
other relief granted to Citigroup Funding pursuant to any applicable law or
statute.
44
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the guarantee that
will be executed and delivered by Salomon Smith Barney HoldingsCitigroup Funding and Citigroup for the
benefit of the holders of TARGETS. The guarantee will be qualified as an
indenture under the Trust Indenture Act. TheJPMorgan Chase Manhattan Bank, N.A. will act as
indenture trustee under the guarantee. The terms of the guarantee will be those
set forth in the guarantee and those made part of the guarantee by the Trust
Indenture Act. The summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference to,
the form of guarantee, which is filed as an exhibit to the registration
statement of which this prospectus forms a part, and the Trust Indenture Act.
The guarantee will be held by the guarantee trustee for the benefit of the
holders of the TARGETS.
GENERAL
Under the guarantee, Salomon Smith Barney HoldingsCitigroup Funding will irrevocably and unconditionally
agree to pay in full to the holders of the TARGETS, except to the extent paid by
Trust [XII][XXV], as and when due, regardless of any defense, right of set off or
counterclaim which Trust [XII][XXV] may have or assert, the following payments:
- any maturity payment that is required to be made in respect of the
TARGETS, to the extent Trust [XII][XXV] has funds available,
- any accelerated maturity payment that is required to be made in respect
of the TARGETS, to the extent Trust [XII][XXV] has funds available,
- any treasury proceeds that are required to be distributed in respect of
the TARGETS, to the extent that Trust [XII][XXV] has funds available,
- any quarterly distributions that are required to be made in respect of
the TARGETS, to the extent Trust [XII][XXV] has funds available,
- any accrued and unpaid yield enhancement payments as of the maturity date
or accelerated maturity, as the case may be, to the extent Trust [XII][XXV]
has funds available, and
- any other remaining assets of Trust [XII][XXV] upon liquidation of Trust
[XII][XXV].
Salomon Smith Barney Holdings'Citigroup Funding's obligation to make a guarantee payment may be satisfied
by direct payment of the required amounts by Salomon Smith Barney
HoldingsCitigroup Funding to the holders of
TARGETS or by causing Trust [XII][XXV] to pay such amounts to such holders.
As an additional guarantee, Citigroup will fully and unconditionally
guarantee Citigroup Funding's guarantee obligations to the same extent as
Citigroup Funding guarantees Trust [XXV]'s obligations under the TARGETS. If for
any reason Citigroup Funding does not make any required guarantee payment when
due, either by direct payment of the required amounts to the holders of the
TARGETS or by causing Trust [XXV] to pay such amounts to such holders, Citigroup
will cause such guarantee payment to be made at the same address at which
Citigroup Funding is obligated to make such guarantee payment. The holders of
the TARGETS will be entitled to payment under the Citigroup guarantee without
taking any action whatsoever against Citigroup Funding. Citigroup's obligations
under its guarantee are unconditional, irrespective of any (i) extension,
amendment, modification or renewal of any required payment; (ii) any waiver of
any event of default, extension of time or failure to enforce any required
payment; or (iii) any extension, moratorium or other relief granted to Citigroup
Funding pursuant to any applicable law or statute.
The guarantee will be a guarantee with respect to the TARGETS from the time
of issuance of the TARGETS but will not apply to any payment of quarterly
distributions, maturity payments, accelerated maturity payments, treasury
proceeds, accrued and unpaid yield enhancement payments or to payments upon the
dissolution, winding-up or termination of Trust [XII][XXV], except to the extent
Trust [XII][XXV] has funds available. If Salomon Smith Barney HoldingsCitigroup Funding or Citigroup does not pay
the aggregate maturity payments or the aggregate accelerated maturity payments
to Trust [XII][XXV] upon maturity of the forward contract, including maturity as a
result of acceleration, Trust [XII][XXV] will not pay any maturity payment or
accelerated maturity payment to holders of the TARGETS and will not have funds
available to make the payments. If the U.S. federal government, as the issuer of
the treasury securities, does not make periodic payments to Trust [XII][XXV] with
45
respect to the treasury securities, or Salomon Smith Barney HoldingsCitigroup Funding or Citigroup does not
pay the yield enhancement payments to Trust [XII][XXV] under the forward contract,
then, in either event, Trust [XII][XXV] will not pay the full
40
42 amount of the quarterly
distributions to holders of the TARGETS and will not have funds available to
make the payments. The guarantee, when taken together with Salomon Smith Barney Holdings'Citigroup Funding's
and Citigroup's obligations under the forward contract, the indenture and the
declaration, including itstheir obligations to pay costs, expenses, debts and
liabilities of Trust [XII][XXV], other than with respect to trust securities, will
provide a full and unconditional guarantee by Salomon Smith
Barney HoldingsCitigroup Funding and Citigroup of
Trust [XII][XXV]'s obligations under the TARGETS.
MODIFICATIONS OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of TARGETS, in which case no vote will be required, the guarantee may
be amended only with the prior approval of the holders of a majority of the
outstanding TARGETS. All guarantees and agreements contained in the guarantee
will bind the successors, assignees, receivers, trustees and representatives of
Salomon Smith Barney HoldingsCitigroup Funding and Citigroup and shall inure to the benefit of the holders of
the TARGETS then outstanding.
GUARANTEE ENFORCEMENT EVENTS
An enforcement event under the guarantee will occur upon the failure of
Salomon Smith Barney HoldingsCitigroup Funding or Citigroup, as applicable, to perform any of itstheir
respective payment or other obligations thereunder. The holders of a majority of
the TARGETS have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the guarantee trustee in respect of
the guarantee or to direct the exercise of any trust or power conferred upon the
guarantee trustee under the guarantee. If the guarantee trustee fails to enforce
the guarantee trustee's rights under the guarantee, any holder of TARGETS may
directly institute a legal proceeding against Salomon Smith Barney HoldingsCitigroup Funding or Citigroup, as
applicable, to enforce the guarantee trustee's rights under the guarantee,
without first instituting a legal proceeding against Trust [XII][XXV], the guarantee
trustee or any other person or entity. A holder of TARGETS may also directly
institute a legal proceeding against Salomon Smith Barney
HoldingsCitigroup Funding or Citigroup, as
applicable, to enforce such holder's right to receive payment under the
guarantee without first directing the guarantee trustee to enforce the terms of
the guarantee or instituting a legal proceeding against Trust [XII][XXV] or any other
person or entity.
Salomon Smith Barney HoldingsCitigroup Funding and Citigroup will be required to provide annually to the
guarantee trustee a statement as to the performance by Salomon Smith Barney
HoldingsCitigroup Funding and
Citigroup of certain of itstheir obligations under the guarantee and as to any
default in such performance.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, prior to the occurrence of a default with respect to
the guarantee and after the curing of all defaults that may have occurred,
undertakes to perform only the duties that are specifically set forth in the
guarantee. If any default occurs with respect to the guarantee that has not been
cured or waived and the guarantee trustee has actual knowledge of it, the
guarantee trustee will exercise its rights and powers under the guarantee, and
use the same degree of care and skill in the exercise of such rights and powers
as a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provision, the guarantee trustee is under no obligation to
exercise any of the powers vested in it by the guarantee at the request of any
holder of the TARGETS unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The guarantee will terminate as to the TARGETS upon full payment to the
holders of the TARGETS of
- the maturity payments and all quarterly distributions,
- the accelerated maturity payments, the treasury proceeds and any accrued
but unpaid yield enhancement payments or
46
- the amounts payable in accordance with the declaration upon liquidation
of Trust [XII][XXV].
The guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any holder of TARGETS must restore payment of any sum
paid under the TARGETS or the guarantee.
41
43
STATUS OF THE GUARANTEE
The guarantee will constitute a guarantee of payment and not of collection.
The guaranteed party may institute a legal proceeding directly against the
guarantor to enforce its rights under the guarantee without first instituting a
legal proceeding against any other person or entity.
GOVERNING LAW
The guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
DESCRIPTION OF THE TREASURY SECURITIES
The treasury securities will consist of a portfolio of stripped
self-amortizing securities issued by the U.S. Treasury and maturing on a
quarterly basis through the maturity date. The treasury securities will bear
quarterly payments corresponding to the payment dates of the quarterly
distributions payable on the TARGETS. Upon acceleration of maturity to an
accelerated maturity date, any treasury securities then held by the
institutional trustee on behalf of Trust [XII][XXV] will be sold and the treasury
proceeds will be distributed to holders of the trust securities. See
"Description of the TARGETS -- Acceleration of Maturity Date; Enforcement of
Rights". in this prospectus.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax consequences
of the purchase, ownership and disposition of the TARGETS. Unless otherwise
specifically indicated herein, this summary only addresses U.S. Holders. A "U.S.
Holder" is a holder of the TARGETS that is an individual who is a citizen or
resident of the United States, a U.S. domestic corporation, or any other person
that is subject to U.S. federal income taxation on a net income basis in respect
of its investment in the TARGETS. The discussion below is based on the advice of
Cleary Gottlieb Steen & Hamilton.Hamilton LLP.
The summary is based on U.S. federal income tax laws, regulations, rulings
and decisions now in effect, all of which are subject to change, possibly on a
retroactive basis. Except to the extent discussed below in "-- Tax Consequences
to Non-U.S. Holders" and "-- Backup Withholding and Information Reporting," the
summary deals only with U.S. Holders that will hold the TARGETS as capital
assets and that purchased the TARGETS in the initial offering. The summary does
not address tax considerations that may be relevant to a particular holder in
light of such holder's individual circumstances or that are applicable to
holders subject to special tax rules, such as banks, tax-exempt entities,
insurance companies, dealers in securities or currencies, traders in securities
electing to mark to market, persons that will hold the TARGETS as a position in
a "straddle" for tax purposes or as part of a "synthetic security" or a
"conversion transaction" or other integrated investment comprised of the TARGETS
and one or more other investments, or persons that have a functional currency
other than the U.S. dollar. It does not include any description of the tax laws
of any state, local or foreign government that may be applicable to the TARGETS
or to the holders thereof. Prospective purchasers of the TARGETS should consult
their tax advisors in determining the tax consequences to them of purchasing,
owning or disposing of the TARGETS, including the application to their
particular situation of the U.S. federal income tax considerations discussed
below, as well as the application of state, local, foreign income or other tax
laws.
There are no regulations, published rulings or judicial decisions
addressing the characterization for U.S. federal income tax purposes of the
TARGETS or instruments with terms substantially similar to the TARGETS. Pursuant to the amended and restated declaration of trust, every holder
of the TARGETS and Trust [XII][XXV] agrees to treat the TARGETS for U.S. federal
income tax purposes as a beneficial interest in a trust that holds the treasury
securities and the forward contract. In addition, pursuant to the forward
contract and the amended and restated declaration of trust, every holder of
47
the TARGETS, Trust [XII][XXV], Citigroup Funding and Salomon Smith Barney HoldingsCitigroup agree to characterize
for U.S. federal income tax purposes, in the absence of an administrative
determination or judicial ruling to the contrary, (1) the forward contract as a
cash-settled
42
44 forward purchase contract and (2) an amount equal to the purchase
price of the TARGETS less the purchase price of the treasury securities as a
cash deposit to be applied on the maturity date or accelerated maturity date in
full satisfaction of the holder's payment obligation under the forward contract.
Trust [XII][XXV] intends to report holders' income to the Internal Revenue Service in
accordance with this agreed treatment.
Under this agreed approach, the tax consequences of holding a TARGETS
should be as described below. Prospective investors in the TARGETS should be
aware, however, that no ruling is being requested from the Internal Revenue
Service with respect to the TARGETS and the Internal Revenue Service might take
a different view as to the proper characterization of the TARGETS or of the
forward contract and of the U.S. federal income tax consequences to a holder
thereof.
TAX STATUS OF TRUST [XII][XXV]
The Trust will be treated as a grantor trust owned solely by the present
and future holders of trust securities for U.S. federal income tax purposes, and
accordingly, income received by Trust [XII][XXV] will be treated as income of the
holders of the TARGETS in the manner set forth below.
TAX CONSEQUENCES TO U.S. HOLDERS
Tax Basis in the Treasury Securities and the Forward Contract. Each U.S.
Holder should be considered the owner of its pro rata portion of the treasury
securities and the forward contract in Trust [XII][XXV]. The cost to the U.S. Holder
of its TARGETS should be allocated among the holder's pro rata portion of the
treasury securities and the forward contract, in proportion to the fair market
values thereof on the date on which the holder acquires its TARGETS, in order to
determine the holder's tax basis in such assets. It is currently anticipated
that approximately 10% to 15% and 85% to 90% of the net proceeds of the offering
will be used by Trust [XII][XXV] to purchase the treasury securities and the forward
contract, respectively.
Recognition of Original Issue Discount on the Treasury Securities. The
treasury securities in Trust [XII][XXV] will consist of stripped, self-amortizing
U.S. Treasury securities. A U.S. Holder should be required to treat its pro rata
portion of each treasury security in Trust [XII][XXV] as a bond that was originally
issued on the date the holder purchased its TARGETS and at an original issue
discount equal to the excess of the holder's pro rata portion of the amounts
payable on such treasury security over the holder's tax basis therein, as
discussed above. The amount of such excess, however, should constitute only a
portion of the total amounts payable with respect to the treasury securities
held by Trust [XII][XXV] and, accordingly, a substantial portion of the quarterly
cash distributions from Trust [XII][XXV] to holders should be treated as a tax-free
return of the holder's investment in the treasury securities and should reduce
the holder's tax basis in its pro rata portion of the treasury securities. A
U.S. Holder, whether using the cash or accrual method of tax accounting, should
be required to include original issue discount, other than original issue
discount on short-term treasury securities as described below, in gross income
for U.S. federal income tax purposes as it accrues, in accordance with a
constant yield method, prior to the receipt of cash attributable to such income.
A U.S. Holder's tax basis in a treasury security held by Trust [XII][XXV] should be
increased by the amount of any original issue discount included in gross income
by the holder with respect to such treasury security and reduced to the extent
that any payment received on maturity, sale or other disposition of the TARGETS
represents a repayment of accrued original issue discount.
With respect to any short-term treasury security (a treasury security with
a maturity of one year or less from the date it is purchased) held by Trust
[XII][XXV], U.S. Holders using the cash method of tax accounting should generally be
required to include interest payments on such treasury securities in gross
income as such payments are received. In addition, such cash method U.S. Holders
may be denied a deduction for any related interest expense until such payments
are received. U.S. Holders using the accrual method of tax accounting should be
required to include original issue discount on any short-term treasury security
held by Trust [XII][XXV] in gross income as such original issue discount accrues.
Unless a U.S. Holder elects to accrue the original issue discount on a
short-term treasury security according to a constant yield method based on daily
compounding, such original issue discount should be accrued on a straight-line
basis.
48
Treatment of the Forward Contract. Each U.S. Holder should be treated as
having entered into a pro rata portion of the forward contract and, at the
maturity date or accelerated maturity date, as having received 43
45
a pro rata
portion of the maturity payment or accelerated maturity payment, as the case may
be, received by Trust [XII][XXV]. Under current law, a U.S. Holder should not
recognize income, gain or loss upon entry into the forward contract and should
not be required to include in gross income additional amounts over the term of
the forward contract, except with respect to the yield enhancement payments, as
described below. The Internal Revenue Service and the U.S. Treasury Department
have indicated that they plan to publish guidance with respect to accrual of
income on certain derivative financial instruments with contingent payments,
including prepaid forward contracts. If such guidance were issued with
retroactive application, it could increase the amount of income required to be
included over the term of the forward contract. See also, "-- Possible
Alternative Characterizations" below.
Treatment of the Yield Enhancement Payments. Consistent with the agreed
characterization, any yield enhancement payments, including amounts payable with
respect to any deferred yield enhancement payments, should be characterized as
interest payable on the amount of the cash deposit and should generally be
includible in the income of a U.S. holder on an accrual basis.
Sale or Other Disposition of the TARGETS. Upon a sale or other disposition
of all or some of a U.S. Holder's TARGETS, such holder should be treated as
having sold its pro rata portions of the treasury securities and the forward
contract underlying the TARGETS. The selling U.S. Holder should recognize
capital gain or loss equal to the difference between the amount realized from
such sale or other disposition and the holder's aggregate tax bases in its pro
rata portions of the treasury securities and the forward contract, except to the
extent of any (1) accrued interest with respect to the holder's pro rata portion
of the treasury securities includible in gross income as ordinary income and (2)
possibly any accrued but unpaid yield enhancement payments as described above.to the extent not previously taken
into account in determining the U.S. Holder's tax basis. Any such gain or loss
will be long-term capital gain or loss if the U.S. Holder's holding period for
the TARGETS is more than one year. The distinction between capital gain or loss
and ordinary income or loss is important for purposes of the limitations on a
holder's ability to offset capital losses against ordinary income. In addition,
long-term capital gains recognized by an individual U.S. Holder generally are
subject to a maximum rate of 2015 percent.
Distributions of Cash at the Maturity Date or Accelerated Maturity
Date. On the receipt of cash by Trust [XII][XXV] with respect to the forward
contract on the maturity date or accelerated maturity date, a U.S. Holder should
realize capital gain or loss equal to the difference between the holder's pro
rata portion of the amount of cash received by Trust [XII][XXV] and the holder's tax
basis in its pro rata portion of the forward contract at that time, except to
the extent such cash is attributable to any accrued but unpaid yield enhancement
payments as described
above.to the extent not previously taken into account in determining the U.S.
Holder's tax basis. Under certain circumstances, on or following the accelerated
maturity date, Trust [XII][XXV] may sell all or a portion of the treasury securities
and distribute the treasury proceeds to holders. Upon such a sale by Trust
[XII][XXV], a U.S. Holder should realize capital gain or loss equal to the difference
between the amount of cash received by the holder, except to the extent of any
accrued interest with respect to the holder's pro rata portion of theshort-term
treasury securities includible in gross income as ordinary income, and the
holder's tax basis in its pro rata portion of the treasury securities sold by
Trust [XII][XXV]. Any such capital gain or loss described in this paragraph will be
long-term capital gain or loss if the U.S. Holder's holding period for the
TARGETS is more than one year and will be subject to the same maximum U.S.
federal income tax rates for individuals discussed above under "-- Sale or Other
Disposition of the TARGETS".TARGETS."
Possible Alternative Characterizations. The Internal Revenue Service may
contendIt is possible that the TARGETS should be characterized for U.S. federal income tax
purposes in a manner different than the approach described above. For example, the Internal
Revenue Service might assertcould seek to characterize the TARGETS in a manner that results
in tax consequences different from those described above. Under alternative
characterizations of the TARGETS, it is possible, for example, that the forward
contract shouldcould be treated as a contingent debt obligation of Salomon Smith Barney Holdings that is
subject to Treasury regulations governing contingent payment debt instruments.
If the Internal Revenue Service were to prevail in making such an assertion,
original issue discount would accrue with respect to theinstrument, or as
including a debt instrument and a forward contract at a
"comparable yield" for Salomon Smith Barney Holdings under the forward contract,
determined at the time the forward contract is entered into. A U.S. Holder's pro
rata portion of original issue discount with respect to the forward contract and
the treasury securities might exceed the aggregate amount of the quarterly
distributions received by the holder. In addition, under this treatment, a U.S.
Holder would be required to treat any gain realized on the sale or other
disposition of the TARGETS as ordinary income to the extent that such gain is
allocable to the holder's pro rata portion of the forward contract. Any loss
realized on such saletwo or 44
46
other disposition that is allocable to the U.S. Holder's pro rata portion of the
forward contract would be treated as an ordinary loss to the extent of the
holder's original issue discount inclusions with respect to the forward contract
and as capital loss to the extent of loss in excess of such inclusions.more options. It is
also possible that the Internal Revenue Service could take the view that a U.S.
Holder should include in gross income the amount of cash actually received each
year in respect of the TARGETS or that the TARGETS as a whole constitute a
contingent payment debt instrument subjectinstrument. Under these alternative characterizations,
the timing and character of income from the TARGETS could differ substantially.
49
It is also possible that future regulations or other Internal Revenue
Service guidance could require U.S. Holders to increase the amount of income
accrued on a current basis over the term of the TARGETS. The Internal Revenue
Service and U.S. Treasury Department recently issued proposed regulations that
require current accrual of income with respect to contingent nonperiodic
payments made under certain notional principal contracts. The preamble to the
rules described above.regulations states that the "wait and see" method of tax accounting does not
properly reflect the economic accrual of income on such contracts, and requires
current accrual of income with respect to some contracts already in existence at
the time the proposed regulations were released. While the proposed regulations
do not apply to forward contracts such as the forward contract held by Trust
[XXV], the preamble to the proposed regulations expresses the view that similar
timing issues exist in the case of prepaid forward contracts. If the Internal
Revenue Service published future guidance requiring current accrual of income
with respect to contingent payments on prepaid forward contracts, it is possible
that U.S. Holders could be required to increase the amount of income accrued on
a current basis over the term of the TARGETS.
Potential Application of Constructive Ownership Rules. Some or all of the
net long-term capital gain arising from certain "constructive ownership"
transactions may be characterized as ordinary income, in which case an interest
charge would be imposed on any such ordinary income. These rules have no
immediate application to forward contracts in respect of the stock of a domestic
operating company, including the TARGETS. The rules, however, grant
discretionary authority to the U.S. Treasury Department to expand the scope of
"constructive ownership" transactions to include forward contracts in respect of
the stock of all corporations. The rules separately also direct the Treasury to
promulgate regulations excluding a forward contract that does not convey
"substantially all" of the economic return on an underlying asset from the scope
of "constructive ownership" transactions. This category may include the TARGETS.
It is not possible to predict whether such regulations will be promulgated by
the Treasury, or the form or effective date that any regulations that may be
promulgated might take.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
A "Non-U.S. Holder" is a holder of the TARGETS that is a non-resident alien
individual or foreign corporation. In the case of a Non-U.S. Holder:
(1) quarterly distributions made with respect to the TARGETS should not be
subject to U.S. withholding tax, provided that the beneficial owner of
the TARGETS complies with applicable certification requirements,
including in general the furnishing of an Internal Revenue Service Form
W-8BEN or a substitute form; and
(2) any capital gain realized upon the sale or other disposition of the
TARGETS should not be subject to U.S. federal income tax unless (A) the
gain is effectively connected with a U.S. trade or business of such
holder or (B) in the case of an individual, the individual is present
in the United States for 183 days or more in the taxable year of the
sale or other disposition and either (i) the gain is attributable to a
fixed place of business maintained by such individual in the United
States or (ii) such holder has a tax home in the United States.
For purpose of applying the rules set forth above to an entity that is
treated as fiscally transparent (e.g., a partnership) for U.S. federal income
tax purpose, the beneficial owner means each of the ultimate beneficial owners
of the entity.
A Non-U.S. Holder that is subject to U.S. federal income taxation on a net
income basis with respect to its investment in the TARGETS should see the
discussion in "-- Tax Consequences to U.S. Holders".Holders."
ESTATE TAX
If you are an individual who will be subject to U.S. federal estate tax
only with respect to U.S. situs property (generally an individual who at death
is neither a citizen nor a domiciliary of the United States) or an entity the
property of which is potentially includible in such an individual's gross estate
for U.S. federal estate tax purposes (for example, a trust funded by such an
individual and with respect to which the individual has retained certain
interests or powers), you should note that, absent an applicable treaty benefit,
the TARGETS
50
may be treated as U.S. situs property for U.S. federal estate tax purposes. You
are urged to consult your own tax advisors regarding the U.S. federal estate tax
consequences of investing in the TARGETS.
BACKUP WITHHOLDING AND INFORMATION REPORTING
A holder of the TARGETS, including a Non-U.S. Holder, may be subject to
information reporting and to backup withholding tax on certain amounts paid to
the holder unless such holder:
(1) is a corporation or comes within certain other exempt categories and,
when required, provides proof of such exemption, or
(2) provides a correct taxpayer identification number, certifies as to no
loss of exemption from backup withholding tax and otherwise complies
with applicable requirements of the backup withholding rules.
Backup withholding is not an additional tax and any amounts withheld may be
credited against the holder's U.S. federal income tax liability, provided that
the required information is furnished to the Internal Revenue Service.
45
47
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended, imposes
certain requirements on "employee benefit plans", as defined in Section 3(3) of
ERISA, subject to ERISA, including entities such as collective investment funds
and separate accounts whose underlying assets include the assets of such plans
(collectively, "ERISA Plans") and on those persons who are fiduciaries with
respect to ERISA Plans. Section 406 of ERISA and Section 4975 of the Internal
Revenue Code of 1986 prohibit certain transactions involving the assets of an
ERISA Plan or a plan, such as a Keogh plan or an individual retirement account,
that is not subject to ERISA but which is subject to Section 4975 of the
Internal Revenue Code (together with ERISA Plans, "Plans") and certain persons,
referred to as "parties in interest" under ERISA or "disqualified persons" under
the Internal Revenue Code, having certain relationships to such Plans, unless a
statutory or administrative exception or exemption is applicable to the
transaction. As used below, the term "Pension Type Accounts" shall include
Plans, entities the assets of which may be deemed to be "plan assets" under
ERISA regulations, and governmental plans subject to any substantially similar
federal, state or local laws.
The U.S. Department of Labor has promulgated a regulation, 29 C.F.R.
Section 2510.3-101, describing what constitutes the assets of a Plan with
respect to the Plan's investment in an entity for purposes of certain provisions
of ERISA, including the fiduciary responsibility provisions of Title I of ERISA
and Section 4975 of the Internal Revenue Code. Under this regulation, if a Plan
invests in a beneficial interest in a trust or a profits interest in a
partnership, the Plan's assets include both the equity interest and an undivided
interest in each of the entity's underlying assets, unless the interest is a
"publicly-offered security" or certain other conditions are satisfied. It is
anticipated that the TARGETS should constitute "publicly-offered securities"
within the meaning of the regulation, and that, consequently, transactions
engaged in by the Trust, including the forward contract, should not be subject
to the provisions of ERISA or Section 4975 of the Internal Revenue Code.
Any Pension Type Account which proposes to purchase the TARGETS should
consult with its counsel regarding the applicability of the fiduciary
responsibility and prohibited transaction provisions of ERISA, Section 4975 of
the Internal Revenue Code and any substantially similar applicable law to such
an investment, and to confirm that such investment will not constitute or result
in a prohibited transaction or any other violation of an applicable legal
requirement for which an exemption is not available.
By its purchase of any TARGETS, each initial purchaser and subsequent
transferee will be deemed to have represented and warranted on each day from the
date on which the purchaser or transferee acquires the TARGETS through and
including the date on which the purchaser or transferee disposes of its interest
in the TARGETS, either that (A) it is not a Pension Type Account or subject to
any federal, state, or local law that is substantially similar to the provisions
of Section 406 of ERISA or Section 4975 of the Internal Revenue Code or (B) its
purchase, holding and disposition of such TARGETS will not result in a
prohibited transaction under Section 406 of ERISA or Section 4975 of the
Internal Revenue Code or any other violation of an applicable legal requirement,
and it has not relied on advice of Citigroup Global Markets Inc. or any of its
affiliates or their employees as a primary basis for which an exemption is not available, all ofits decision to purchase
the conditions of which have
been satisfied.
46TARGETS.
51
48
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement
dated the date hereof, Salomon Smith BarneyCitigroup Global Markets Inc., as underwriter, has agreed
to purchase from Trust [XII][XXV], and Trust [XII][XXV] has agreed to sell to Salomon Smith
BarneyCitigroup
Global Markets Inc., TARGETS.
The underwriting agreement provides that the obligation of Salomon Smith
BarneyCitigroup Global
Markets Inc. to purchase the TARGETS included in this offering is subject to
approval of certain legal matters by counsel and to certain other conditions. Salomon Smith BarneyCitigroup
Global Markets Inc. is obligated to purchase all of the TARGETS other
than those covered by the over-allotment option described below, if it purchases
any TARGETS.
Salomon Smith BarneyCitigroup Global Markets Inc. proposes to offer some of the TARGETS
directly to the public at the public offering price set forth on the cover page
of this prospectus and some of the TARGETS to certain dealers at the public
offering price less a concession not in excess of $ per TARGETS. Salomon Smith
BarneyCitigroup
Global Markets Inc. may allow, and such dealers may reallow, a concession not in
excess of $ per TARGETS on sales to certain other dealers. Sales may also be
made through Citicorp Investment Services and Citicorp Financial Services Corp.,
broker-dealers affiliated with Citigroup Global Markets Inc., acting as agents.
Citicorp Investment Services and Citicorp Financial Services Corp. will receive
as remuneration a portion of the underwriting discount set forth on the cover of
this prospectus equal to $ per TARGETS for the TARGETS they sell. If
all of the TARGETS are not sold at the initial offering price, Salomon Smith BarneyCitigroup Global
Markets Inc. may change the public offering price and the other selling terms.
Trust [XII] has granted to Salomon Smith Barney Inc. an option, exercisable
for 30 days from the date of this prospectus, to purchase up to
additional TARGETS at the public offering price. Salomon Smith Barney Holdings
will pay the underwriting discount in the amount per TARGETS set forth on the
cover page hereof with respect to such additional TARGETS. Salomon Smith Barney
Inc. may exercise such option solely for the purpose of covering
over-allotments, if any, in connection with this offering.
Trust [XII][XXV] and Salomon Smith Barney HoldingsCitigroup Funding have agreed that, for the period
beginning on the date of the underwriting agreement and continuing to and
including the closing date for the purchase of the TARGETS, they will not,
without the prior written consent of Salomon Smith BarneyCitigroup Global Markets Inc., dispose of
or hedge any securities, including any backup undertakings of such securities,
of Salomon Smith Barney HoldingsCitigroup Funding or of Trust [XII][XXV], in each case that are substantially
similar to the TARGETS, or any securities convertible into or exchangeable for
the TARGETS or such substantially similar securities. Salomon
Smith BarneyCitigroup Global Markets
Inc. may release any of the securities subject to this lock-up at any time
without notice.
The underwriting agreement provides that Trust [XII][XXV], Citigroup Funding and
Salomon Smith
Barney HoldingsCitigroup will indemnify Salomon Smith BarneyCitigroup Global Markets Inc. against certain
liabilities, including liabilities under the Securities Act of 1933, and will
make certain contributions in respect thereof, or will contribute to payments
that Salomon Smith BarneyCitigroup Global Markets Inc. may be required to make in respect of any of
those liabilities and will reimburse Salomon Smith BarneyCitigroup Global Markets Inc. for certain
legal and other expenses.
Prior to this offering, there has been no public market for the TARGETS.
Consequently, the initial public offering price for the TARGETS was determined
by negotiations among Trust [XII][XXV] and Salomon Smith BarneyCitigroup Global Markets Inc. There can be
no assurance, however, that the prices at which the TARGETS will sell in the
public market after this offering will not be lower than the price at which they
are sold by Salomon Smith BarneyCitigroup Global Markets Inc. or that an active trading market in
the TARGETS will develop and continue after this offering.
Salomon Smith Barney HoldingsCitigroup Funding and Trust [XII][XXV] will apply to list the TARGETS on the
American Stock Exchange under the symbol "[TGM]." ".
In view of the fact that the proceeds of the sale of the TARGETS will
ultimately be used by Trust [XII][XXV] to purchase the forward contract, the
underwriting agreement provides that Salomon Smith Barney HoldingsCitigroup Funding will pay to Salomon Smith BarneyCitigroup
Global Markets Inc. an underwriting discount of $ per TARGETS for the
account of Salomon Smith BarneyCitigroup Global Markets Inc.
In connection with the offering, Salomon Smith BarneyCitigroup Global Markets Inc., as the
underwriter, may purchase and sell the TARGETS and [Motorola] common stock in
the open market. These transactions may include over-allotment, covering transactions and
stabilizing transactions. Over-allotment involves sales of the TARGETS by
Salomon Smith Barney Inc. in excess of the number of the TARGETS issued in the
offering, which creates a short position. Covering transactions involve purchases of the TARGETS
in the open market after the distribution has been completed to cover short
positions. Stabilizing transactions consist of certain bids or 47
49
purchases of the
TARGETS or [Motorola] common stock made for the purpose of preventing or slowing
a decline in the market price of the TARGETS or [Motorola] common stock while
the offering is in progress.
These52
Any of these activities may have the effect of preventing or retarding a
decline in the market price of the TARGETS. They may also cause the price of the
TARGETS to be higher than the price that otherwise would exist in the open
market in the absence of suchthese transactions. TheseCitigroup Global Markets Inc. may
conduct these transactions may be effected in the over-the-counter market or otherwise and, if commenced,otherwise. If
Citigroup Global Markets Inc. commences any of these transactions, it may
be discontinueddiscontinue them at any time.
In order to hedge its obligations under the TARGETS, Citigroup Funding
expects to enter into one or more swaps or other derivatives transactions with
one or more of its affiliates. See "Use of Proceeds and Hedging Activities,"
"Risk Factors -- The offer and saleMarket Value of the TARGETS May Be Affected by Purchases
and Sales of [Motorola] Common Stock or Derivative Instruments Related to
[Motorola] Common Stock by Affiliates of Citigroup Funding" and "-- Citigroup
Funding's Hedging Activity Could Result in a Conflict of Interest" in this
prospectus.
We estimate that our total expenses for this offering will complybe $ .
Citigroup Global Markets Inc. is an affiliate of Citigroup Funding.
Accordingly, the offering will conform with the requirements ofset forth in Rule
2810 of the Conduct Rules of the National Association of Securities Dealers,
Inc. regarding direct participation programs. Citigroup Global Markets Inc. may
not confirm sales to any discretionary account without the prior specific
written approval of a customer.
This prospectus may also be used by Salomon Smith Barney Holdings, Salomon Smith
Barney Inc. or otherCitigroup Funding's broker-dealer
affiliates of Salomon Smith Barney Holdings in connection with offers and sales of the TARGETS (subject to
obtaining any necessary approval of the American Stock Exchange for any suchof these
offers and sales) in market-making transactions at negotiated prices related to
prevailing market prices at the time of sale. Any such entityof these affiliates may act as
principal or agent in suchthese transactions. No such entityNone of these affiliates is obligated
to make a market in the TARGETS and any such entity may discontinue any market-making at any
time without notice, at its sole discretion.
There canCitigroup Funding and Citigroup have agreed to indemnify Citigroup Global
Markets Inc. against certain liabilities under the Securities Act of 1933, or to
contribute to payments Citigroup Global Markets Inc. may be no assurancerequired to make
because of the liquidity or
existenceany of a secondary market for any TARGETS.those liabilities.
LEGAL MATTERS
The validity of the TARGETS, the forward contract, the guarantee and
certain matters relating thereto will be passed upon for Salomon Smith Barney
HoldingsCitigroup Funding,
Trust [XXV] and Citigroup by John R. Dye, Esq. Mr. Dye, General
Counsel -- Capital Markets of Citigroup and legal counsel to Citigroup Funding
and Trust [XII] by Marcy Engel, Esq. Ms. Engel, a Deputy General
Counsel of Salomon Smith Barney Holdings,[XXV], beneficially owns or has rights to acquire under Citigroup
employee benefit plans, an aggregate of less than one percent of the common
stock of Citigroup. Certain legal matters will be passed upon for the
underwriter by Cleary Gottlieb Steen & Hamilton LLP, New York, New York. Cleary
Gottlieb Steen & Hamilton LLP has also acted as special tax counsel to Salomon Smith Barney HoldingsCitigroup
Funding and Citigroup in connection with tax matters related to the TARGETS.TARGETS and Citigroup's guarantee.
Cleary Gottlieb Steen & Hamilton LLP has from time to time acted as counsel for
Salomon Smith Barney HoldingsCitigroup and certain of its affiliatessubsidiaries, including Citigroup Funding, and may
do so in the future.
EXPERTS
The consolidated financial statements incorporatedof Citigroup as of December 31, 2004
and 2003, and for each of the years in this prospectus by reference to
the Annual Report on Form 10-K for the yearthree-year period ended December 31,
2000,2004, and management's assessment of the effectiveness of internal control over
financial reporting as of December 31, 2004, have been so incorporated by reference
herein in reliance onupon the reportreports of PricewaterhouseCoopersKPMG LLP, independent accountants, given onregistered public
accounting firm, incorporated by reference herein, and upon the authority of
said firm as experts in auditingaccounting and accounting.
48auditing. The report of KPMG LLP refers
to changes, in 2003, in Citigroup's methods of accounting for variable interest
entities and stock-based compensation, and, in 2002, in Citigroup's methods of
accounting for goodwill and intangible assets and accounting for the impairment
or disposal of long-lived assets.
53
50
=======================================================================================================================
You should rely only on the information contained or incorporated by reference
in this prospectus. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information contained
or incorporated by reference in this prospectus is accurate as of any date other
than the date on the cover of this prospectus.
TABLE OF CONTENTS
Page
----
Page
- ---------------------------------------
Summary 2
- ---------------------------------------Summary Information--Q&A 3
Risk Factors 13
- ---------------------------------------9
Available Information 17
- ---------------------------------------
Salomon Smith Barney Holdings 19
- ---------------------------------------13
Citigroup Inc. 15
Citigroup Funding Inc. 15
Use of Proceeds and Hedging Activities 20
- ---------------------------------------
Issuer of the Common Stock 21
- ---------------------------------------16
[Motorola, Inc.] 17
Historical Data on the Common Stock
22
- ---------------------------------------of [Motorola, Inc.] 18
TARGETS Trust [XII] 23
- ---------------------------------------[XXV] 19
Description of the TARGETS 24
- ---------------------------------------20
Description of the Forward Contract 39
- ---------------------------------------44
Description of the Guarantee 40
- ---------------------------------------45
Description of the Treasury Securities 42
- ---------------------------------------47
Certain United States Federal
Income Tax Considerations 42
- ---------------------------------------47
ERISA Considerations 46
- ---------------------------------------51
Underwriting 47
- ---------------------------------------52
Legal Matters 48
- ---------------------------------------53
Experts 48
- ---------------------------------------
=======================================53
TARGETS TRUST [XII][XXV]
TARGETED GROWTH
ENHANCED TERMS SECURITIES
(TARGETS(R))
With respect to
the common stock of
________________________
Due on
____________
$[10.00] perWITH RESPECT TO
THE COMMON STOCK OF
[MOTOROLA, INC.]
DUE ON
$10.00 PER TARGETS
Payments Due FromPAYMENTS DUE FROM
TARGETS Trust [XII]
Guaranteed by
Salomon Smith Barney
Holdings Inc.TRUST [XXV]
GUARANTEED BY
CITIGROUPFUNDING INC.
PAYMENTS DUE FROM
CITIGROUP FUNDING INC.
GUARANTEED BY
CITIGROUP INC.
PROSPECTUS
_____,2001
Salomon Smith Barney, [2005]
[CITIGROUP LOGO]
================================================================================
51
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable by the
registrants in connection with the securities being registered hereby. All of
the fees set forth below are estimates except for the Commission registration
fee and the NASD fee.
Commission Registration Fee................................. $ 250,00035,310
Accounting Fees............................................. 100,00030,000
Trustees' Fees and Expenses................................. 55,000
Blue Sky Fees and Expenses.................................. 5,00020,000
Printing and Engraving Fees................................. 200,000Fees............................................... 75,000
NASD Fee.................................................... 30,500
Legal Fees and Expenses..................................... 500,000140,000
Miscellaneous............................................... 9,5004,190
----------
Total............................................. $1,150,000$ 335,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
SALOMON SMITH BARNEY HOLDINGS INC.CITIGROUP
Subsection (a) of Section 721145 of the New York BusinessGeneral Corporation Law ("B.C.L.") provides
that, in addition to the indemnification provided in Article 7 of the B.C.L.,State
of Delaware, or DGCL, empowers a corporation mayto indemnify any person who was or
is a directorparty or officer by a provision contained in its
certificate of incorporation or by-laws or by a duly authorized resolution of
its shareholders or directors or by agreement provided that no indemnification
may be made to or on behalf of any director or officer if a judgment or other
final adjudication adverse to the director or officer establishes that his acts
were committed in bad faith or were the result of active and deliberate
dishonesty and material to the cause of action, or that such director or officer
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
Section 722(a) of the B.C.L. provides that a corporation may indemnify a
director or officer made, oris threatened to be made a party to any threatened, pending or
completed action, other
than a derivative action,suit or proceeding, whether civil, criminal, administrative or
criminal,investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement and reasonable expenses actually and necessarilyreasonably
incurred as a result ofby the person in connection with such action, suit or proceeding if such director or officerthe
person acted in good faith forand in a purpose which hemanner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, inwith respect to
any criminal actionsaction or proceedings,
in addition, hasproceeding, had no reasonable cause to believe that histhe
person's conduct was unlawful. Section 722(c)The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in or not opposed to the best interest of the B.C.L. providescorporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that the
person's conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation mayto
indemnify any person who was or is a directorparty or officer, made oris threatened to be made a party
to any threatened, pending or completed action or suit by or in right of the
corporation to procure a derivative
action,judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against amounts paid in settlement and reasonable expenses
(including attorneys' fees) actually and necessarilyreasonably incurred by himthe person in
connection with the defense or settlement of such action or in connection with an appeal thereinsuit if such director or officerthe person
acted in good faith forand in a purpose which hemanner the person reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification willmay be available under Section 722(c) of the B.C.L.made in respect of a threatenedany claim, issue or pending action which is settled or otherwise disposed of or
any claimsmatter as to which
such director or officerperson shall have been adjudged to be liable to the corporation unless and
only to the extent that the Court of Chancery or the court in which thesuch action
or suit was brought or, if no action was brought, any court of competent
jurisdiction, determines,shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, the director or officersuch
person is fairly and reasonably entitled to indemnity for such portionexpenses which
the Court of Chancery or such other court shall deem proper.
Subsection (d) of Section 145 of the settlement amountDGCL provides that any indemnification
under subsections (a) and expenses(b) of Section 145 (unless ordered by a court) shall
be made by the corporation only as authorized in the
court deems proper.
Section 723II-1
specific case upon a determination that indemnification of the B.C.L. specifiespresent or former
director, officer, employee or agent is proper in the mannercircumstances because the
person has met the applicable standard of conduct set forth in which paymentsubsections (a)
and (b) of indemnification under Section 722 of the B.C.L. or indemnification permitted
under Section 721 of the B.C.L. may145. Such determination shall be authorized by the corporation. It
provides that indemnification bymade, with respect to a
corporationperson who is mandatory in any case in which
thea director or officer at the time of such determination, (1) by a
majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) by a committee of such
directors designated by the majority vote of such directors, even though less
than a quorum, or (3) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or (4) by the
stockholders.
Section 145 of the DGCL further provides that to the extent a present or
former director or officer of a corporation has been successful whether on the merits or
otherwise in defendingthe defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
therewith and that such expenses may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
action. In the event that theundertaking by or on behalf of such director or officer hasto repay such amount if
it shall ultimately be determined that such person is not been
successful or the action is settled, indemnification must be authorized by the
II-1
52
appropriate corporate action as set forth in Section 723. Section 724 of the
B.C.L. provides that, upon application by a director or officer, indemnification
may be awarded by a courtentitled to the extent authorized under Sections 722 and 723.
Section 725 of the B.C.L. contains certain other miscellaneous provisions
affecting the indemnification of directors and officers.
Section 726 of the B.C.L. authorizes the purchase and maintenance of
insurance to indemnify (1) a corporation for any obligation which it incurs as a
result of the indemnification of directors and officers under the above
sections, (2) directors and officers in instances in which they may be
indemnified by the corporation as authorized in Section 145 of the DGCL; that
any indemnification and advancement of expenses provided by, or granted pursuant
to, Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; that indemnification provided by, or granted
pursuant to, Section 145 shall, unless otherwise provided when authorized and
ratified, continue as to a corporation under such sections,person who has ceased to be a director, officer,
employee or agent and (3) directors and officers
in instances in which they may not otherwise be indemnified by a corporation
under such sections, provided the contract of insurance covering such directors
and officers provides, in a manner acceptableshall inure to the New York State
Superintendentbenefit of Insurance, for a retention amountsuch person's heirs,
executors and for co-insurance.
Article Seventh(e)administrators; and empowers the corporation to purchase and
maintain insurance on behalf of the Restated Certificate of Incorporation of Salomon
Smith Barney Holdings Inc. (the "Company") provides in part as follows:
The Corporation shall indemnify to the full extent authorized by law any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of
the fact that he, his testator or intestatewho is or was a director, officer,
employee or employeeagent of the Corporationcorporation or any predecessor of the
Corporationis or serves or served any other enterprise as a director,
officer or employeewas serving at the request of the
Corporationcorporation as a director, officer, employee or any predecessoragent of the Corporation, provided that this provision shall not provide for
indemnification to be made to or on behalf of any director or officer if
a judgmentanother corporation,
partnership, joint venture, trust or other final adjudication adverseenterprise against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the corporation
would have the power to the director or
officer establishesindemnify such person against such liabilities under
Section 145. Section Four of Article IV of Citigroup's By-Laws provides that
his acts were committed in bad faith or were
the result of activeCitigroup shall indemnify its directors and deliberate dishonesty and were materialofficers to the
cause of action so adjudicated, or that he personally gained in fact a
financial profit or other advantage to which he was not legally
entitled.
Article Ninth of the Restated Certificate of Incorporation of the Company
provides as follows:
To the fullest extent
permitted by the DGCL.
Citigroup also provides liability insurance for its directors and officers
which provides for coverage against loss from claims made against directors and
officers in their capacity as such, including, subject to certain exceptions,
liabilities under section 402the federal securities laws.
Section 102(b)(7) of the B.C.L., noDGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director of the corporation shall be personally liable to the corporation or its shareholdersstockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty in
such capacity, provided that this provision shall not limit
(a)of loyalty to the liability of any director if a judgmentcorporation or other final
adjudication adverse to him or her establishes that his or herits stockholders, (ii) for acts
or omissions werenot in badgood faith or involvedwhich involve intentional misconduct or a
knowing violation of law, or that he or she personally gained in
fact a financial profit or other advantage to which he or she was
not legally entitled or that his or her acts violated section 719(iii) under Section 174 of the B.C.L.DGCL, or (b)(iv) for any
transaction from which the director derived an improper personal benefit.
Article Tenth of Citigroup's Restated Certificate of Incorporation limits the
liability of directors to the fullest extent permitted by Section 102(b)(7).
The directors and officers of Citigroup are covered by insurance policies
indemnifying them against certain liabilities, including certain liabilities
arising under the Securities Act, which might be incurred by them in such
capacities and against which they cannot be indemnified by Citigroup. Any
agents, dealers or underwriters who execute any director for any actunderwriting or omission priordistribution
agreement relating to adoptionsecurities offered pursuant to this Registration Statement
will agree to indemnify Citigroup's directors and their officers who signed the
Registration Statement against certain liabilities that may arise under the
Securities Act with respect to information furnished to Citigroup by or on
behalf of a provision authorized by this paragraph.
Article Twelvesuch indemnifying party.
CITIGROUP FUNDING
Subsection (a) of Section 145 of the By-lawsGeneral Corporation Law of the Company provides as follows:
The Corporation shallState
of Delaware, or DGCL, empowers a corporation to indemnify to the full extent authorized by law any person madewho was or
is a party or is threatened to be made a party to
anII-2
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, civil, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he, his testator or intestatethe person is or was a
director, officer, employee or employeeagent of the Corporationcorporation, or any predecessor of the
Corporationis or serves or served any other enterprise as a director,
officer or employeewas serving at
the request of the Corporationcorporation as a director, officer, employee or any predecessoragent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the Corporation, provided that this provisioncorporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, provide for
indemnificationof itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
Subsection (b) of Section 145 of the DGCL empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by the person in
connection with the defense or settlement of such action or suit if the person
acted in good faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable to the corporation unless and
only to the extent that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
the Court of Chancery or such other court shall deem proper.
Subsection (d) of Section 145 of the DGCL provides that any indemnification
under subsections (a) and (b) of Section 145 (unless ordered by a court) shall
be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the present or former director, officer,
employee or agent is proper in the circumstances because the person has met the
applicable standard of conduct set forth in subsections (a) and (b) of Section
145. Such determination shall be made, with respect to a person who is a
director or officer at the time of such determination, (1) by a majority vote of
the directors who are not parties to such action, suit or proceeding, even
though less than a quorum, or (2) by a committee of such directors designated by
the majority vote of such directors, even though less than a quorum, or (3) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (4) by the stockholders.
Section 145 of the DGCL further provides that to the extent a present or
former director or officer of a corporation has been successful on the merits or
otherwise in the defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
therewith and that such expenses may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of anysuch director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in Section 145 of the DGCL; that
any indemnification and advancement of expenses provided by, or granted pursuant
to, Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; that indemnification provided by, or granted
pursuant to, Section 145 shall, unless otherwise provided when authorized and
ratified, continue as to a judgmentperson who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of such person's heirs,
executors and administrators; and empowers the corporation to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other final adjudication adverseenterprise against any liability
asserted against such person and incurred by such person
II-3
in any such capacity, or arising out of such person's status as such, whether or
not the corporation would have the power to indemnify such person against such
liabilities under Section 145. Section One of Article VII of Citigroup Funding's
By-Laws provides that Citigroup Funding shall indemnify its directors and
officers to the director or
officer establishes that his acts were committed in bad faith or werefullest extent permitted by the result of active and deliberate dishonesty and were material to the
cause of action so adjudicated, or that he personally gained in fact a
financial profit or other advantage to which he was not legally
entitled.
The Company has purchased certainDGCL.
Citigroup Funding also provides liability insurance for its directors and
officers which provides for coverage against loss from claims made against
directors and officers in their capacity as such, including, subject to certain
exceptions, liabilities under the federal securities laws.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
Article Seventh of Citigroup Funding's Certificate of Incorporation limits the
liability of directors asto the fullest extent permitted by Section 726 of the B.C.L. and has entered into
indemnity agreements with its102(b)(7).
The directors and officers of Citigroup Funding are covered by insurance
policies indemnifying them against certain officers providing
indemnification in addition to that providedliabilities, including certain
liabilities arising under the B.C.L., as permittedSecurities Act, which might be incurred by Section 721them in
such capacities and against which they cannot be indemnified by Citigroup
Funding. Any agents, dealers or underwriters who execute any underwriting or
distribution agreement relating to securities offered pursuant to this
Registration Statement will agree to indemnify Citigroup Funding's directors and
their officers who signed the Registration Statement against certain liabilities
that may arise under the Securities Act with respect to information furnished to
Citigroup Funding by or on behalf of the B.C.L.
II-2
53such indemnifying party.
THE TARGETS TRUSTS
The form of amended and restated declaration of trust for each of TARGETS
Trust XII, TARGETS Trust XIII, TARGETS Trust XIV, TARGETS Trust XV, TARGETS
Trust XVI, TARGETS Trust XVII, TARGETS Trust XVIII, TARGETS Trust XIX, TARGETS
Trust XX, TARGETS Trust XXI, TARGETS Trust XXII, TARGETS Trust XXIII, TARGETS
Trust XXIV, TARGETS
Trust XXV, TARGETS Trust XXVI and TARGETS Trust XXVII (each a "TARGETS Trust")
provides that no Institutional Trustee (as defined in each amended and restated
declaration of trust) or any of its affiliates, Delaware Trustee (as defined in
each amended and restated declaration of trust) or any of its affiliates, or
officer, director, shareholder, member, partner, employee, representative,
custodian, nominee or agent of the Institutional Trustee or the Delaware Trustee
(each a "Fiduciary Indemnified Person"), and no Regular Trustee (as defined in
each amended and restated declaration of trust), affiliate of any Regular
Trustee, or any officer, director, shareholder, member, partner, employee,
representative or agent of any Regular Trustee, or any employee or agent of such
TARGETS Trust or its affiliates (each a "Company Indemnified Person") shall be
liable, responsible or accountable in damages or otherwise to such TARGETS
Trust, any Affiliate (as defined in the amended and restated declaration of
trust) of such TARGETS Trust or any holder of securities issued by such TARGETS
Trust, or to any officer, director, shareholder, partner, member,
representative, employee or agent of such TARGETS Trust or its Affiliates for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Fiduciary Indemnified Person or Company Indemnified Person in
good faith on behalf of such TARGETS Trust and in a manner such Fiduciary
Indemnified Person or Company Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Fiduciary Indemnified Person
or Company Indemnified Person by such amended and restated declaration of trust
or by law, except that a Fiduciary Indemnified Person or Company Indemnified
Person shall be liable for any loss, damage, or claim incurred by reason of such
Fiduciary Indemnified Person's or Company Indemnified Person's gross negligence
(or in the case of a Fiduciary Indemnified Person, negligence) or willful
misconduct with respect to such acts or omissions. The amended and restated
declaration of trust of each TARGETS Trust also provides that, to the full
extent permitted by law, the Company shall indemnify any Company Indemnified
Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in right
of such TARGETS Trust) by reason of the fact that he is or was a Company
Indemnified Person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he
II-4
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of such TARGETS Trust, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The amended and restated declaration of trust of each TARGETS
Trust also provides that to the full extent permitted by law, the Company shall
indemnify any Company Indemnified Person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in right of such TARGETS Trust to procure a judgment in its favor by reason of
the fact that he is or was a Company Indemnified Person against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of such TARGETS Trust and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to such TARGETS Trust
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such Court of Chancery or such other court shall deem proper. The
amended and restated declaration of trust of each TARGETS Trust further provides
that expenses (including attorneys' fees) incurred by a Company Indemnified
Person in defending a civil, criminal, administrative or investigative action,
suit or proceeding referred to in the immediately preceding two sentences shall
be paid by the Company in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Company as authorized in the
amended and restated declaration of trust. The directors and II-3
54
officers of the
Company and the individual trustees are covered by insurance policies
indemnifying them against certain liabilities, including certain liabilities
arising under the Securities Act, which might be incurred by them in such
capacities and against which they cannot be indemnified by the Company or the
TARGETS Trusts. Any agents, dealers or underwriters who execute any of the
agreements filed as Exhibit 1 to this Registration Statement will agree to
indemnify the Company's directors and their officers and the TARGETS Trustees
who signed the Registration Statement against certain liabilities that may arise
under the Securities Act with respect to information furnished to the Company or
any of the TARGETS Trusts by or on behalf of such indemnifying party.
For the undertaking with respect to indemnification, see Item 17 herein.
See the Formform of proposed Underwriting Agreement filed or to be filed as Exhibit 1
for certain indemnification provisions.
ITEM 16. EXHIBITS.
EXHIBIT NO.
- -----------
1 -- Form of Underwriting Agreement for the offering of the
TARGETS being registered under this Registration Statement,
incorporatedStatement.*
3(a) -- Certificate of Incorporation of Citigroup Funding Inc.
(incorporated by reference to Exhibit 13(a) to Salomon Smith
Barney Holding Inc.'sCitigroup
Funding's Registration Statement on Form S-3 filed on
February 18, 2005 (No. 333-32792)333-122925-01)).
3.013(b) -- By-Laws of Citigroup Funding Inc. (incorporated by reference
to Exhibit 3(b) to Citigroup Funding's Registration
Statement on Form S-3 filed on February 18, 2005 (No. 333-
122925-01)).
3(c) -- Restated Certificate of Incorporation of Salomon Smith
Barney HoldingsCitigroup Inc.
("Salomon Smith Barney"), effective as
of July 1, 1999, incorporated(incorporated by reference to Exhibit 3.024.01 to Post-Effective Amendment No. 1 to Salomon Smith Barney'sCitigroup's
Registration Statement on Form S-3 filed on December 15,
1998 (No. 333-71667)333-68949-01 to 08)).
3.023(d) -- By-LawsCertificate of Salomon Smith Barney, incorporatedDesignation of 5.321% Cumulative Preferred
Stock, Series YY, of Citigroup Inc. (incorporated by
reference to Exhibit 3.034.45 to Post-Effective Amendment No. 1 to Salomon
Smith Barney'sCitigroup's
Registration Statement on Form S-3 filed on January 22, 1999
(No. 333-71667)333-68949)).
4(a) -- Certificate of Trust of TARGETS Trust XII, incorporated by
reference to Exhibit 4(g) to Salomon Smith Barney's
Registration Statement on Form S-3 (No. 333-32792).
4(b) -- Certificate of Trust of TARGETS Trust XIII, incorporated by
reference to Exhibit 4(h) to Salomon Smith Barney's
Registration Statement on Form S-3 (No. 333-32792).
4(c) -- Certificate of Trust of TARGETS Trust XIV, incorporated by
reference to Exhibit 4(i) to Salomon Smith Barney's
Registration Statement on Form S-3 (No. 333-32792).
4(d) -- Certificate of Trust of TARGETS Trust XV, incorporated by
reference to Exhibit 4(j) to Salomon Smith Barney's
Registration Statement on Form S-3 (No. 333-32792).
4(e) -- Certificate of Trust of TARGETS Trust XVI, incorporated by
reference to Exhibit 4(k) to Salomon Smith Barney's
Registration Statement on Form S-3 (No. 333-32792).
4(f) -- Certificate of Trust of TARGETS Trust XVII, incorporated by
reference to Exhibit 4(l) to Salomon Smith Barney's
Registration Statement on Form S-3 (No. 333-32792).
4(g) -- Certificate of Trust of TARGETS Trust XVIII.
4(h) -- Certificate of Trust of TARGETS Trust XIX.
4(i) -- Certificate of Trust of TARGETS Trust XX.
4(j) -- Certificate of Trust of TARGETS Trust XXI.
4(k) -- Certificate of Trust of TARGETS Trust XXII.
4(l) -- Certificate of Trust of TARGETS Trust XXIII.
4(m) -- Certificate of Trust of TARGETS Trust XXIV.
4(n) -- Certificate of Trust of TARGETS Trust XXV.
4(o) -- Certificate of Trust of TARGETS Trust XXVI.
4(p) -- Certificate of Trust of TARGETS Trust XXVII.
II-4II-5
55
EXHIBIT NO.
- -----------
4(q)3(e) -- Certificate of Amendment to the Restated Certificate of
Incorporation of Citigroup Inc., dated April 18, 2000
(incorporated by reference to Exhibit 3.01.3 to Citigroup's
Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2000 (File No. 1-9924)).
3(f) -- Certificate of Amendment to the Restated Certificate of
Incorporation of Citigroup Inc., dated April 17, 2001
(incorporated by reference to Exhibit 3.01.4 to Citigroup's
Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2001 (File No. 1-9924)).
3(g) -- Certificate of Designation of 6.767% Cumulative Preferred
Stock, Series YYY, of Citigroup Inc. (incorporated by
reference to Exhibit 3.01.5 to Citigroup's Annual Report on
Form 10-K for the fiscal year ended December 31, 2001 (File
No. 1-9924)).
3(h) -- By-Laws of Citigroup Inc., as amended effective January 19,
2005 (incorporated by reference to Exhibit 3.1 to
Citigroup's Current Report on Form 8-K filed on January 21,
2005).
3(i) -- Certificate of Trust of TARGETS Trust XXV (incorporated by
reference to Exhibit 4(n) to Citigroup Global Markets
Holdings' Registration Statement on Form S-3 (No. 333-
69230)).
3(j) -- Certificate of Trust of TARGETS Trust XXVI (incorporated by
reference to Exhibit 4(o) to Citigroup Global Markets
Holdings' Registration Statement on Form S-3 (No. 333-
69230)).
3(k) -- Certificate of Trust of TARGETS Trust XXVII (incorporated by
reference to Exhibit 4(p) to Citigroup Global Markets
Holdings' Registration Statement on Form S-3 (No.
333-69230)).
4(a) -- Supplemental Declaration of Trust of TARGETS Trust XXV,
dated as of July 19, 2005.*
4(b) -- Supplemental Declaration of Trust of TARGETS Trust XXVI,
dated as of July 19, 2005.*
4(c) -- Supplemental Declaration of Trust of TARGETS Trust XXVII,
dated as of July 19, 2005.*
4(d) -- Form of Amended and Restated Declaration of Trust,
incorporated by reference to Exhibit 4(m) to Salomon Smith
Barney's Registration Statement on Form S-3 (No. 333-32792).
4(r)Trust.*
4(e) -- Form of TARGETS Guarantee Agreement, incorporated by
reference to Exhibit 4(n) to Salomon Smith Barney's
Registration Statement on Form S-3 (No. 333-32792).
4(s)Agreement.*
4(f) -- Form of Indenture incorporated by reference to Exhibit 4(o)
to Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).
4(t)and Forward Contract among Citigroup
Funding Inc., Citigroup Inc. and JPMorgan Chase Bank, N.A.,
as Trustee.*
4(g) -- Form of TARGETS (included in Exhibit 4(q)4(d)).
4(u)4(h) -- Form of Common Securities (included in Exhibit 4(q)4(d)).
4(v)4(i) -- Form of Forward Contract (included in Exhibit 4(s)4(f)).
5 -- Opinion of counsel as to certain corporate law matters.John R. Dye, Esq.+
8 -- Opinion of counselCleary Gottlieb Steen & Hamilton LLP as to
certain federal income tax matters.
12+
12(a) -- ComputationCalculation of Ratio of EarningsIncome to Fixed Charges of Salomon
Smith Barney
(incorporated by reference to Exhibit 12.01 to Salomon Smith Barney'sCitigroup's
Annual Report on Form 10-K for the year ended December 31,
2000 and2004).
12(b) -- Calculation of Ratio of Income to Combined Fixed Charges
(including preferred stock dividends) (incorporated by
reference to Exhibit 12.0112.02 to Salomon
Smith Barney's QuarterlyCitigroup's Annual Report on
Form 10-Q10-K for the quarteryear ended June 30, 2001)December 31, 2004).
23(a) -- Consent of PricewaterhouseCoopersKPMG LLP, independent certified
public accountants.Independent Registered Public
Accounting Firm.*
23(b) -- Consent of counsel (containedJohn R. Dye, Esq. (included in Exhibits No. 5 andExhibit 5).+
23(c) -- Consent of Cleary Gottlieb Steen & Hamilton LLP (included in
Exhibit 8).+
24 -- Powers of Attorney of certain Citigroup Inc. Directors.*
II-6
EXHIBIT NO.
- -----------
25(a) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of TheJPMorgan Chase Manhattan Bank, N.A., under
the amended and restated declaration of trust of TARGETS
Trust XII, incorporated by reference to Exhibit 25(g) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).XXV.*
25(b) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of TheJPMorgan Chase Manhattan Bank, N.A., under
the amended and restated declaration of trust of TARGETS
Trust XIII, incorporated by reference to Exhibit 25(h) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).XXVI.*
25(c) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of TheJPMorgan Chase Manhattan Bank, N.A., under
the amended and restated declaration of trust of TARGETS
Trust XIV, incorporated by reference to Exhibit 25(i) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).XXVII.*
25(d) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of TheJPMorgan Chase Manhattan Bank, N.A., under
the amended and restated declaration of trust ofTARGETS Guarantee Agreement with respect to TARGETS
Trust XV, incorporated by reference to Exhibit 25(j) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).XXV.*
25(e) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of TheJPMorgan Chase Manhattan Bank, N.A., under
the amended and restated declaration of trust ofTARGETS Guarantee Agreement with respect to TARGETS
Trust XVI, incorporated by reference to Exhibit 25(k) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).XXVI.*
25(f) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of TheJPMorgan Chase Manhattan Bank, N.A., under
the amended and restated declaration of trust ofTARGETS Guarantee Agreement with respect to TARGETS
Trust XVII, incorporated by reference to Exhibit 25(l) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).XXVII.*
25(g) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of TheJPMorgan Chase Manhattan Bank, under
the amended and restated declaration of trust of TARGETS
Trust XVIII.
II-5
56
EXHIBIT NO.
- -----------
25(h) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the amended and restated declaration of trust of TARGETS
Trust XIX.
25(i) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the amended and restated declaration of trust of TARGETS
Trust XX.
25(j) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the amended and restated declaration of trust of TARGETS
Trust XXI.
25(k) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the amended and restated declaration of trust of TARGETS
Trust XXII.
25(l) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the amended and restated declaration of trust of TARGETS
Trust XXIII.
25(m) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the amended and restated declaration of trust of TARGETS
Trust XXIV.
25(n) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the amended and restated declaration of trust of TARGETS
Trust XXV.
25(o) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the amended and restated declaration of trust of TARGETS
Trust XXVI.
25(p) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the amended and restated declaration of trust of TARGETS
Trust XXVII.
25(q) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XII, incorporated by reference to Exhibit 25(s) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).
25(r) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XIII, incorporated by reference to Exhibit 25(t) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).
25(s) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XIV, incorporated by reference to Exhibit 25(u) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).
25(t) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XV, incorporated by reference to Exhibit 25(v) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).
25(u) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XVI, incorporated by reference to Exhibit 25(w) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).
II-6
57
EXHIBIT NO.
- -----------
25(v) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XVII, incorporated by reference to Exhibit 25(x) to
Salomon Smith Barney's Registration Statement on Form S-3
(No. 333-32792).
25(w) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XVIII.
25(x) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XIX.
25(y) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XX.
25(z) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XXI.
25(aa) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XXII.
25(bb) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XXIII.
25(cc) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XXIV.
25(dd) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XXV.
25(ee) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XXVI.
25(ff) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank, under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XXVII.
25(gg) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of The Chase Manhattan Bank,N.A., under
the Indenture with respect to the Forward Contracts,
incorporated by reference to Exhibit 25(y) to Salomon Smith
Barney's Registration Statement on Form S-3 (No. 333-32792).Contracts.*
- ---------------
* A Form T-1 Statement of Eligibility and Qualification of Trustees other than
those as to which Form T-1s are filed herewith mayFiled herewith.
+ To be filed as an Exhibit to
a Current Report on Form 8-K and incorporated herein by reference.amendment.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrantsregistrants hereby undertake:
(A)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
II-7
(iii) To include any material information with respect to the plan
of distribution not II-7
58
previously disclosed in thethis registration statement
or any material change to such information in this registration
statement;
provided, however, that the undertakings set forth in clauses (i) and (ii) above
do not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed with or
furnished to the Securities and Exchange Commission by Citigroup Inc. pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended, that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrants hereby undertake that,(B) That, for purposes of determining any liability under the
Securities Act of 1933, as amended, each filing of Salomon Smith
Barney HoldingsCitigroup Inc.'s annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934, as amended, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934, as amended) that is incorporated by
reference in the Registration
Statementregistration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c)(C) Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of the Registrantsregistrants pursuant to the provisions
described inunder Item 15 above, or otherwise, the Registrantsregistrants have been
advised that in the opinion of the SEC,Securities and Exchange Commission such
Indemnificationindemnification is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrantsregistrants of
expenses incurred or paid by a director, officer or controlling person of
the Registrantsregistrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrantsregistrants will,
unless in the opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication of such
issue.
(d) The undersigned Registrants hereby undertake that:
(D)(1) For purposes of determining any liability under the Securities
Act of 1933, as amended, the information omitted from the form of
prospectus filed as part of this Registration Statementregistration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the Registrantsregistrants
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of
1933, as amended, shall be deemed to be part of this Registration Statementregistration statement
as of the time it was declared effective; andeffective.
(2) For purposesthe purpose of determining any liability under the
Securities Act of 1933, as amended, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(E) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310 of
the Trust Indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Act.
II-8
59
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XII certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XII
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-9
60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XIII certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement and, or Amendment thereto, to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XIII
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-10
61
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XIV certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XIV
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-11
62
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XV certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XV
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-12
63
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XVI certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XVI
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-13
64
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XVII certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XVII
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-14
65
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XVIII certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XVIII
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-15
66
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XIX certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XIX
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-16
67
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XX certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XX
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-17
68
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XXI certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XXI
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-18
69
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XXII certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XXII
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-19
70
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XXIII certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XXIII
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-20
71
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, TARGETS Trust
XXIV certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement, or Amendment thereto, to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 10th day of September, 2001.
TARGETS TRUST XXIV
By: /s/ MICHAEL J. DAY
------------------------------------
Name: Michael J. Day
Title: Regular Trustee
By: /s/ BARBARA A. YASTINE
------------------------------------
Name: Barbara A. Yastine
Title: Regular Trustee
By: /s/ MARK I. KLEINMAN
------------------------------------
Name: Mark I. Kleinman
Title: Regular Trustee
II-21
72
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,as amended,
TARGETS Trust XXV certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement, or Amendment thereto, to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 10th20th day of September, 2001.July, 2005.
TARGETS TRUST XXV
By: /s/ MICHAEL J. DAYSCOTT FREIDENRICH
------------------------------------
Name: Michael J. DayScott Freidenrich
Title: Regular Trustee
By: /s/ BARBARA A. YASTINEGEOFFREY S. RICHARDS
------------------------------------
Name: Barbara A. YastineGeoffrey S. Richards
Title: Regular Trustee
By: /s/ MARK I. KLEINMANCLIFF VERRON
------------------------------------
Name: Mark I. KleinmanCliff Verron
Title: Regular Trustee
II-22II-9
73
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
TARGETS Trust XXVI certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement and, or Amendment thereto, to be signed on its behalf by
the undersigned, thereunto duly authorized, on the 10th20th day of September, 2001.July, 2005.
TARGETS TRUST XXVI
By: /s/ MICHAEL J. DAYSCOTT FREIDENRICH
------------------------------------
Name: Michael J. DayScott Freidenrich
Title: Regular Trustee
By: /s/ BARBARA A. YASTINEGEOFFREY S. RICHARDS
------------------------------------
Name: Barbara A. YastineGeoffrey S. Richards
Title: Regular Trustee
By: /s/ MARK I. KLEINMANCLIFF VERRON
------------------------------------
Name: Mark I. KleinmanCliff Verron
Title: Regular Trustee
II-23II-10
74
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
TARGETS Trust XXVII certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement, or Amendment thereto, to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 10th20th day of September, 2001.July, 2005.
TARGETS TRUST XXVII
By: /s/ MICHAEL J. DAYSCOTT FREIDENRICH
------------------------------------
Name: Michael J. DayScott Freidenrich
Title: Regular Trustee
By: /s/ BARBARA A. YASTINEGEOFFREY S. RICHARDS
------------------------------------
Name: Barbara A. YastineGeoffrey S. Richards
Title: Regular Trustee
By: /s/ MARK I. KLEINMANCLIFF VERRON
------------------------------------
Name: Mark I. KleinmanCliff Verron
Title: Regular Trustee
II-24II-11
75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Salomon Smith
Barney Holdingsas amended,
Citigroup Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or Amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in The City of New York, State of New
York, on the 10th day of September, 2001.
SALOMON SMITH BARNEY HOLDINGSJuly 20, 2005.
CITIGROUP INC.
By: /s/ BARBARA A. YASTINESALLIE L. KRAWCHECK
------------------------------------
Name: Barbara A. Yastine
Title: Senior Executive Vice
President andSallie L. Krawcheck
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement or Amendment thereto has been signed below by the
following persons in the capacities indicated with Salomon Smith Barney Holdingson July 20, 2005.
SIGNATURES
----------
/s/ CHARLES PRINCE Chief Executive Officer and Director
- -------------------------------------- (Principal Executive Officer)
Charles Prince
/s/ SALLIE L. KRAWCHECK Chief Financial Officer
- -------------------------------------- (Principal Financial Officer)
Sallie L. Krawcheck
/s/ JOHN C. GERSPACH Controller and Chief Accounting Officer
- -------------------------------------- (Principal Accounting Officer)
John C. Gerspach
* Chairman of the Board
- --------------------------------------
Sanford I. Weill
* Director
- --------------------------------------
C. Michael Armstrong
* Director
- --------------------------------------
Alain J.P. Belda
* Director
- --------------------------------------
George David
* Director
- --------------------------------------
Kenneth T. Derr
* Director
- --------------------------------------
John M. Deutch
* Director
- --------------------------------------
Roberto Hernandez Ramirez
* Director
- --------------------------------------
Ann Dibble Jordan
II-12
SIGNATURES
----------
* Director
- --------------------------------------
Dudley C. Mecum
* Director
- --------------------------------------
Anne M. Mulcahy
* Director
- --------------------------------------
Richard D. Parsons
* Director
- --------------------------------------
Judith Rodin
* Director
- --------------------------------------
Robert E. Rubin
* Director
- --------------------------------------
Franklin A. Thomas
*By: /s/ Michael S. Helfer
------------------------------
Michael S. Helfer
Attorney-in-Fact
II-13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Citigroup Funding Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement, or Amendment thereto, to be signed on its behalf by the
10th dayundersigned, thereunto duly authorized, in The City of September, 2001.New York, State of New
York, on July 20, 2005.
CITIGROUP FUNDING INC.
By: /s/ DAVID WINKLER
------------------------------------
Name: David Winkler
Title: Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement or Amendment thereto has been signed below by the
following persons in the capacities indicated on July 20, 2005.
SIGNATURES TITLE
---------- -----
/s/ MICHAEL A. CARPENTERGUY R. WHITTAKER Chairman, of the Board, Chief ExecutivePresident and Director
- -------------------------------------------- Officer-------------------------------------- (Principal Executive Officer)
and
(Michael A. Carpenter) DirectorGuy R. Whittaker
/s/ DERYCK C. MAUGHAN Director
- --------------------------------------------
(Deryck C. Maughan)
/s/ BARBARA A. YASTINE SeniorDAVID WINKLER Executive Vice President and Chief Financial
- -------------------------------------------- Financial-------------------------------------- Officer (Principal Financial (Barbara A. Yastine) Officer)
David Winkler
/s/ MICHAEL J. DAY ExecutiveCONWAY Vice President and Controller
- ---------------------------------------------------------------------------------- (Principal Accounting Officer)
(Michael J. Day)Michael Conway
/s/ SCOTT FREIDENRICH Director
- --------------------------------------
Scott Freidenrich
/s/ JAMES GARNETT Director
- --------------------------------------
James Garnett
/s/ JOHN C. GERSPACH Director
- --------------------------------------
John C. Gerspach
/s/ SAUL M. ROSEN Director
- --------------------------------------
Saul M. Rosen
II-25
II-14
EXHIBIT INDEX
EXHIBIT NO.
- -----------
1 -- Form of Underwriting Agreement for the offering of the
TARGETS being registered under this Registration Statement.*
3(a) -- Certificate of Incorporation of Citigroup Funding Inc.
(incorporated by reference to Exhibit 3(a) to Citigroup
Funding's Registration Statement on Form S-3 filed on
February 18, 2005 (No. 333-122925-01)).
3(b) -- By-Laws of Citigroup Funding Inc. (incorporated by reference
to Exhibit 3(b) to Citigroup Funding's Registration
Statement on Form S-3 filed on February 18, 2005 (No. 333-
122925-01)).
3(c) -- Restated Certificate of Incorporation of Citigroup Inc.
(incorporated by reference to Exhibit 4.01 to Citigroup's
Registration Statement on Form S-3 filed on December 15,
1998 (No. 333-68949-01 to 08)).
3(d) -- Certificate of Designation of 5.321% Cumulative Preferred
Stock, Series YY, of Citigroup Inc. (incorporated by
reference to Exhibit 4.45 to Amendment No. 1 to Citigroup's
Registration Statement on Form S-3 filed on January 22, 1999
(No. 333-68949)).
3(e) -- Certificate of Amendment to the Restated Certificate of
Incorporation of Citigroup Inc., dated April 18, 2000
(incorporated by reference to Exhibit 3.01.3 to Citigroup's
Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2000 (File No. 1-9924)).
3(f) -- Certificate of Amendment to the Restated Certificate of
Incorporation of Citigroup Inc., dated April 17, 2001
(incorporated by reference to Exhibit 3.01.4 to Citigroup's
Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2001 (File No. 1-9924)).
3(g) -- Certificate of Designation of 6.767% Cumulative Preferred
Stock, Series YYY, of Citigroup Inc. (incorporated by
reference to Exhibit 3.01.5 to Citigroup's Annual Report on
Form 10-K for the fiscal year ended December 31, 2001 (File
No. 1-9924)).
3(h) -- By-Laws of Citigroup Inc., as amended effective January 19,
2005 (incorporated by reference to Exhibit 3.1 to
Citigroup's Current Report on Form 8-K filed on January 21,
2005).
3(i) -- Certificate of Trust of TARGETS Trust XXV (incorporated by
reference to Exhibit 4(n) to Citigroup Global Markets
Holdings' Registration Statement on Form S-3 (No. 333-
69230)).
3(j) -- Certificate of Trust of TARGETS Trust XXVI (incorporated by
reference to Exhibit 4(o) to Citigroup Global Markets
Holdings' Registration Statement on Form S-3 (No. 333-
69230)).
3(k) -- Certificate of Trust of TARGETS Trust XXVII (incorporated by
reference to Exhibit 4(p) to Citigroup Global Markets
Holdings' Registration Statement on Form S-3 (No.
333-69230)).
4(a) -- Supplemental Declaration of Trust of TARGETS Trust XXV,
dated as of July 19, 2005.*
4(b) -- Supplemental Declaration of Trust of TARGETS Trust XXVI,
dated as of July 19, 2005.*
4(c) -- Supplemental Declaration of Trust of TARGETS Trust XXVII,
dated as of July 19, 2005.*
4(d) -- Form of Amended and Restated Declaration of Trust.*
4(e) -- Form of TARGETS Guarantee Agreement.*
4(f) -- Form of Indenture and Forward Contract among Citigroup
Funding Inc., Citigroup Inc. and JPMorgan Chase Bank, N.A.,
as Trustee.*
4(g) -- Form of TARGETS (included in Exhibit 4(d)).
4(h) -- Form of Common Securities (included in Exhibit 4(d)).
4(i) -- Form of Forward Contract (included in Exhibit 4(f)).
EXHIBIT NO.
- -----------
5 -- Opinion of John R. Dye, Esq.+
8 -- Opinion of Cleary Gottlieb Steen & Hamilton LLP as to
certain federal income tax matters.+
12(a) -- Calculation of Ratio of Income to Fixed Charges
(incorporated by reference to Exhibit 12.01 to Citigroup's
Annual Report on Form 10-K for the year ended December 31,
2004).
12(b) -- Calculation of Ratio of Income to Combined Fixed Charges
(including preferred stock dividends) (incorporated by
reference to Exhibit 12.02 to Citigroup's Annual Report on
Form 10-K for the year ended December 31, 2004).
23(a) -- Consent of KPMG LLP, Independent Registered Public
Accounting Firm.*
23(b) -- Consent of John R. Dye, Esq. (included in Exhibit 5).+
23(c) -- Consent of Cleary Gottlieb Steen & Hamilton LLP (included in
Exhibit 8).+
24 -- Powers of Attorney of certain Citigroup Inc. Directors.*
25(a) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, N.A., under
the amended and restated declaration of trust of TARGETS
Trust XXV.*
25(b) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, N.A., under
the amended and restated declaration of trust of TARGETS
Trust XXVI.*
25(c) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, N.A., under
the amended and restated declaration of trust of TARGETS
Trust XXVII.*
25(d) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, N.A., under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XXV.*
25(e) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, N.A., under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XXVI.*
25(f) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, N.A., under
the TARGETS Guarantee Agreement with respect to TARGETS
Trust XXVII.*
25(g) -- Form T-1, Statement of Eligibility Under the Trust Indenture
Act of 1939, as amended, of JPMorgan Chase Bank, N.A., under
the Indenture with respect to the Forward Contracts.*
- ---------------
* Filed herewith.
+ To be filed by amendment.