July 25,
2008
Michael S.
Klein
Citigroup
Inc.
399 Park
Avenue
New York, NY
10022
Dear
Michael:
This Letter
Agreement, together with the attachment hereto (collectively, the
“Agreement”), reflects our mutual understanding with
respect to your resignation from Citigroup Global Markets Inc. (the
“Company”) and sets forth the payments and benefits
that you will be eligible to receive under this Agreement. For
purposes of this Agreement, “Citigroup” shall mean
Citigroup Inc., together with its subsidiaries and their
affiliates, including, but not limited to, the Company.
1.
Termination
Date. You have
advised us that you resigned from your position as Chairman of the
Institutional Clients Group and Vice Chairman of Citigroup
effective July 21, 2008 (the "Notice Date"), and you will separate
from employment with the Company and Citigroup effective September
2, 2008 (the "Termination Date"). As of the Notice Date, you
resigned from your status as an officer or director of any parent,
subsidiary or affiliate of the Company or a member of any board or
internal management committee of Citigroup.
2.
Payments through the
Termination Date. Until the close of business on the Termination
Date, you will continue to receive (a) salary payments at your
current annual base salary rate (less applicable withholdings and
deductions), paid in accordance with the Company’s payroll
practices in the ordinary course and (b) the broad-based employee
benefits commensurate with the level and type of benefits you
currently receive. Through the Termination Date, you will continue
to work on client matters at Citigroup’s reasonable request.
You are covered by the Stock Ownership Commitment and the Loan
Policy through the Notice Date and by the Personal Trading Policy
until the close of business on the Termination Date.
3.
Post-Termination Health and
Welfare Benefits .
Following the Termination Date, you will be eligible for medical
and other benefits pursuant to the terms of the broad-based plans
and programs and any changes thereto, and additional information
concerning such benefits has been or will be provided to you under
separate cover.
4.
Other Payments and
Benefits . If you
sign the General Release in the form attached hereto as Attachment
A (“General Release”) and do not revoke it during the
Revocation Period (as defined in paragraph 17(b) below), then after
the expiration of the Revocation Period, you will receive the
following payments and benefits, subject to the conditions set
forth in paragraph 4 hereof. You acknowledge and agree that certain
of the payments and benefits described herein differ from and are
in excess of the total payments and benefits you would otherwise be
eligible to receive, absent this Agreement, and shall be paid or
provided to you in accordance with and subject to the terms hereof
notwithstanding any provision in any applicable plan or agreement
to the contrary.
(a) Your nonvested basic shares granted under the
Capital Accumulation Program (“CAP”), your Supplemental
CAP shares and the portion of your premium CAP shares pro-rated
through the Termination Date granted on January 18, 2005, January
17, 2006, and January 16, 2007 will vest on the Termination Date,
and be delivered on the first day following the expiration of six
months after your separation from service, as defined in paragraph
15 hereof. On August 1, 2008, you will receive in cash (less
applicable withholdings and deductions) an amount equal to the sum
of (i) the balance of your Account under the Deferred Cash
Retention Plan as of such payment date, and (ii) the amount, if
any, by which such balance is less than the initial value of your
Account. On March 31, 2009, subject to your compliance through such
date with the restrictive covenants contained in paragraph 7, you
will receive in cash (less applicable withholdings and deductions)
an amount equal to the aggregate initial value on the award date of
your special equity awards granted on January 22, 2008, which
awards are cancelled.
(b) All your outstanding employee stock options
vested by their terms prior to the Notice Date. These vested
employee stock options will remain exercisable for the periods
after your Termination Date in accordance with their existing terms
and as specified in the applicable plans and
prospectuses.
(c)You will be
paid $7,500,000 (less applicable deductions and withholdings) on
March 31, 2009, and you will be paid $7,500,000 (less applicable
deductions and withholdings) on October 5, 2009, each payment being
subject to your compliance, through the date on which such payment
is to be made, with the restrictive covenants in paragraph
7.
(d)The Company
will provide you with an office and your current secretarial
support in midtown Manhattan through the earlier of (i) your
commencement of employment elsewhere or (ii) July 31, 2009, subject
to your compliance through such earlier date with the restrictive
covenants contained in paragraph 7. The Company shall not seek
reimbursement for any office and support provided pursuant to this
paragraph 4(d). Please be advised that some portion of the benefits
described in this subparagraph may be taxable income to
you.
5.
Pension, 401(k) and Other
Plans and Programs.
(a) The Company acknowledges that your account
balances under Citigroup’s qualified and nonqualified
retirement plans in which you are a participant are already 100%
vested, remain unaffected by the Agreement and shall be paid in
accordance with the terms of the plans. Additional information
concerning these plans has been or will be provided to you under
separate cover.
(b) Your participation in the Citigroup
co-investment programs or funds in which you have invested will not
be affected by your separation and will be governed by the terms of
the private placement memorandum and the partnership agreement for
each fund; each such fund is fully invested, all leverage has fully
vested, and as such you are and will be entitled to distributions
as if you had remained employed by Citigroup.
(c) Except as otherwise provided by this Agreement,
any amounts or benefits that are vested benefits or that you are
otherwise entitled to receive under any other plan, policy,
practice or program of the Company or Citigroup shall be payable in
accordance with such plan, policy, practice or program; provided
that in no event shall you be entitled to any severance pay under
any such plan, program, practice or policy. Without limiting the
generality of the foregoing, any amounts payable to you pursuant to
the Management Committee Long-Term Incentive Program shall be paid
to you in accordance with the terms and conditions of such
plan.
(d) You will continue to participate in Citigroup's
tax preparation program for current and former employees covered
under Citigroup's formal expatriate program for tax years 2008 and
2009, unless otherwise required by your new employer or principal
business. You agree that, in accordance with the terms of such
program, any tax refunds or tax credits in respect of taxes paid by
Citigroup on your behalf are or will be assigned to
Citigroup. The amount of expenses eligible for
reimbursement, or in-kind benefits to be provided, under such
program in any calendar year shall not affect the expenses eligible
for reimbursement, or in-kind benefits to be provided, under the
program in any other calendar year. Reimbursement of any such
eligible expense shall be made by no later than the last day of the
calendar year after the year in which such expense is
incurred. Your right to reimbursement or in-kind benefits
under such program shall not be subject to liquidation or
exchange for another benefit.
6.
Citigroup Credit
Card. You agree to
pay any unpaid, outstanding balance due on your Citigroup business
credit card as soon as practicable following the Termination Date.
Citigroup agrees to promptly reimburse you for all business
expenses you incur prior to the Termination Date pursuant to its
general expense reimbursement policies.
7.
Certain
Covenants.
(a) Given your senior position at Citigroup, your
substantial knowledge of Citigroup’s clients and personnel
and your substantial knowledge of Citigroup’s operations and
strategy, you acknowledge and understand that you have the ability
to effectively compete with Citigroup.
(b) Accordingly, you agree that, from the Notice
Date through and including October 4, 2009 (the "Restricted
Period"):
(i) you will not, directly or indirectly, accept
employment with; become a consultant or advisor to; accept
membership onto any board of; join any venture with (except as a
passive investor); accept any remuneration from; solicit clients or
potential clients on behalf of; solicit, hire or recruit any
employee on behalf of; or, otherwise become affiliated or
associated with any of the following investment firms or banks:
Barclays PLC; Credit Suisse Group; Deutsche Bank AG; Goldman Sachs
Group, Inc.; HSBC Holdings PLC; JP Morgan Chase & Co.; Lazard
Ltd.; Lehman Brothers Holdings Inc.; Merrill Lynch & Co.;
Morgan Stanley; The Royal Bank of Scotland Group PLC; and UBS A.G.
(each an “Entity”) or any entity or person in which an
Entity has a direct or indirect interest of at least 33 1/3% (an
“Affiliate”); provided, however, that if an Entity or
an Affiliate is acquired by (in whole or part), itself acquires (in
whole or part), merges with, or has any business combination
transaction whatsoever with any organization with which you are
employed or affiliated, you will not engage in otherwise restricted
activities with the successor business that includes the business
of the Entity or Affiliate unless they were permitted under
paragraph 7 hereof immediately prior to the effective date of such
transaction;
(ii) you will not, directly or indirectly, solicit,
recruit, hire or otherwise induce any employee of Citigroup as of
July 21, 2008 (with the exceptions of your current secretarial
assistants and your current chief of staff) who had total annual
compensation for 2008 of $100,000 or more (an
“Employee”) to either leave Citigroup or join any other
business;
(iii) for yourself or on behalf of any third party,
you will not, directly or indirectly, solicit or otherwise induce
any client of Citigroup with which you had substantive contact to
reduce or terminate its relationship with Citigroup or otherwise
solicit any existing business of Citigroup away from
Citigroup.
Notwithstanding
(i), (ii) or (iii) above, you are expressly permitted
to:
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(A)
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become a
special, general or limited partner or member or officer, director
or employee or affiliate of a corporation, firm, partnership, LLC,
joint venture or other business organization engaged principally in
alternative asset management and specifically including without
limitation an alternative asset manager principally engaged in a
private equity or hedge fund business (as those terms are commonly
understood) or similar business (together with affiliates,
“AAM”); and
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(B)
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personally or
on behalf of such AAM contacting or soliciting or otherwise
inducing clients or customers of Citigroup with respect to
investments or potential investments in, with or by the AAM or any
fund sponsored by the AAM or any portfolio company of such fund or
the entering into with such clients or customers of
investment(s);
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(C)
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the
relationships permitted under Section 7(b)(A) and (B) shall
not include an AAM controlled by an Entity or
Affiliate on the date the affiliation with such AAM commences as
contemplated by (A) above; provided, however, if subsequent to the
Effective Date an AAM with which you are engaged in any business is
acquired by or acquires or merges with an Entity or an Affiliate (a
“Qualifying Transaction”) (a) you may, as part of the
activities permitted in Section 7(b)(B), participate in the
Qualifying Transaction but following consummation of the Qualifying
Transaction will continue to be subject to Section 7(b)(i) with
respect to such Entity or Affiliate involved in the Qualifying
Transaction other than the AAM with which you were affiliated prior
to such Qualifying Transaction; and
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(D)
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you are
permitted to engage in such activities as are customarily
undertaken by or on behalf of an AAM other than an Entity or an
Affiliate; provided that notwithstanding the foregoing, financial
advisory, investment banking and other investment banking
activities, other than in connection with the investment activities
of the AAM, are expressly prohibited.
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(c) The foregoing restrictions shall not prohibit
any entity with whom you may have an employment relationship (an
“Employing Entity”) from independently soliciting,
recruiting, offering employment to or hiring an Employee; provided
that you do not have a direct or indirect role whatsoever,
including the providing of an opinion or recommendation with
respect to any Employee, in connection with the recruitment,
solicitation, offering of employment to, or hiring of such
Employee.
(d) You recognize, acknowledge and agree that
certain of the payments and benefits provided for in paragraph 4
are expressly contingent on your compliance with the conditions of
this paragraph 7, and Citigroup recognizes, acknowledges and agrees
that any payment or benefit not made expressly contingent on
compliance with the conditions of paragraph 7 is not subject to
such conditions. You shall be required to certify in writing to
Citigroup that you have fully complied with the conditions of this
paragraph 7 before any cash payment so subject to these conditions
is made by Citigroup to you. Should you fail to perform your
obligations under this paragraph 7, the Company shall have no
obligation to make any subsequent payments described in paragraph 4
that are subject to the conditions of paragraph 7, or to continue
to provide the benefits described in paragraph 4(d).
(e) You
acknowledge and agree that given the role and opportunity you have
had with Citigroup, the covenants contained in this paragraph 7 are
reasonable, constitute an important part of the consideration
provided to you under this agreement, and will not unnecessarily or
unreasonably restrict your professional opportunities.
(f) Notwithstanding anything to the contrary
contained herein or the terms of any other award or other agreement
between you and Citigroup or of any severance, compensation, equity
or benefit plan of Citigroup in which you may from time to time
participate or which is binding on you, the restrictive covenants
set forth in this paragraph 7 supersede and replace the restrictive
covenants of the same type contained in any other award and other
agreements between you and Citigroup and in any severance,
compensation, equity and benefit plan of Citigroup in which you may
from time to time participate or which is binding on
you.
8.
Claims.
You represent that as of the date
you have signed this Agreement, you have not filed, directly or
indirectly, nor caused to be filed, any Claims (as defined in the
General Release) against the Company, Citigroup or the Releasees
(as defined in the General Release) in any forum, including
federal, state or local court or in arbitration, any administrative
proceeding with any federal, state or local administrative agency,
or the Company’s dispute resolution procedure. You agree that
should any administrative agency or third party pursue any claims
on your behalf, you waive your right to any monetary or other
recovery of any kind.
9.
Non-Disparagement . You agree not to disparage or denigrate
Citigroup or the Releasees orally or in writing. Citigroup agrees
not to disparage or denigrate you or your agents, assignees,
attorneys, heirs, executors and administrators orally or in
writing, and agrees to direct its directors and executive officers
not to disparage or denigrate you or your agents, assignees,
attorneys, heirs, executors and administrators. Nothing in this
paragraph 9 will prevent either party from making a truthful
statement in response to a statement by the other party that
violates this paragraph 9, or will prevent either party from
providing truthful, non-confidential, non-privileged information
concerning your employment or Citigroup’s business activities
to any government, regulatory or self-regulatory agency, or court
of law as necessary or appropriate in any litigation or other
proceeding (including, but not limited to, arbitration). Nothing in
this paragraph 9 shall be construed to limit or prohibit conduct
permitted by paragraph 10.
10.
Citigroup Property and
Proprietary Information.
(a) You agree to return all Citigroup property in
your possession, custody or control. You will be entitled to retain
permanently
