RPT-TEXT-Terms of Citigroup, U.S. government agreement

WASHINGTON, Nov 24 (Reuters) - The following is the text of
the term sheet detailing the agreement reached on Sunday
between the U.S. government and Citigroup Inc (C.N):
November 23, 2008
Summary of Terms

Eligible Asset Guarantee
Eligible Assets: Asset pool consisting of loans and securities
backed by residential real estate and commercial real estate,
and their associated hedges, as agreed, and other such assets
as the U.S. Government (USG) has agreed to guarantee. Each
specific asset must be identified on signing of guarantee
agreement. Assets will remain on the books of institution but
will be appropriately "ring-fenced."
Size: Up to $306 bn in assets to be guaranteed (based on
valuation agreed upon between institution and USG).
Term of Guarantee: FDIC standard loss-sharing protocol:
Guarantee is in place for 10 years for residential assets, 5
years for non-residential assets.
Deductible: Institution absorbs all losses in portfolio up to
$29 bn (in addition to existing reserves)

Any losses in portfolio in excess of that amount are shared
USG (90%) and institution (10%).

USG share will be allocated as follows:

UST (via TARP) second loss up to $5 bn; FDIC takes the
third loss up to $10 bn;
Financing: Federal Reserve funds remaining pool of assets with
a non-recourse loan, subject to the institution's 10% loss
sharing, at a floating rate of OIS plus 300bp. Interest
payments are with recourse to the institution.
Fee for Guarantee - Preferred Stock: Institution will issue $7
bn of preferred stock with an 8% dividend rate (under terms
described below). $4 bn of preferred will be issued to UST. $3
bn will be issued to the FDIC.
Management of Assets: USG will provide institution with a
template to manage guaranteed assets This template will include
the use of mortgage modification procedures adopted by the
FDIC, unless otherwise agreed.
Risk Weighting: Institution will retain the income stream from
the guaranteed assets. Risk weighting for assets will be 20%.
Dividends: Institution is prohibited from paying common stock
dividends, in excess of $.01 per share per quarter, for 3 years
without UST/FDIC/FRB consent. A factor taken into account for
consideration of the USG's consent is the ability to complete a
common stock offering of appropriate size.
Executive Compensation: An executive compensation plan,
including bonuses, that rewards longterm performance and
profitability, with appropriate limitations, must be submitted
to, and approved by, the USG
Corporate Governance: Other matters as specified

Preferred Securities
Issuer: Citigroup ("Citi")
Initial Holder: United States Department of the Treasury
("UST").
Size: $20 billion
Security: Preferred, liquidation preference $1,000 per share.
(Depending upon the available authorized preferred shares, the
UST may agree to purchase preferred with a higher liquidation
preference per share, in which case the UST may require Citi to
appoint a depositary to hold the Preferred and issue depositary
receipts.)
Ranking: Same terms as preferred issued in CPP.
Term: Perpetual life.
Dividend: The Preferred will pay cumulative dividends at a rate
of 8% per annum. Dividends will be payable quarterly in arrears
on February 15, May 15, August 15 and November 15 of each
year.
Redemption: In stock or cash, as mutually agreed between UST
and Citi. Otherwise, redemption terms of CPP preferred terms
apply.
Restrictions on Dividends: Institution is prohibited from
paying common stock dividends, in excess of $.01 per share per
quarter, for 3 years without UST consent. A factor taken into
account for consideration of the UST's consent is the ability
to complete a common stock offering of appropriate size.
Repurchases: Same terms as preferred issued in CPP.
Voting rights: The Preferred shall be non-voting, other than
class voting rights on (i) any authorization or issuance of
shares ranking senior to the Preferred, (ii) any amendment to
the rights of Preferred, or (iii) any merger, exchange or
similar transaction which would adversely affect the rights of
the Preferred.
If dividends on the Preferred are not paid in full for six
dividend periods, whether or not consecutive, the Preferred
will have the right to elect 2 directors. The right to elect
directors will end when full dividends have been paid for (i)
all prior dividend periods in the case of cumulative Preferred
or (ii) four consecutive dividend periods in the case of
noncumulative Preferred.
Transferability: The Preferred will not be subject to any
contractual restrictions on transfer.
Executive Compensation: An executive compensation plan,
including bonuses, that rewards longterm performance and
profitability, with appropriate limitations, must be submitted
to, and approved by, the USG.

Summary of Warrant Terms
Warrant: Institution will issue a warrant to UST for an
aggregate exercise value of 10% of the total preferred issued
to USG (in both transactions) ($2.7 bn).
Exercise Price: The strike price will be equal to $10.61 per
share (the 20 day trailing average ending on November 21,
2008). The warrants issued to UST are not subject to reduction
based on additional offerings.
Term: Ten years, immediately exercisable, in whole or in part.
DEPARTMENT OF THE TREASURY FEDERAL RESERVE BOARD
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CITIGROUP INC. FEDERAL DEPOSIT INSURANCE CORP.
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