Document:

Exhibit 10.7

 

 

UNDERWRITING FEE REIMBURSEMENT AGREEMENT

 

by and
among

 

PENNYMAC
MORTGAGE INVESTMENT TRUST,

 

PENNYMAC
OPERATING PARTNERSHIP, L.P.

 

and

 

PNMAC
CAPITAL MANAGEMENT, LLC

 

Dated
as of August 4, 2009

 

 

 

UNDERWRITING FEE
REIMBURSEMENT AGREEMENT, dated as of August 4, 2009, by and among PennyMac
Mortgage Investment Trust, a Maryland real estate investment trust (the “Trust”), PennyMac Operating Partnership, L.P., a Delaware
limited partnership (the “Operating Partnership”),
and PNMAC Capital Management, LLC, a Delaware limited liability company (the “Manager”).

 

W I T N E S S E T H:

 

WHEREAS, the Trust is a
newly-formed Maryland real estate investment trust which intends to invest
primarily in residential mortgage loans and mortgage-related assets and intends
to qualify as a real estate investment trust for federal income tax purposes
and will elect to receive the tax benefits accorded by Sections 856 through 860
of the Internal Revenue Code of 1986, as amended (the “Code”);

 

WHEREAS, the Trust conducts
substantially all of its operations, and makes substantially all of its
investments, through the Operating Partnership, which is a Subsidiary of the
Trust;

 

WHEREAS, the Manager has
entered into the Management Agreement (as defined herein), pursuant to which
the Manager will manage the business and investment affairs of the Trust and
its subsidiaries; and

 

WHEREAS, the Manager has
entered into the Underwriting Agreement (as defined herein), pursuant to which,
among other things, the Manager has agreed to pay to the Underwriters (as
defined herein) the Manager Offering Payments (as defined herein).

 

NOW THEREFORE, in
consideration of the premises and agreements hereinafter set forth, the parties
hereto hereby agree as follows:

 

Section 1.  Definitions.  (a)  The following terms shall have the meanings
set forth in this Section 1(a):

 

“Affiliate”
means (1) any Person directly or indirectly controlling, controlled by or under
common control with such other Person, (2) any executive officer or general
partner of such other Person and (3) any legal entity for which such Person
acts as an executive officer or general partner.

 

“Agreement”
means this Underwriting Fee Reimbursement Agreement, as amended, supplemented
or otherwise modified from time to time.

 

“Board of
Trustees” means the board of trustees of the Trust.

 

“Business Day”
means any day except a Saturday, a Sunday or a day on which banking
institutions in New York, New York are not required to be open.

 

“Closing Date”
means the date of closing of the Initial Public Offering.

 

“Code”
has the meaning set forth in the Recitals.

 

 

“Common
Shares” means the common shares of beneficial interest, par value
$0.01, of the Trust.

 

“Conditional
Payment Period” has the meaning set forth in Section 2(a).

 

“Core Earnings”
means:

 

(A) GAAP net income (loss)
excluding non-cash equity compensation expense;

 

(B) excluding any unrealized
gains, losses or other non-cash items recorded in the period, regardless of
whether such items are included in other comprehensive income or loss, or in
net income; and

 

(C) adjusted to exclude
one-time events pursuant to changes in GAAP and certain other non-cash charges
after discussions between the Manager and the Independent Trustees and after
approval by a majority of the Independent Trustees.

 

“Core Earnings Offset” has the meaning ascribed to such term
in the Management Agreement.

 

“GAAP”
means generally accepted accounting principles in effect in the United States
on the date such principles are applied.

 

“Incentive Fee” has the meaning ascribed to such term in the
Management Agreement.

 

“Independent
Trustee” means a member of the Board of Trustees who is not an
officer or employee of the Manager or any Affiliate thereof and who otherwise
is “independent” in accordance with the rules of the NYSE or such other
securities exchange on which the Common Shares may be listed.

 

“Initial
Public Offering” means the sale by the Trust of 14,706,327 Common
Shares in the initial public offering of the Trust registered with the
Securities and Exchange Commission.

 

“Manager Conditional Payment” has the meaning set forth in Section
2(a).

 

“Manager Offering Payments” has the meaning ascribed to such
term in the Underwriting Agreement.

 

“Management Agreement” means that certain management
agreement, dated the date hereof, among the Trust, the Operating Partnership
and the Manager.

 

“NYSE”
means the New York Stock Exchange, Inc.

 

“Performance Hurdle” has the meaning set forth in Section 2(a).

 

“Person”
means any natural person, corporation, partnership, association, limited
liability company, estate, trust, joint venture, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof or any other legal entity and any fiduciary acting in such capacity
on behalf of the foregoing.

 

2

 

“REIT”
means a “real estate investment trust” as defined under the Code.

 

“Subsidiary”
means any subsidiary of the Trust, any partnership (including the Operating
Partnership), the general partner of which is the Trust or any subsidiary of
the Trust; any limited liability company, the managing member of which is the
Trust or any subsidiary of the Trust; and any corporation or other entity of
which a majority of (i) the voting power of the voting equity securities or (ii)
the outstanding equity interests is owned, directly or indirectly, by the Trust
or any subsidiary of the Trust.

 

“Termination
Fee” has the meaning ascribed to such term in the Management
Agreement.

 

“Underwriters” means the underwriters named in the
Underwriting Agreement.

 

“Underwriting Agreement” means the purchase agreement, dated July
29, 2009, among the Trust, the Operating Partnership, the Manager and the
Underwriters relating to the Initial Public Offering.

 

(b)           As used herein, accounting terms relating to the Trust and
the Subsidiaries, if any, not defined in Section 1(a) and accounting terms
partly defined in Section 1(a), to the extent not defined, shall have the
respective meanings given to them under GAAP.

 

(c)           The words “hereof,” “herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section references
are to this Agreement unless otherwise specified.

 

(d)           The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.  The words include, includes and including
shall be deemed to be followed by the phrase “without limitation.”

 

Section 2.  Conditional Payment to the Manager.

 

(a)           The Trust and the Operating Partnership acknowledge the
obligation of the Manager to pay to the Underwriters the Manager Offering
Payments pursuant to the terms of the Underwriting Agreement.  The Trust and the Operating Partnership agree
to reimburse the Manager an amount (the “Manager
Conditional Payment”) equal to
the Manager Offering Payments if during any full four calendar quarter period
during the 24 full calendar quarters after the Closing Date (the “Conditional Payment Period”), the Trust’s
Core Earnings for such four-quarter period and excluding the amount of any
Incentive Fee equals or exceeds the product of:

 

(1)                                  the weighted
average of the issue price per Common Share of all of the Trust’s public
offerings of Common Shares (including the Initial Public Offering) multiplied
by the weighted average number of Common Shares outstanding (including, for the
avoidance of doubt, restricted share units granted under one or more of the
Trust’s equity incentive plans) in the four-quarter period; and

 

3

 

(2)                                  8.0% (such
product of (1) and (2), the “Performance
Hurdle”).

 

For the avoidance of doubt,
for purposes of determining whether the Manager Conditional Payment is payable,
Core Earnings shall not be offset by the Core Earnings Offset in determining
whether the Performance Hurdle has been met.

 

For purposes of determining
whether the Performance Hurdle has been met, outstanding
limited partnership interests in the Operating Partnership (other than limited
partnership interests held by the Trust) shall be treated as outstanding Common
Shares.

 

(b)           During the Conditional Payment Period if the Manager
Conditional Payment has not been made, the Manager shall compute Core Earnings
for each full four-quarter period within 30 days after the end of each calendar
quarter and shall promptly deliver such computations to the Board of Trustees
(but in no event later than the date that is 35 days after the end of each
calendar quarter).  In the event that the
Performance Hurdle has been met, the Manager Conditional Payment shall be paid
in cash to the Manager no later than the date which is five (5) Business Days
after the date of delivery to the Board of Trustees of such computations of
Core Earnings.

 

(c)           In the event the Termination Fee is payable under the
Management  Agreement prior to the end of
the Conditional Payment Period and the Manager Conditional Payment has not been
paid, the amount of the Manager Conditional Payment shall be paid in cash to
the Manager on the same date as the payment of the Termination Fee in
reimbursement of the Manager’s payment of the Manager Offering Payments.

 

Section 3.  No Joint
Venture.  The Trust, the Operating
Partnership and the Manager are not partners or joint venturers with each other
and nothing herein shall be construed to make them such partners or joint
venturers or impose any liability as such on any of them.

 

Section 4.  Term;
Termination.  This Agreement
shall become effective on the Closing Date and shall continue in operation,
until the earlier of (a) the payment in full of the Manager Conditional Payment
and (b)  August 4, 2015.  If the Performance Hurdle is not met or
exceeded for a full four calendar quarter period during the Conditional Payment
Period, this Agreement and the conditional obligation to reimburse the Manager
for the Manager Offering Payments shall terminate.

 

Section 5.  Assignments.  (a)  This Agreement shall not be assigned by any
party hereto  without the prior written
consent of the other parties, except in the case of assignment by the Trust or
the Operating Partnership to another REIT (in the case of the Trust) or other
organization which is a successor (by merger, consolidation, purchase of
assets, or similar transaction) to the Trust or the Operating Partnership, in
which case such successor organization shall be bound under this Agreement and
by the terms of such assignment in the same manner as the Trust and the
Operating Partnership are bound under this Agreement.

 

Section 6.  Miscellaneous.

 

(a)           Notices.  All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise 

 

4

 

expressly provided herein, shall be deemed to have been duly given or
made when delivered against receipt or upon actual receipt of (1) personal
delivery, (2) delivery by reputable overnight courier, (3) delivery by
facsimile transmission with telephonic confirmation or (4) delivery by
registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below (or to such other address as may be hereafter
notified by the respective parties hereto in accordance with this Section 6):

 

	
  The
  Trust and the

  	
   

  
	
  Operating
  Partnership:

  	
  PennyMac
  Mortgage Investment Trust

  
	
   

  	
  PennyMac
  Operating Partnership, L.P.

  
	
   

  	
  27001
  Agoura Road, Third Floor

  
	
   

  	
  Calabasas,
  California 91301

  
	
   

  	
  Attention:
  Chief Executive Officer

  
	
   

  	
  Fax:
  (818) 337-2138

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  Sidley
  Austin LLP

  
	
   

  	
  787
  Seventh Avenue

  
	
   

  	
  New
  York, New York 10019

  
	
   

  	
  Attention:
  Edward J. Fine and J. Gerard Cummins

  
	
   

  	
  Fax:
  (212) 839-5599

  
	
   

  	
   

  
	
  the
  Manager:

  	
  PNMAC
  Capital Management, LLC

  
	
   

  	
  27001
  Agoura Road, Third Floor

  
	
   

  	
  Calabasas,
  California 91301

  
	
   

  	
  Attention:
  Chief Executive Officer

  
	
   

  	
  Fax:
  (818) 337-2138

  
	
   

  	
   

  
	
  with
  a copy to:

  	
  PNMAC
  Capital Management, LLC

  
	
   

  	
  27001
  Agoura Road, Third Floor

  
	
   

  	
  Calabasas,
  California 91301

  
	
   

  	
  Attention:
  Chief Legal Officer

  
	
   

  	
  Fax:
  (818) 337-2138

  

 

(b)           Binding Nature of
Agreement; Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors
and assigns as provided herein.

 

(c)           Integration.  This Agreement contains the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter
hereof.  The express terms hereof control
and supersede any course of performance and/or usage of the trade inconsistent
with any of the terms hereof.

 

(d)           Amendments.  Neither this Agreement, nor any terms hereof,
may be amended, supplemented or modified except in an instrument in writing
executed by the parties hereto.

 

5

 

(e)           GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. 
EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA AND THE UNITED STATES
DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE FOR THE PURPOSE OF ANY ACTION
OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF VENUE IN SUCH COURT.

 

(f)            WAIVER OF JURY TRIAL.  EACH PARTY HERETO ACKNOWLEDGES AND AGREES
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.

 

(g)           No Waiver; Cumulative
Remedies.  No failure to
exercise and no delay in exercising, on the part of a party hereto, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. 
The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

 

(h)           Costs and Expenses.  Each party hereto shall bear its own costs
and expenses (including the fees and disbursements of counsel and accountants)
incurred in connection with the negotiations and preparation of and the closing
under this Agreement, and all matters incident thereto.

 

(i)            Section Headings.  The section and subsection headings in this
Agreement are for convenience of reference only and shall not be deemed to
alter or affect the interpretation of any provisions hereof.

 

(j)            Counterparts.  This Agreement may be executed by the parties
to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.

 

(k)           Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

6

 

IN WITNESS WHEREOF, each of
the parties hereto have executed this Underwriting Fee Reimbursement Agreement
as of the date first written above.

 

	
   

  	
  PENNYMAC MORTGAGE INVESTMENT TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeff Grogin

  
	
   

  	
   

  	
  Name:
  Jeff Grogin

  
	
   

  	
   

  	
  Title:
  Secretary and Chief Legal Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PENNYMAC OPERATING PARTNERSHIP, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  PENNYMAC
  GP OP, INC.,

  
	
   

  	
   

  	
  its
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeff Grogin

  
	
   

  	
   

  	
  Name:
  Jeff Grogin

  
	
   

  	
   

  	
  Title:
  Executive Vice President and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PNMAC
  CAPITAL MANAGEMENT, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jeff Grogin

  
	
   

  	
   

  	
  Name:
  Jeff Grogin

  
	
   

  	
   

  	
  Title:   Secretary
  and Chief Legal Officer

  

 

7Exhibit 10.01

 

FORM OF CITIGROUP EQUITY OR DEFERRED CASH
AWARD AGREEMENT (EFFECTIVE 11/01/09)

 

Citigroup Inc.

[Equity][Deferred Cash] Award Agreement

 

1.  Award Agreement. 
Citigroup Inc. (“Citigroup”) hereby grants to {NAME}  (the
“Participant”), the award(s) summarized below, pursuant to the
terms of the [EQUITY/DEFERRED CASH
AWARD PROGRAM NAME] (the “Program”).  The terms, conditions and restrictions of
your award are contained in this Equity/Deferred Cash Award Agreement,
including the attached Appendix (together, the “Agreement”), and are
summarized, along with additional information, in the [EQUITY/Deferred Cash
AWARD PROGRAM NAME] [prospectus/brochure]
dated [MONTH] [DAY], [YEAR],  and
any applicable [prospectus] supplements (together, a “[Prospectus/Brochure]”).  Your award is also governed by the Citigroup
[2009 Stock Incentive Plan, as it may be amended from time to time][DEFERRED
CASH PLAN] (the “Plan”) [IF APPLICABLE: , and the Letter Agreement (as
defined in the Appendix)].  For the award
to be effective, you must [accept][sign] below[ and return this page of
the Agreement], acknowledging that you have received and read the
[Prospectus/Brochure] and this Agreement, including the Appendix.

 

2. [EQUITY][DEFERRED CASH] AWARD PROGRAM NAME] Award Summary*

 

	
  [{Restricted/Deferred} Stock] [Deferred Cash]
  Award Summary

  
	
  Award
  Date:

  	
   

  	
  {AWARD DATE}

  
	
  Number
  of Shares [Award Amount(1)]

  	
   

  	
  {# SHARES} [{US$ or
  local currency value}]

  
	
  [Interest
  Rate or Notional Return

  	
   

  	
  {RATE, INVESTMENT
  VEHICLE OR MARKET INDEX}](2)

  
	
  Vesting
  Dates (      %
  each vesting date):(3)

  	
   

  	
  {VEST DATE 1}(4)

  
	
   

  	
   

  	
  {VEST DATE 2}

  
	
   

  	
   

  	
  {VEST DATE 3}

  
	
   

  	
   

  	
  {VEST DATE 4}

  
	
  [Stock Option Grant Summary

  	
   

  	
   

  
	
  Grant
  Date:

  	
   

  	
  {GRANT DATE}

  
	
  Grant
  Price:

  	
   

  	
  {$ Grant Price per share}(5)

  
	
  Number
  of Shares:

  	
   

  	
  {#OPTION SHARES}

  
	
  Vesting
  Dates (    % each vesting date):(6)

  	
   

  	
  {VEST DATE 1}(7)

  
	
   

  	
   

  	
  {VEST DATE 2}

  
	
   

  	
   

  	
  {VEST DATE 3}

  
	
   

  	
   

  	
  {VEST DATE 4}

  
	
  Option
  Expiration Date:

  	
   

  	
  {EXPIRATION DATE}(8)]

  

 

3. Acceptance and Agreement by
Participant. I
hereby accept the award described above, and agree to be bound by the terms,
conditions, and restrictions of such award as set forth in this Agreement,
including the Appendix, and in the [Prospectus/Brochure] (acknowledging hereby
that I have read and that I understand such documents), the Plan and Citigroup’s
policies, as in effect from time to time, relating to the administration of the
Program and the Plan.  I understand that
vesting is conditioned upon continuous employment with the Company, and that an
Award may be cancelled if there is a break in or termination of my employment
with the Company.

 

	
  CITIGROUP INC.

  	
   

  	
  PARTICIPANT’S
  [SIGNATURE][ACCEPTANCE]:

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  [Name]

  	
   

  	
  Name:

  
	
   

  	
  [Title]

  	
   

  	
  GEID:

  

 

*The terms, conditions
and restrictions applicable to your award, including what happens in the event
of a termination or suspension of your employment, and including restrictions
or a potential waiver of your rights that may apply pursuant to provisions of
the Emergency Economic Stabilization Act of 2008, are contained in this
Agreement, which includes the Appendix hereto, and are also summarized in the
[Prospectus/Brochure].

 

(1) Initial deferral
amount.

(2) Basis for
notional return (may be subject to election) to be added to (or subtracted
from) initial deferral amount.

(3) Generally,
no more rapidly than 25% each vesting date.

(4) Generally,
at least one year after award date. 
Awards of long-term restricted stock to “covered employees”—i.e., “senior
executive officers” and “most highly compensated employees” (as defined in the
Emergency Economic Stabilization Act of 2008, as amended, and the regulations
promulgated thereunder (“EESA”))—will vest on a schedule determined by the
Office of the Special Master for TARP Executive Compensation (the “Special
Master”); vested shares from such awards are subject to a restriction on sale
or other transfer.

(5) No less than
prior day NYSE closing price (or no less than the NYSE closing price on the
grant date for participants who are subject to the reporting requirements of
Section 16(a) of the Securities and Exchange Act of 1934, as
amended).

(6) Generally, no
more rapidly than 25% each vesting date.

(7) Generally, at
least one year after award date.

(8) Generally,
no later than sixth anniversary of grant date.

 

 

CITIGROUP INC.

[EQUITY/DEFERRED
CASH] AWARD AGREEMENT

APPENDIX

 

This Appendix constitutes part of the
[Equity/Deferred Cash] Award Agreement (the “Agreement”) and is
applicable to the [EQUITY/DEFERRED CASH AWARD PROGRAM NAME] award(s) summarized
on the first page of this Agreement.  This
Appendix is part of the Agreement and sets forth the terms and conditions and
other information applicable to the [restricted or deferred stock award, and/or
non-qualified stock option grant (an “Option”)][deferred cash award (the
“Award”)], made to Participant under the
Program, as described in the Award Summary on page 1.  [FOR EQUITY AWARDS ONLY: Restricted or
deferred stock awards and Option grants are hereinafter referred to as “Awards”.  All Awards are denominated in shares of
Citigroup common stock, par value $.01 per share (referred to herein as “shares”
or “Citigroup stock”).]  The “Company”,
for purposes of this Agreement, shall mean Citigroup and its subsidiaries that
participate in the Program, except where provided otherwise herein.

 

1.
Terms and Conditions.  The terms, conditions, and restrictions of
the Award are set forth below [IF APPLICABLE: , subject to the letter agreement
between the Company and Participant dated [MONTH] [DAY], [YEAR] (the “Letter Agreement”)].  Certain of these provisions [IF APPLICABLE: ,
except as they are deemed modified by the terms of the Letter Agreement], along
with other important information, are summarized in the [EQUITY/DEFERRED CASH PROGRAM NAME] [prospectus/brochure] dated [MONTH] [DAY], [YEAR], and any
applicable [prospectus] supplement (together, the “[Prospectus/Brochure]”). 
The terms, conditions, and restrictions of the Award include, but are
not limited to, provisions relating to amendment, vesting, and cancellation of
Awards, restrictions on the transfer of Awards, [sale restrictions on shares
acquired upon the exercise of an Option], and additional restrictions or a
potential waiver of Participant’s rights to an Award, if required by the
applicable provisions of the Emergency Economic Stabilization Act of 2008,
which will regulate Citigroup’s policies and practices with respect to
corporate governance and executive compensation, as further described below.

 

By accepting an Award, Participant acknowledges that he or
she has read and understands the [Prospectus/Brochure] and the terms and
conditions set forth in this Appendix. 
Participant understands that this Award and all other incentive awards
are entirely discretionary and that no right to receive the Award, or any
incentive award, exists absent a prior written agreement to the contrary.

 

[Participant understands that the value that may be realized
from an Award, if any, is contingent and depends on the future market price of
Citigroup stock, among other factors, and that because equity awards are
discretionary, and intended to promote employee retention and stock ownership
and to align employees’ interests with those of stockholders, equity awards are
subject to vesting conditions and will be canceled if vesting conditions are
not satisfied.]

 

Any monetary value assigned to an Award in any communication
regarding the Award is contingent, hypothetical, and for illustrative purposes
only and does not express or imply any promise or intent by the Company to
deliver, directly or indirectly, any certain [or determinable] cash value to
Participant.  Receipt of an Award covered
by this Agreement, or any other incentive award, is neither an indication nor a
guarantee that an incentive award of any type or amount will be made in the
future, and absent a written agreement to the contrary, the Company is free to
change its practices and policies regarding incentive awards at any time in its
sole discretion.

 

Any actual, anticipated, or estimated financial benefit to
Participant from an Award is not and shall not be deemed to be a normal or an
integral part of Participant’s regular or expected salary or compensation from
employment for any purposes, including, but not limited to, calculating any
statutory, common law or other employment-related payment to Participant,
including any severance, resignation, termination, redundancy, end-of-service ,
bonus, long-service awards, pension, superannuation or retirement or welfare or
similar payments, benefits or entitlements, and in no event should be
considered as compensation for, or relating in any way to, past services for
the Company.

 

2.
Vesting.  If
conditions to vesting are satisfied,  [the initial
deferral amount, as adjusted to reflect interest accrued/notional gain (or
loss) to the vesting date][shares underlying an Award of [restricted][deferred]
stock will vest and become distributable to Participant on the vesting date(s) set
forth in the [Restricted 

 

2

 

Stock][DeferredStock][Deferred
Cash] Award Summary, or on other specified dates as provided for upon the
occurrence of events described in Section 6 of this Agreement]; [Option
shares shall vest and become exercisable in the installment amounts (subject to
rounding, in Citigroup’s discretion) on the vesting dates set forth in the
Stock Option Grant Summary, or on other specified dates as provided for upon
the occurrence of events described in Section 6 of this Agreement].  Vesting in each case is subject to receipt of
the information necessary to make required tax payments and confirmation by Citigroup
that all conditions to vesting have been satisfied.

 

Vesting is conditioned on Participant’s continuous employment
with the Company up to and including the scheduled vesting date, unless
otherwise provided below.

 

[3.
Exercise of Option.  Vested Option shares may be exercised in
whole or in part by Participant upon notice to the Company, together with
provision for payment of the grant price (set forth in the Stock Option Grant
Summary) and applicable withholding taxes. 
Such notice shall be given in the manner prescribed by Citigroup and
shall specify the date and method of exercise and the number of Option shares
that are being exercised. The currently available option exercise methods,
which are subject to change at any time, are described in the Prospectus.  All stock option exercises will be processed
in accordance with the Citigroup Equity Compensation administrative procedures
and deadlines then in effect.  If Participant
uses a broker-assisted exercise method that may be available from time to time,
Participant acknowledges and agrees that option proceeds from any
broker-assisted exercises will be net of applicable commissions and fees
associated with these transactions.  The
applicable commissions and fees will be disclosed to Participant at or prior to
the time of exercise or will be available to Participant upon request.  The laws of the country in which Participant
is working at the time of grant, vesting, and/or exercise of the Option
(including any rules or regulations governing securities, foreign
exchange, tax or labor matters), and Citigroup accounting or other policies,
whether dictated by such country’s political or regulatory climate or
otherwise, may restrict or prohibit any one or more of the stock option
exercise methods described in the Prospectus; such restrictions may apply
differently if Participant is a resident or expatriate employee, and are
subject to change at any time.  If the
last day on which an Option may be exercised pursuant to any provision of this
Agreement is not a trading day on the New York Stock Exchange, then the
immediately preceding New York Stock Exchange trading day shall be the last day
on which an Option may be exercised.  An
Option may not be exercised after the Option Expiration Date set forth in the Stock
Option Grant Summary (the “Option expiration date”).  The Company
is not obligated to notify a Participant that an Option is nearing expiration.]

 

[IF APPLICABLE: 4.
Sale Restriction on Option Shares.  Except in the case of Participant’s
termination of employment pursuant to Section [6][(b) and (e)] [(b),
(e), (j), (k) or (l)], Participant acknowledges that shares acquired upon
an Option exercise during the term of Participant’s employment may not be sold
or otherwise transferred until two years from the date of exercise.]

 

[5. Fractional Shares. 
Participant acknowledges that only whole shares of Citigroup stock may
be delivered [upon the exercise of an Option for shares and] upon the vesting
of a restricted or deferred stock award, and that while Citigroup will endeavor
to compensate Participant in cash for any fractional shares Participant would
otherwise be entitled to receive pursuant to the terms of an Award, due to
foreign exchange controls that may be in effect from time to time in certain
countries, there is no guarantee that such payments can be made to Participants
residing outside of the United States, and the Company shall not be liable if
for such reason payment is not made to a Participant.]

 

6.
Termination and Interruption of Employment.  Participation
in the Program, including but not limited to Participant’s right to vest in an
Award [or exercise an Option], is conditioned upon Participant’s continuous
employment with the Company, except as otherwise provided below.

 

For all
purposes related to an Award, Participant’s employment shall be deemed
terminated on the date of [FOR AWARDS SUBJECT TO SECTION 409A: Participant’s “separation from service” from
Citigroup,][FOR AWARDS NOT SUBJECT TO SECTION 409A, THE
FOLLOWING MAY BE USED: Participant’s
termination of employment by Citigroup,] [except where specifically provided
otherwise in this Agreement,][.  Whether
a “separation from service” has occurred will be determined in accordance with
the definition of such term in Treas. Reg. § 1.409A-1(h), which, unless
provided otherwise by such definition (or elsewhere in this Agreement in a
manner that 

 

3

 

does not
conflict with such definition) shall be as of Participant’s last day of active
service with the Company,] regardless of any entitlement to notice, payment in
lieu of notice, severance pay, termination pay, pension payment, or the
equivalent that may be provided by any other plan, contract, or law.

 

If Participant’s
continuous employment with the Company terminates or is interrupted for any
reason stated below, Participant’s rights with respect to the Award will be
affected as described below.  [FOR AWARDS
SUBJECT TO SECTION 409A: With respect to any provision herein that
provides for the distribution of a deferred [stock][cash] award upon the
termination of Participant’s employment, such distribution may be delayed for a
period of six months, if Citigroup determines that Participant is a “specified
employee” within the meaning of Treas. Reg. § 1.409A-1(i)(1) (generally,
one who is among the Company’s top 50 most highly compensated employees).  Interest will not accrue during the period of
any such delay and there will not be any compensation for loss in market value
that occurs during such time or otherwise.] [INCLUDE SUB-SECTIONS (a) — (q) AS
APPLICABLE](9)

 

(a) Voluntary
Resignation.  If Participant voluntarily terminates his or
her employment with the Company, vesting of [restricted stock awards, deferred
stock awards and Option shares][deferred cash awards] will cease[, as will the
right to exercise any vested Option shares,] on the date Participant’s
employment is so terminated[; all unvested shares and unexercised Option shares
subject to the Award will be canceled] and Participant shall have no further
rights of any kind with respect to the Award. 
[Different treatment may apply to Option shares if Participant is
subject to a garden leave or other notice policy.]

 

(b) Disability.

 

[(i) A restricted stock award will
continue to vest during a Participant’s approved disability leave pursuant to a
Company disability policy.  If
Participant’s approved disability leave results in a termination of employment,
any unvested portion of the Award will vest immediately and shares of Citigroup
stock will be delivered to Participant following such termination.]

 

[(ii) A deferred
[stock][cash] award will continue to vest during a Participant’s approved
disability leave pursuant to a Company disability policy.  If Participant’s approved disability leave
results in a [“separation from service,”][termination of employment,] any
unvested portion of the Award will vest immediately and be
[distributable][distributed] to Participant [on the 90th day following
the “separation from service”][as soon as practicable after the termination]
date.  [The provisions of this Section 6(b)(ii) shall
not apply if prior to the commencement or during the period of any disability
leave referred to above, Participant meets the conditions of Section 6(j),
(k) or (l) below, in which case the Award will be administered in
accordance with the applicable provisions of those Sections of this Agreement.]

 

[(iii) Notwithstanding
the foregoing, if a Participant with a deferred [stock][cash] award provides
proof satisfactory to the Company that Participant has been determined by the
United States Social Security Administration to be totally disabled, any
unvested portion of a deferred [stock][cash] award will vest and be distributed
to Participant immediately.]

 

[(iv) An Option will
continue to vest on schedule and may be exercised during a Participant’s
approved disability leave (but not later than the Option expiration date).  If Participant’s approved disability leave
results in a termination of employment, any unvested Option shares will vest immediately,
and the Option may be exercised [until the Option expiration date][for up to
[XX DAYS/MONTHS/YEARS] thereafter (but not later than the Option expiration
date)][IF APPLICABLE:; the two year sale restriction imposed on Option shares
will cease to apply and will not be imposed on any shares that may be acquired
from a future exercise of the Option].]

(9) The terms and
conditions of awards of long-term restricted stock to covered employees will be
as prescribed by the Special Master, and may include, to the extent permitted
by EESA or as modified to comply with EESA as determined by the Special Master,
all or some of the provisions in sub-paragraphs (a) – (q) below.

 

4

 

[(v) Notwithstanding
the foregoing, if before the end of a period of approved disability leave (or
determination of total disability by the United States Social Security
Administration) Participant’s employment is terminated for any of the reasons
described in Sections 6(a), (e), (f), (h) or (i), such applicable
provisions shall apply instead of the provisions of this Section 6(b).]

 

(c) Approved
Personal Leave of Absence (Non-Statutory Leave).

 

(i) A [restricted or
deferred stock award][deferred cash award] will continue to vest on schedule
during the first six months of Participant’s personal leave of absence,
provided that Participant’s leave of absence was approved by management of
Participant’s business unit in accordance with the leave of absence policies
applicable to Participant (an “approved personal leave of absence”).  Any unvested [restricted or deferred
stock][deferred cash award] will be canceled as soon as the approved personal
leave of absence has exceeded six months.

 

[(ii) An Option will
continue to vest on schedule during the first six months of an approved
personal leave of absence.  Vested Option
shares may be exercised during the first six months of an approved personal
leave of absence (but not later than the Option expiration date).  All [unvested][unexercised] Option shares
will be canceled as soon as the approved personal leave of absence has exceeded
six months.]

 

(iii) If Participant
terminates employment for any reason during the first six months of an approved
personal leave of absence[, or if on or prior to such time Participant
satisfies the conditions of Section 6(j), (k) or (l)], then such
applicable provisions of this Section 6 will apply.  [For purposes of Section 6(j), (k) and
(l), Participant’s employment will be deemed to have terminated as of the date
that an approved personal leave of absence exceeds six months.]

 

(d) Statutory
Leave of Absence.  The Award will continue to vest [and
Participant may continue to exercise vested Option shares (but not later than
the Option expiration date)] during a leave of absence that is approved by
management of Participant’s business unit, is provided by applicable law and
taken in accordance with such law and applicable Company policy (a “statutory
leave of absence”).  If a statutory leave
of absence is followed without interruption by an approved personal leave of
absence, any unvested [restricted or deferred stock [and
[unvested][unexercised] Option shares]][deferred cash award] will be canceled
as of the date that the combined leaves, if continuous, have exceeded six
months.  If Participant terminates
employment for any reason during an approved statutory leave of absence[, or if
on or prior to such time Participant satisfies the conditions of Section 6(j),
(k), or (l)], then such applicable provisions of this Section 6 will
apply.  [For purposes of Section 6(j),
(k) and (l), if a statutory leave of absence is followed without
interruption by an approved personal leave of absence, Participant’s employment
will be deemed to have terminated as of the date that the combined leaves
exceed six months.]

 

(e) Death. 
If Participant’s employment terminates by reason of Participant’s death,
(i) any unvested [restricted or deferred stock][deferred cash award] will
vest and be distributed to Participant’s estate[; (ii) any unvested Option
shares will vest and vested Option shares may be exercised by Participant’s
estate [until the Option expiration date][for up to [XX DAYS/MONTHS/YEARS] from
the date of Participant’s death (but not later than the Option expiration
date)] [IF APPLICABLE: and (iii) the two-year sale restriction imposed on
Option shares will cease to apply and will not be imposed on any shares that
may be acquired by Participant’s estate in a future exercise of the Option].

 

(f) Involuntary
Termination for Gross Misconduct. 
Notwithstanding any provisions of this Agreement to the contrary, if the
Company terminates Participant’s employment because of Participant’s “gross
misconduct” (as defined below), vesting of the Award[, and the right to
exercise vested Option shares,] will cease on the date Participant’s employment
is so terminated; all unvested [restricted or deferred stock][deferred cash
awards][and all unexercised Option shares] will be canceled as of the
termination date of Participant’s employment and Participant shall have no
further rights of any kind with respect to the Award.  For purposes of this Agreement, “gross
misconduct” means any conduct that (i) is in competition with the
Company’s business operations, (ii) that breaches any obligation that
Participant 

 

5

 

owes to the Company or
Participant’s duty of loyalty to the Company, (iii) is materially
injurious to the Company, monetarily or otherwise, or (iv) is otherwise
determined by the Personnel and Compensation Committee of the Citigroup Board
of Directors (the “Committee), in its sole discretion, to constitute gross
misconduct.  For purposes of this Section 6(f),
“Company” shall mean Citigroup and any of its subsidiaries.

 

(g) Transfer
to Non-Participating Subsidiary.

 

(i) If Participant
transfers to a subsidiary that is a member of the “controlled group” of
Citigroup (as defined below), the Award will continue to vest on schedule [and
vested Option shares may continue to be exercised (but not later than the
Option expiration date)].

 

(ii) If Participant
transfers to a subsidiary that is not a member of the “controlled group” of
Citigroup (as defined below), the provisions of Section 6(h) will
apply to the Award.

 

For
purposes of this Agreement, “controlled group” has the meaning set forth
in Treas. Reg. § 1.409A-1(h)(3).

 

(h) Involuntary
Termination Other than for Gross Misconduct. Except as provided in Section 6(n) below,
if Participant’s employment is terminated by the Company for any reason other
than gross misconduct [and Participant has not met the conditions specified in Section 6(j),
(k) or (l)], (i) any unvested [restricted or deferred stock][deferred
cash award] will vest and be distributed to Participant [on the 90th day following
the “separation from service” date][as soon as practicable after the
termination date] [;and (ii) vesting of an Option will cease and any
vested Option shares may continue to be exercised [until the expiration
date][for up to [XX DAYS/MONTHS/YEARS] after Participant’s [“separation from
service”][termination] date (but not later than the Option expiration date)].

 

(i) Voluntary
Resignation to Pursue Alternative Career.  If
[Participant has not met the conditions of Section 6(j), (k) or (l),
and], with the prior written approval of the Senior Human Resources Officer for
Participant’s business, in his or her sole discretion, Participant voluntarily
resigns from his or her employment with the Company to work in a full-time
career in either government service, for a bona fide charitable institution, or
as a teacher at a bona fide educational institution, and/or otherwise satisfies
the alternative or additional requirements that may be imposed by then
applicable guidelines adopted for the purposes of administering this provision,
(i) any unvested [restricted stock] [deferred stock][deferred cash award]
will vest and be [distributable][distributed] to Participant [as soon as
practicable after the termination date][on the 90th day following the “separation from service”
date][;and (ii) vesting of an Option will cease and [vested options may
continue to be exercised for up to [XX DAYS/MONTHS/YEARS] after Participant’s [“separation
from service”][termination] date (but not later than the Option expiration
date), provided that Participant is not, at any time up to and including any
exercise date, employed by a “significant competitor” of the Company (as
defined in Section 6(p) below)][all unexercised Option shares will be
canceled as of Participant’s [“separation from service”[termination] date and
Participant shall have no further rights of any kind with respect to the
Option].

 

(j) Satisfying
the “Rule of 75.”  If Participant has completed a
number of full years of service with the Company that, when added to his or her
age, equals at least 75, (i) any unvested [restricted or deferred
stock][deferred cash award] will continue to vest on schedule, provided that
Participant is not, at any time up to and including any vesting date, employed
by a “significant competitor” of the Company (as defined in Section 6(p) below)[;
and (ii) an Option will continue to vest on schedule and may be exercised
(but not later than the Option expiration date) while Participant is employed
by the Company; unvested Option shares will vest on Participant’s [“separation
from service”][termination] date if employment with the Company is terminated
for any reason other than gross misconduct and may be exercised [until the
Option expiration date][for up to [XX DAYS/MONTHS/YEARS] after Participant’s [“separation
from service”][termination] date (but not later than the Option expiration
date)][, provided that Participant is not, at any time up to and including any
exercise date, employed by a “significant competitor” of the Company (as
defined in Section 6(p) below)].

 

6

 

(k) Satisfying
the “Rule of 60.”  If Participant [does not
satisfy the conditions of Section 6(j) above, but] (i) is at
least age 50 and has completed at least five full years of service with the
Company and Participant’s age plus the number of full years of service with the
Company equals at least 60, or (ii) Participant is under age 50, but has
completed at least 20 full years of service with the Company and Participant’s
age plus the number of full years of service with the Company equals at least
60, then (1) any unvested [restricted or deferred stock][deferred cash
award] will continue to vest on schedule, provided that Participant is not, at
any time up to and including any vesting date, employed by a “significant
competitor” of the Company (as defined in Section 6(p) below); [(2) an
Option will continue to vest on schedule and may be exercised (but not later
than the Option expiration date) while Participant is employed by the Company;
if Participant is no longer employed by the Company, vesting of the Option will
cease on the Participant’s [“separation from service”][termination] date if
employment with the Company is terminated for any reason other than gross
misconduct and any vested Option shares may be exercised for up to [XX
DAYS/MONTHS/YEARS] after Participant’s [“separation from service”][termination]
date (but not later than the Option expiration date), provided that Participant
is not, at any time up to and including any exercise date, employed by a “significant
competitor” of the Company (as defined in Section 6(p) below)].

 

(l) Reaching
Age 55 by Certain Legacy Citibank Employees. 
If
Participant is at least age 55 and is a legacy Citibank employee who
participates in (i) the grandfathered Citibank formula of the U.S.
Citigroup Pension Plan or (ii) the grandfathered Citibank formula of the
Head Office Guarantee (HOG) Plan, then [(1)] any unvested [restricted or
deferred stock][deferred cash award] will continue to vest on schedule,
provided that Participant is not, at any time up to and including any vesting
date, employed by a “significant competitor” of the Company (as defined in Section 6(q) below);
[(2) vested options may continue to be exercised for up to [XX
DAYS/MONTHS/YEARS] after Participant’s [“separation from service”][termination]
date (but not later than the Option expiration date) if employment with the
Company is terminated for any reason other than gross misconduct, provided that
Participant is not, at any time up to and including any exercise date, employed
by a “significant competitor” of the Company (as defined in Section 6(p) below)][all
unexercised Option shares will be canceled as of Participant’s [“separation
from service”][termination] date and Participant shall have no further rights
of any kind with respect to the Option]

 

(m) Termination
of Employment other than for Gross Misconduct or Transfer to Non-Participating
Subsidiary, when Also Eligible under Section 6(j), (k) or (l).  If Participant is terminated other than for gross
misconduct or is transferred to a subsidiary described in Section 6(g)(ii) above
and on the date Participant’s employment is so terminated or transferred,
Participant has satisfied the conditions of Section 6(j), (k) or (l) above,
then the provisions of such sub-section will apply; provided, however, that
continued vesting of the Award [and the right to exercise vested Option shares]
will not be subject to the condition that Participant not be employed by a “significant
competitor” of the Company (as defined in Section 6(p) below).

 

(n) Employing
Company is Acquired by Another Entity (Change in Control).  If Participant is employed by a company or other legal
entity that is the subject of a transaction that [is described in Section 409A(a)(2)(A)(v) of
the United States Internal Revenue Code of 1986, as amended and the regulations
thereunder (the “Code”)] [is the subject of a transaction that
constitutes [either] [a “change in the ownership of a substantial portion of a
corporation’s assets” as described in Treas. Reg. § 1.409A-3(i)(5)(vii)] [a “change
in ownership of a corporation” as described in Treas. Reg. § 1.409A-3(i)(5)(v)]
[, or] [a “change in the effective control of a corporation” as described in
Treas. Reg. § 1.409A-3(i)(5)(vi) [but excluding an event in sub-paragraph (2) thereof]],
without substituting any higher percentage thresholds than the minimum that may
be specified therein (except as necessary to satisfy the first of the two
additional conditions described below in the case of a change in control of
Citigroup) (hereinafter, a “change in control”), [all][ANY AMOUNT UP TO
99.9%] unvested [restricted stock][deferred stock][deferred cash] shall vest
and become distributable on the effective date of the change in
control[[all][ANY AMOUNT UP TO 99.9%] unvested Option shares shall become exercisable
and may be exercised for a period of [XX YEARS/MONTHS] following the effective
date of such change in control (but not later than the Option expiration
date)].  [The Committee, in its
discretion, may accelerate the vesting of additional [shares of restricted or
deferred stock or Option shares][deferred cash] in the event of a 

 

7

 

change in control.  [Notwithstanding anything in this Agreement
to the contrary, in the event of a change in control of Citigroup, the
accelerated vesting [and distribution of [restricted stock][deferred
stock]][Option shares] provided in this section shall apply only if (1) the
transaction also constitutes a “Change of Control” as defined in the Plan, and (2) not
until Participant also experiences a [“separation from service”][termination of
employment] as a result of the change in control[; provided, however, if
Participant has satisfied the conditions specified in Section 6(j), (k) or
(l) at any time prior to experiencing a “separation from service” as a
result of a change in control of Citigroup, the distribution to Participant of
[deferred stock] that vests under this Section 6(n) upon such “separation
from service” will not occur until the originally scheduled vesting dates]].  For these purposes only, a [“separation from
service”][termination of employment] for any reason other than Participant’s “gross
misconduct” (as defined elsewhere herein) that occurs within the period
commencing on the date of the change in control and ending on the first
anniversary of the change in control shall be deemed to have been as a result
of the change in control.  Participant
acknowledges that in the event of a Change of Control (as defined in the Plan)
of Citigroup, the Plan authorizes the Committee, in its sole discretion, to
take other action with respect to Awards, including, but not limited to, making
adjustments to awards that it deems necessary or appropriate to reflect the
transaction, or causing Awards to be assumed, or new rights substituted
therefore, by the surviving entity in such change.  Further, pursuant to its authority under the
Plan and subject to any limitations thereon, the Committee reserves its right
to take any similar action that it deems necessary or appropriate with respect
to Awards in the event of a change in control of any entity that employed
Participant on the date of the Award or at any time thereafter.  Any such action taken by the Committee with
respect to the Award shall override the treatment otherwise provided by this Section 6(n).

 

(o) Additional
Conditions Applicable to Post-Employment Participation.  Except as otherwise provided herein, [in any instance
in which, if, in the determination of the Committee, Participant engages in
conduct that is in competition with the Company’s business operations, breaches
his or her duty of loyalty or any obligation Participant owes to the Company,
or is materially injurious to the Company, monetarily or otherwise, while
holding any shares of Citigroup common stock subject to a sale restriction,
such shares may be canceled, in the sole discretion of the Committee.  If any such shares are canceled pursuant to
this Section 6(o), Participant will receive a cash payment (without
interest) equal to the grant price of the Option under which the shares were
issued (as adjusted, if applicable) multiplied by the number of shares
canceled.  Additionally,] [t]he Committee
may cancel any unvested [restricted or deferred stock][deferred cash award] if
it determines that Participant has, since the termination of Participant’s
employment with the Company, engaged in conduct that breaches any obligation or
duty of loyalty to the Company or that is materially injurious to the Company,
monetarily or otherwise.  For purposes of
this Section 6(o), “Company” shall mean Citigroup and any of its
subsidiaries.

 

(p) Definition of “Significant Competitor.”  For purposes of this Agreement, a “significant
competitor” of the Company shall mean any company or other entity
designated by the Committee as such and included on a list of “significant
competitors” that will be made available to Participant and which may be
updated from time to time.  If
Participant has terminated employment with the Company, a “significant
competitor” shall mean a company or other entity included on the list in effect
at the time Participant’s employment with the Company was terminated.  For purposes of this Section 5(q), “Company”
shall mean Citigroup and any of its subsidiaries.

 

(q) Non-Solicitation
Covenant.

 

(i)            Participant agrees that during
Participant’s employment with the Company (inclusive of any notice period or
garden leave policy to which Participant is otherwise subject) and for twelve
(12) months following any termination of Participant’s employment, he or she will
not, without the prior written consent of the Company, directly or indirectly
solicit or induce away from the Company or cause to be solicited or induced
away from the Company any of its employees.

 

(ii)           Notwithstanding anything to the
contrary in this Agreement, and without limiting any remedies at law or in
equity that may be available to the Company, Participant acknowledges and
agrees that a remedy at law for any breach or threatened breach of the covenant
contained in this Section 6(q) would be inadequate and monetary
damages would be difficult to calculate and that for any such breach 

 

8

 

or threatened breach, a
court of law may award an injunction, restraining order or other equitable
relief, restraining Participant from committing or continuing to commit such
breach.

 

(iii)          It is expressly understood and agreed
that if a final determination is made by a court of law that the time or any
other restriction contained in this Section 6(q) is an unenforceable
restriction against Participant, the provisions of Section 6(q) shall
not be rendered void but shall be deemed amended to apply to such maximum time
and to such other maximum extent as such court may determine or indicate to be
enforceable.  Alternatively, if such
court finds that any restriction contained in this Section 6(q) is
unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any other
provision of this Agreement.

 

(iv)          The restrictive covenant set forth in
this Section 6(q) shall continue and survive any cancellation,
forfeiture or payment of any amounts due under the Award.

 

(v)           The covenant contained in this Section 6(q) is
not intended to shorten, reduce or otherwise limit any non-solicitation
obligation Participant may have (including but not limited the non-solicitation
obligation contained in the Employment Termination Notice and Non-Solicitation
Policy for the Citigroup Management Committee or any successor policy) pursuant
to contract, collective agreement or applicable policy, local law, rule or
regulation (“Independent Obligation”), nor is it intended to limit or reduce
any other obligation that Participant may have to the Company pursuant to an
Independent Obligation.  For purposes of
this Section 6(q), “Company” shall mean Citigroup and any of its
subsidiaries.

 

7. Non-Transferability. 
Neither the Award, nor
any component of the Award, may be sold, pledged, hypothecated, assigned,
margined or otherwise transferred, other than by will or the laws of descent
and distribution, and no Award or interest or right therein shall be subject to
the debts, contracts or engagements of Participant or his or her successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law, by judgment,
lien, levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy or divorce), and any attempted disposition thereof shall
be null and void, of no effect, and not binding on the Company in any way.  Participant agrees that any purported
transfer shall be null and void, and shall constitute a breach of this
Agreement causing damage to the Company for which the remedy shall be a
cancellation of the Award.  During
Participant’s lifetime, all rights with respect to the Award shall be
exercisable only by Participant, and any and all payments in respect of the
Award shall be to Participant only.  The
Company shall be under no obligation to entertain, investigate, respect,
preserve, protect or enforce any actual or purported rights or interests
asserted by any creditor of Participant or any other third party in the Award,
and Participant agrees to take all reasonable measures to protect the Company
against any such claims being asserted in respect of Participant’s Award and to
reimburse the Company for any and all reasonable expenses it incurs defending against
or complying with any such third-party claims if Participant could have
reasonably acted to prevent such claims from being asserted against the
Company.

 

[8. Stockholder Rights. 
Participant shall have no rights as a stockholder of Citigroup over any
shares covered by an Award, except to the limited extent provided in the
Prospectus for an Award of restricted stock, unless and until shares are
distributed to Participant in connection with the vesting of a restricted or
deferred stock award or an Option exercise. 
During the vesting period, Participant may receive dividend or dividend
equivalent payments in respect of shares subject to a restricted or deferred
stock award, to the extent provided in the Prospectus.]

 

9.
Right of Set Off.  Participant agrees that the Company may, to
the extent permitted by applicable law, retain for itself funds or securities
otherwise payable to Participant pursuant to this Award or any award under any
equity award program administered by Citigroup to offset any amounts paid by
the Company to a third party pursuant to any award, judgment, or settlement of
a complaint, arbitration, or lawsuit of which Participant was the subject; to
satisfy any obligation or debt that Participant owes the Company or its
affiliates; or in the event any equity award is canceled pursuant to its
terms.  The Company may not retain 

 

9

 

such
funds or securities and set off such obligations or liabilities, as described
above, until such time as they would otherwise be distributable to Participant
in accordance with the applicable award terms.

 

10.
Consent to Electronic Delivery.  In lieu of receiving documents in paper
format, Participant hereby agrees, to the fullest extent permitted by law, to
accept electronic delivery of any documents that Citigroup may be required to
deliver (including, but not limited to, prospectuses, prospectus supplements,
grant or award notifications and agreements, account statements, annual and
quarterly reports, and all other forms or communications) in connection with
the Award(s) covered by this Agreement and any other prior or future
incentive award or program made or offered by Citigroup or its predecessors or
successors.  Electronic delivery of a
document to Participant may be via a Company e-mail system or by reference to a
location on a Company intranet site to which Participant has access.

 

[11. Plan Administration.  The Award described in
this Agreement has been granted subject to the terms of the Plan, and the shares
deliverable to Participant in connection with an Award, whether upon the
exercise of an Option or vesting of a restricted or deferred stock award, will
be from the shares available for grant pursuant to the terms of the Plan].

 

12. Adjustments.  In the event of any change in Citigroup’s
capital structure on account of (i) any extraordinary dividend, stock
dividend, stock split, reverse stock split or any similar equity restructuring;
or (ii) any combination or exchange of equity securities, merger, consolidation,
recapitalization, reorganization, divestiture or other distribution (other than
ordinary cash dividends) of assets to stockholders, or any other similar event
affecting Citigroup’s capital structure, to the extent necessary to prevent the
enlargement or diminution of the rights of Participants, the Committee shall
make such appropriate equitable adjustments as may be permitted by the terms of
the Plan and applicable law, to the number or kind of shares subject to an
Award and/or the grant price applicable to an Award.  All such adjustments shall conform to the
requirements of Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), to the extent applicable, and with respect to Awards
intended to qualify as “performance-based compensation” under Section 162(m) of
the Code, such adjustments or substitutions shall be made only to the extent
that the Committee determines that such adjustments or substitutions may be
made without causing the Company to be denied a tax deduction on account of Section 162(m) of
the Code.  Citigroup shall give each
Participant notice of an adjustment hereunder and, upon notice, such adjustment
shall be conclusive and binding for all purposes.  Notwithstanding the foregoing, the Committee
may, in its discretion, decline to adjust any Award made to a Participant, if
it determines that such adjustment would violate applicable law or result in
adverse tax consequences to the Participant or the Company, and neither the
Committee nor Citigroup shall be bound to compensate any Participant for any
such adjustment not made, nor shall they be liable to Participant for any
additional personal tax or other consequences of any adjustments that are made
to an Award.

 

13.
Taxes and Tax Residency Status.  By accepting the Award, Participant agrees to
pay all applicable income and/or social taxes and file all required tax returns
in all jurisdictions where Participant is subject to tax and/or an income tax
filing requirement.  If Participant is an
employee in one of Citigroup’s expatriate programs, he or she agrees to pay all
applicable income and/or social taxes and file all tax returns in accordance
with the applicable expatriate policy. 
To assist Citigroup in achieving full compliance with its obligations
under the laws of all relevant taxing jurisdictions, Participant agrees to keep
complete and accurate records of his or her income tax residency status and the
number and location of workdays outside his or her country of income tax
residency from the date of an Award until the later of the vesting of an Award,
the exercise of an Option, or the subsequent sale of any shares received in
connection with an Award.  By signing
this Agreement, Participant also agrees to provide, upon request, information
about his or her tax residency status to Citigroup during such period.
Participant will be responsible for any income tax due, including penalties and
interest, arising from any misstatement by Participant regarding such
information.

 

14.
Entire Agreement; No Right to Employment.  [IF APPLICABLE: The Letter Agreement,] [T]he
Prospectus [Brochure] and the Agreement constitute the entire understanding
between the Company and Participant regarding the Award and supersede all
previous written, oral, or implied understandings between the parties hereto
about the subject matter hereof, including any written or electronic agreement,
election form or other communication to, from or between Participant and the
Company.  Nothing contained herein, in the
Plan, or in any Prospectus [Brochure] shall confer upon Participant any rights
to continued employment or employment in any particular position, at any
specific rate of compensation, or for any particular period of time.

 

10

 

15.
Amendment.  The
Committee may in, its sole discretion, modify, amend, terminate or suspend the
Award or the Program at any time, except that no termination, suspension,
modification or amendment of the Award or the Program shall (i) cause the
Award or the Program to become subject to, or violate, Section 409A of the
Code, or (ii) except as provided in Section 16(a), adversely affect
Participant’s rights with respect to the Award, as determined by the Committee,
without Participant’s written consent.

 

16. Section 409A [and Section 457A] Compliance.

 

(a) Participant
understands that as a result of Section 409A to the Code, if Participant
is a U.S. taxpayer he or she could be subject to adverse tax consequences if
the Award, the Program and/or the Plan are not administered in accordance with
the requirements of Section 409A. 
[Participant further understands that if Participant is a U.S. taxpayer,
and a deferred cash award or other award type covered by this Agreement is
considered to be a “nonqualified deferred compensation plan” and Participant’s
employer is considered to be a “nonqualified entity” (as such terms are defined
in Section 457A of the Code), Participant could be subject to adverse tax
consequences if the Award or the Program are not administered in accordance
with the requirements of Section 457A.] Citigroup may modify the
provisions of the Award, the Program and/or the Plan, as necessary, to conform
them to the requirements of Section 409A[, Section 457A,] or other
changes in applicable law.  To the extent
Citigroup amends the Award, the Program or the Plan, Participant will receive a
supplement to the Prospectus describing any such changes.

 

(b) Notwithstanding
any provision of this Agreement to the contrary, (i) Citigroup may modify
the provisions of the Award, the Program and/or the Plan, as necessary, to
conform them to the requirements of Section 409A[, Section 457A,] or
other changes in applicable law and (ii) any distribution of [shares
subject to a deferred stock award][a deferred cash award] otherwise provided by
the terms of this Agreement to occur upon any event that would constitute a “separation
from service” (within the meaning of Section 409A of the Code) to a
Participant who is a “specified employee” (within the meaning of Treas. Reg. §
1.409A-1(i)(1)) at the time of such Participant’s “separation from service,”
shall not be made until the date which is six months from such “separation from
service,” or, if earlier, the date of Participant’s death and during such
six-month deferral period, Participant shall not be entitled to interest,
dividends, dividend equivalents, or any compensation for any loss in market
value or otherwise which occurs with respect to the Award during such deferral
period.

 

(c) BY
ACCEPTING THIS AWARD, PARTICIPANT HEREBY CONSENTS TO THE AMENDMENT OR
MODIFICATION OF ANY OUTSTANDING AWARD(S) HERETOFORE GRANTED TO OR ENTERED
INTO WITH PARTICIPANT, IN LIKE MANNER AND PURPOSE AS PROVIDED BY SECTION 16(b) OF
THIS AGREEMENT, TO THE EXTENT ANY SUCH AWARDS MAY VIOLATE SECTION 409A
[OR SECTION 457A] OF THE CODE; PROVIDED, HOWEVER, THAT (i) NO SUCH
AMENDMENT OR MODIFICATION SHALL BE MADE IF IT WOULD VIOLATE THE TERMS AND
CONDITIONS OF PARTICIPANT’S OFFER LETTER OR EMPLOYMENT AGREMENT, AND (ii) UNLESS
THE COMMITTEE DETERMINES OTHERWISE, ANY AMENDMENT OR MODIFICATION TO
OUTSTANDING AWARD(S) PURSUANT TO THIS SECTION 16(c) SHALL
MAINTAIN, TO THE MAXIMUM EXTENT PRACTICABLE, THE ORIGINAL INTENT OF THE
APPLICABLE PROVISION WITHOUT CONTRAVENING THE PROVISIONS OF SECTION 409A
[OR SECTION 457A] OF THE CODE.  THE
AMENDMENT OR MODIFICATION OF ANY AWARD(S) PURSUANT TO THIS PROVISION SHALL
BE AT THE COMPANY’S SOLE DISCRETION AND THE COMPANY SHALL NOT BE OBLIGATED TO
AMEND OR MODIFY ANY SUCH AWARD(S) OR THIS AWARD, THE PROGRAM OR THE PLAN,
NOR SHALL THE COMPANY BE LIABLE FOR ANY ADVERSE TAX OR OTHER CONSEQUENCES TO
PARTICIPANT RESULTING FROM SUCH AMENDMENTS OR MODIFICATIONS OR THE COMPANY’S
FAILURE TO MAKE ANY SUCH AMENDMENTS OR MODIFICATIONS FOR PURPOSES OF COMPLYING
WITH SECTION 409A [OR SECTION 457A] OF THE CODE OR FOR ANY OTHER
PURPOSE.  TO THE EXTENT CITIGROUP AMENDS
OR MODIFIES ANY OUTSTANDING AWARD(S) OR THIS AWARD PURUSANT TO SECTIONS 15
OR 16 OF THIS AGREMENT, PARTICIPANT SHALL RECEIVE A SUPPLEMENT TO THE
PROSPECTUS [BROCHURE] DESCRIBING ANY SUCH CHANGES AND, UNLESS THE COMMITTEE
DETERMINES OTHERWISE, 

 

11

 

THE
CHANGES DESCRIBED IN THE SUPPLEMENT SHALL BE DEEMED TO AMEND THE TERMS AND
CONDITIONS OF THE APPLICABLE AWARD AGREEMENTS.

 

17.
Compliance with Emergency Economic Stabilization Act of 2008.  Participant
acknowledges that if Participant and any Award or payment governed by this
Agreement are subject to Section 111 of the Emergency Economic
Stabilization Act of 2008, as amended, and any regulations or interpretations
that may from time to time be promulgated thereunder (“EESA”), then any Award
or payment of any kind provided for by this Agreement must comply with EESA,
and that this Agreement shall be interpreted or reformed as determined by the
Committee to so comply.  Participant
hereby agrees that if the Award or any payment pursuant to this Agreement would
violate EESA, or may in the judgment of the Company limit or adversely impact
the ability of the Company to participate in, or the terms of the Company’s
participation in, the Troubled Asset Relief Program or the Capital Purchase
Program, or to qualify for any other relief under EESA, Participant shall be
deemed to have waived his or her right to the Award and any such payment.  In addition, if applicable, Participant
acknowledges and agrees that any Award or payment governed by this Agreement is
subject to forfeiture or repayment (i) if the Award or payment is based on
materially inaccurate financial statements (including, but not limited to,
statements of earnings, revenues, or gains) or any other materially inaccurate
performance metric criteria; (ii) if Participant materially violates any
risk limits established or revised by [senior management, a business head
and/or a risk management department, or any balance sheet or working or
regulatory capital guidance provided by a business head][a “senior risk officer”
(as defined under EESA)]; or (iii) if Participant is terminated for
misconduct that occurred during the period in which the award was earned.  Participant agrees that a financial statement
or performance metric shall be treated as materially inaccurate for these
purposes if Participant knowingly engaged in providing inaccurate information
(including knowingly failing to timely correct inaccurate information) relating
to those financial statements or performance metrics.  If applicable, Participant also hereby grants
to the U.S. Treasury and the Company a waiver releasing the U.S. Treasury and
the Company from any claims that Participant may have as a result of the
issuance of any regulations which modify, or cause the modification of, the
terms of any award that would not otherwise comply with the executive
compensation and corporate governance requirements of EESA or any securities
purchase agreement or other agreement entered into between the Company and the
U.S. Treasury pursuant to EESA. [In accordance with but not limited to the
foregoing, Participant agrees that the Committee, pursuant to its authority
under the Plan, may change the terms of any award as it deems necessary, in its
sole discretion, to comply with or satisfy any legal, regulatory or
governmental requirements or directives or to qualify for any government loan,
investment, subsidy or program.]

 

18.
Arbitration; Conflict; Governing Law.  Any disputes related to the Award shall be
resolved by arbitration in accordance with the Company’s arbitration
policies.  In the absence of an effective
arbitration policy, Participant understands and agrees that any dispute related
to an Award shall be submitted to arbitration in accordance with the rules of
the American Arbitration Association, if so elected by the Company in its sole
discretion.  In the event of a conflict
between the Prospectus and this Agreement [IF APPLICABLE: the Letter Agreement
and this Agreement], this Agreement [IF APPLICABLE: the Letter Agreement] shall
control.  In the event of a conflict
between this Agreement and the Plan, the Plan shall control.  This Agreement shall be governed by the laws
of the State of New York (regardless of conflict of laws principles) as to all
matters, including, but not limited to, the construction, application, validity
and administration of the Program.

 

19. Disclosure Regarding Use of Personal Information and
Participant’s Consent.

 

(a) Definition and Use of “Personal
Information.”  In connection with the grant of this Award,
and any other award under the Program or any other equity award program, and
the implementation and administration of any such program, including, without
limitation, Participant’s actual participation, or consideration by the Company
for potential future participation, in any program at any time, it is or may
become necessary for the Company to collect, transfer, use, and hold certain
personal information regarding Participant in and/or outside of Participant’s
home country.

 

The
“personal information” that Citigroup may collect, process, store and
transfer for the purposes outlined above may include Participant’s name,
nationality, citizenship, tax or other residency status, work authorization,
date of birth, age, government/tax identification number, passport number,
brokerage account information, GEID or other internal identifying information,
home address, work address, job and location history, compensation and equity
award information and history, business unit, employing entity, 

 

12

 

and
Participant’s beneficiaries and contact information.  Participant may obtain more details regarding
the access and use of his/her personal information, and may correct or update
such information, by contacting his/her human resources representative or local
equity coordinator.

 

Use,
transfer, storage and processing of personal information, electronically or
otherwise, may be in connection with the Company’s internal administration of
its equity award programs, or in connection with tax or other governmental and
regulatory compliance activities directly or indirectly related to an equity
award program.  For such purposes only,
personal information may be used by third parties retained by the Company to
assist with the administration and compliance activities of its equity award
programs, and may be transferred by the company that employs (or any company
that has employed) Participant from Participant’s home country to other
Citigroup entities and third parties located in the United States and in other
countries.  Specifically, those parties
that may have access to Participant’s information for the purposes described
herein include, but are not limited to, (i) human resources personnel
responsible for administering the equity award programs, including local and
regional equity award coordinators, and global coordinators located in the
United States; (ii) Participant’s U.S. broker and equity account
administrator and trade facilitator; (iii) Participant’s U.S., regional
and local employing entity and business unit management, including Participant’s
supervisor and his/her superiors; (iv) the Committee or its designee,
which is responsible for administering the Plan; (v) Citigroup’s
technology systems support team (but only to the extent necessary to maintain
the proper operation of electronic information systems that support the equity
award programs); and (vi) internal and external legal, tax and accounting
advisors (but only to the extent necessary for them to advise the Company on
compliance and other issues affecting the equity award programs in their
respective fields of expertise).  At all
times, Company personnel and third parties will be obligated to maintain the
confidentiality of Participant’s personal information except to the extent the
Company is required to provide such information to governmental agencies or
other parties.  Such action will always
be undertaken only in accordance with applicable law.

 

(b) Participant’s Consent.  BY
ACCEPTING THIS AWARD, PARTICIPANT EXPLICITLY CONSENTS (I) TO THE USE OF
PARTICIPANT’S PERSONAL INFORMATION FOR THE PURPOSE OF BEING CONSIDERED FOR
PARTICIPATION IN FUTURE EQUITY OR OTHER AWARD PROGRAMS (TO THE EXTENT HE/SHE IS
ELIGIBLE UNDER APPLICABLE PROGRAM GUIDELINES, AND WITHOUT ANY GUARANTEE THAT
ANY AWARD WILL BE MADE); AND (II) TO THE USE, TRANSFER, PROCESSING AND
STORAGE, ELECTRONICALLY OR OTHERWISE, OF HIS/HER PERSONAL INFORMATION, AS SUCH
USE HAS OCCURRED TO DATE, AND AS SUCH USE MAY OCCUR IN THE FUTURE, IN
CONNECTION WITH THIS OR ANY OTHER EQUITY OR OTHER AWARD, AS DESCRIBED ABOVE.

 

***

 

13

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