EXHIBIT 1 

Engagement Letter

Case:17-03283-LTS Doc#:24695-1 Filed:06/30/23 Entered:06/30/23 12:18:50 Desc:

Exhibit 1 - Engagement Letter dated Jan. 27 2017 Page 1 of 8
Financfal Oversight and Managc:mc:nt Board 

for Puerto Rico 

'Ry Email Transmittal 

Anenlioo: Jc>$e B. Ca.rri6n., Chafr 

Dear Sirs: 

Oveniew 

January 27, 2017 

Citigroup Glob~I Markets Inc. is plC'..isc:d to acc(.-pt our a.pf)(>intmc:nt by the: Finunc.i-al 

O.•en.ight and Management Board for Puerto Rico (the "Board"), established under the Puetto 

Rico Oversight. Managcmcn~ and Economic Stability Act, 48 U.S.C. Chapter 20 ('"PROMF.SA "'), 

to save as investment banker and financ:iaJ advisor to the Board iu coJ.lJlectiou with the Board's 

statutOI)' dut-ics under PROMESA and ils task of working with I.he peoph: and govemmt-nl of 

Pue110 Rico (the "'Comruon,vea1th") to create tbe ueoesS3J)' founda tio.o for economic grov..1h and 

to reston:: upp<>rlunity to I.he J)(:()ple of Puerto Rioo. Citi welcomes the oppc.>rtunity to bring our 

expe.iiise in municipal fUl3.Uoc, capital m,ukcts.. rcsm»ctUri.ng (both in and out of court) snd 

infrastruct~ and utility finance to bear in assisting the Board in seeking to pro,•ide lhe 

Commonwealth with the necessary tools to rcstn.1eturc its debt, access the C..<tpitsl msrkets and gc-t 

back on a path to economic. r«:.0very. The lectns and oonditions of Citi's appoint.rnent are Set 

forth in this letter agrcew.en.t (this .. Agreement"'). 

As used herein. "Crti" shall mean Citigroup (jlol)sl Markets Inc. and its successors and 

penn iued assigns. 

ln connectit)n wilh this engagement, Ci[i will otter the services set forth beJow: 

I. 6,•aluate lhe CommonweaJth~s current fiscal siruation. and interface with the Hoard 

and its other professional adviSQrs in connection thcn:wilh; 

2. Review md (.':valuate the Communweallh's capital Slructu.re. and advise I.he Board on 

possible restrucru.ring strategies (including developing fmaocing: and debt issuance 

models and ahcnu.tives) and in negotiating wilh the Commonwcahh arid the 

Conunonweatlh 's creditocs: 

3. Advise the Board OJl me Commonwealth's ability to access the capital .oo.'l.l'kets. 

induding providing advice on market strale_gy; 

4. Und~riake discussions on bdla.lf of the Board wilh r<lling agencie~ cn:ditors, and 

other third panies as r¢qoested by the Board; 

5. Perform such other iu\'estment banking and fw3DCia1 advisory services as the Board 

may rea.-'-<mahly requc~"l in oonnection with this engagement., including providing 

testimony in connection with the seivic:es provided uuder this Agreement. 

1 The tenn "'Commonwealth" s.~ w;ed in this $ection shs.11 indude-its "'cove.red entitie$., (3.S defined below). 

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Exhibit 1 - Engagement Letter dated Jan. 27 2017 Page 2 of 8
.lru,uruy 27.2017 

Pagc 2 

The fc:cs to Citi under this agreement shaJJ include the following: 

(i) a fixed monthly .ret.ainet of $250,000, payable. monthly in arrears (upon lhe 

submission of monthly invoices) comrueocing oil the dale of this Agreement 

(s.ucb retainer to be pro rated for any partial month), plus 

(ii) a success fee equal to 0.0333% of the par amounl o f any bonds (A) issued by the 

CommonweaJt11 or any of it,; agendc$., authorities. public cotp0ra1jons or 

instrumentalities (''covered entities"2) as part of a PROMESA related 

restrucruring, for the avoidanCc": of doubt, excluding any bonds issued ill 

connection with any bonds restructured under clause B below, or (R) n::,tructu.rcd 

as pan of a PROMESA relatod restructuring (coJculatc<I by multiplying 0.000333 

times the n:stmc-turcd bond par amount). in each case, without duplicalion, and 

subject in all cases to an a~gate success fee. cap of$10 mlllioo. A success fee 

shall be due and payable upon each successful closing of aJ1 or a portion of a debt 

rc5tn1cn1riog of the existing debt of lhe Commonwealth and its cove.red entities. 

wbetller a<X.X>mpJished pursu.anl Lo Title I U or Title Vl of PROMES/\ or 

otherwise, and whether completed in a single lransaction or multiple transactions, 

but in all cases subject to the a&e,.~>atc suoccss fee cap refcrcoced above. 

The success Jee payable by Lhe Board shall be subject to rech1etion io the event 

that Citi, with the prior p¢mlissioo of die Doard, saves a..; either a senior 

managing or ~senior managing underv.Titcr on any debt issued by the 

Commonwealth of Puerto Rko or its covered entities as part of such debt 

rcstrocrurin_g. in tllat event, the su~s foe shall he reduced by 80%, of the 

atnount of any compc-ns.1tl(.)n received by Citi from the Commonwealth or any 

cove/I.."<! entity p1.1rsuailt to such n::structuring bond underwriting engagements. 

Tbe Boatd agrees to reimburse Citi, upon request, for a.II our reasonable. documented outof-pocket expenses direit.-tly related to this Agrcc01.cnt, iuch1diog but nol limited to ~muble fa-s 

and cx:pcnscs of a single outside counsel to Citi on a monthly hssis,. upon subrnjssfoo to the Board 

of au invoice or in\'oic<.es. Such re-imburscmcnt of expenses shall be subject to an annual 

aggregate cap ( COlUJ.neoci.og ou the date of this Agreement) of $250,000, subject to modifteatioo 

by mutual ag.remtent of the-parties hereto. 

Conditions 

This /\g.rt:c:mc:nt is not a e()mmM1cnt. cx:prcss or itnpl~ on the part of Ci Li to underwrite 

or purcha...c .any ~urities or to commit any capita~ nor docs it obligate us to enter in.to an 

uoderwriting agceemem, dealer manager agreement or similar commitment. Cili's participation 

in any financing trans:+ctioo wtU be subject to, among other things, (i) satisf.'loto,y completion of 

.all docuroentatioo tor lhe tr.msoclion (including, but not limited to, Otle or mon:: di.!:iClos-urc. 

documenL~ and a dealer n.HU) .. ""l.gcr agreemeol, othe:r docwnenL..; necessary to the consummation of a 

? "'Covc:n::d entities- are those. idcmmcd by the Roa.rd in iis list of"lnitial covered entities subject to o,,ersight uud~ 

the PROMESA Act" ~cd ()ti No,·embt:r l8. 20l6 on the Boar<i>s website {https!l/jur:i1asupe.rvi:siou.pr.go,·/v.~ 

oomel'lth1ploads/wpfdf50l5S:345c7a9bd5a.pdt). 

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Exhibit 1 - Engagement Letter dated Jan. 27 2017 Page 3 of 8
January 27, 2017 

Pagel 

tender or exchange offer); (ii) satisfat:lOry compltlio11. of a customary due dili.geuco review; (iii) 

in 0\1t detec.mination. tbe abscnoc o f any material adverse change in the. financial marktl:i. or in the 

linancial condilion, operations or prospect:S of the issuer. t3king into ~ccount their current 

fmaucial ooodition~ (iv) rccc.ipt of all requiri::d gtwcmme,1t.a1 and olhet approvals and appropriate 

legal opinions, including a lOb-5 disclosure opinion delivered by coonscl acceptable tn the issuer 

and otherwise .in form and substance acceptable. to Citi and its 00(.mSd and (v) approval of our 

intc:mal cn:dit and commitment oo,nrninees. 

Certain Acknowle:dgments 

The Boatd understands that Cjtigroup Global Markt.';fS Inc. and its affiliates (togeO,er, the 

.. Group'") arc engaged in a wide range of linaocial services and businesses (ioc-luding investment 

mariagement, tiuaocillg. securities trading, corporate and investment banking and resean::b). 

Members o f the Group und busineSSeS within the Group generally act independently of each 

other, both for their owu respective. accounts and for the aOCQunts of clic:nLs. According.Jy, there 

may be siruatiQn:;. wht.-rc parLs of the Group a.iidlor their clients e ither now have-o r may in the 

future have U1terests. or rake actions that may conflict with the interests o r tl)e CotllJlloJlweallh 

and its covered entities. For example. the Group may, in tbe ordi.n;uy course of business, engage 

in trading i.o financial producLs or undertake ,,1.her im·es1.ment businesses for jts own account or 

on behalf or other c lient~ including. but oot liroitcd to. trading in Qr hc)lding long. short or 

derivative positions in sccuriti~. loans or other financial produ<:ts of the Commonwealth and its 

covered entities and any O(het entities involved in the mm1ctud.ng: of the Commonwt.-ahh 's debt. 

Subject 1.0 the last seuteuee of this paragraph. neithe r this Agreement, the n:ceipt by the 

Group of confidt.-ntial infonmttion n<>r any t)ther mauer shall give rise to any fiduciary. eq·uitable 

or conttactuaJ duties (in<:h1diog without li.ro.itation any duty of trust or oonfidence) that would 

prevent <)r restricl the Gruup from acling on behalf of other customers or for its own aooount. 

Purthemtote. the Board agrees that oeitb.cr the Group nor any m<..-mher or business or the Group is 

under a duty to disclose to the Board or use on behalf of the Boord any mfonnation wh:usocvcT 

about or derived from those activities or to account for any revenue (>r profits obtained in 

cQOnoction with such sctivitle.-.. However, consistent with tJ1e Group's long-standing polfoy ro 

hold in COf1lide11ce the affairs of its customers and the obligations impo .. 5(:(1 by iLs own policies and 

procedures, the Group will not use confidential infonnation obtained from the Soard except in 

connection with its services to, and its rcJationship with, the Board. 

The B-Oard and Citi acknowledge that all of the services to be performed by Citi undec 

this Agrt..-cmenl are solely for or on behalf of the Board. Neitber the Commonwt."alth nor any o f 

its covered entities shaU be a cUcot or recipient of direct or indirtet advice of Citi \IJtdet this 

Agreement. It is C ili's undmlanding. th.at the Board does uot constitute a .. municipal cotity- or 

«obligated person,.,. as S\li;h tcnns arc defined under the Sc:curitles and Exchange Commission's 

rvfonicipal Advisor Rule {the "MA Rule"). As such, it is Citi's understanding that Citi is oot 

a<:ting as a "municipal advisor'' (as defined in the MA Rule) or fiduciary Lo lhe Board or any other 

party hereunder. The Board a~ lO ootii)' Citi if it becomes aware of a change in its status that 

could result io .it being considered a municipal entity, oblig.atod person or an issuer of mu11icipal 

securities. Furthennore: the Boord agrees that it is solely responsible for making its own 

judgments in connection with any particular transaction that it seeks to undertake or any a1frice it 

wish~ 1.0 convey to the Commonwealth or its covered entities. 

Indemnification 

The Board agrees to indemnjfy and bold bannless the «indemnified panicf' as provided 

in Append ix A attached h<..-n:to, the lerms of which are incorp<>rntcd into d1is Agreement in their 

entirety. 

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Exhibit 1 - Engagement Letter dated Jan. 27 2017 Page 4 of 8
January 27, 2017 

Page4 

·1nis Agreement is governed by the fav.'S of the State of New Yock without regatd. to 

conOicls of Jaw principles and will be binding upon and inure to the benefit of the 'Roa.rd nnd Citi 

ao.d their respective suooessors and assigns. Any suit a¢tion. or proooeding brought in coru1tction 

with Lhi.s Agrec:mc:nl ~hall be brought c:xdusivdy in the Federal Courts <)f the Commonwealth of 

Pueno Rioo. San Juau, Puerto Rioo, and the parties hereby irrevocably oonsent to the exclusi\•e 

juri.sdietion of ::;.uch court in any pn,cccding ari::;.ing out of ()r rclnring to this Agreement and a._~ 

uot to coLwueooe any suit. actfon. or proceeding relatiug, thereto exoept in such oourt, a11d waivt., 

lo the fullest extent pennillc:d by law, Lhe right LO move to dismiss or tnmsfer any s:uil,, action ur 

procccding.5 brought in such court on the basis of any objections as to vcl'.loc or inconvenient 

forum ot on the basis of any o~jection to pets0n.al jurisdiction. 

n,e Boo.rd aod Citi agree to waive trial by jury in any actioo., proceeding or ooumerclaim 

brought by or on bchslf of either party with ~poet to any matter whatsoever relating to or arising 

out of My a,crual or proposed 1.ransactioo or d,e engagement of or perfonnance by Citi of its 

services hcn:undt..'T. 

Tcrmin:ettioo 

This Ag.reemt nt shall be effective as of I.he: date firsL above written and may only ~ 

terminated by a pany hereto with 30 days' notice to the non·tc.rminatiug party, except as noted 

below; pro\•ided lhal if the Commonwcahh tc:nninatc.; this A1:,<reement for any reason other thun 

those set forth in the ocxt paragraph. the Commonwealth shaU pay to Citi. in Ueu of any other 

fccS or ex.pe.1ses otherwise provided und~ this Ag.rt:ement, an amount equaJ Lo 12 monLhs' 

retainer fee (i.e., SJ million) in :)ddition to any a.mounts otbcnvisc. owed ,mder this Agreement 

through the date of su¢h termination. Tbt. provisions of this paragraph and I.he provisions set 

fonh under the captions ··Ccrt.ain Acknowledgments,- .. Indemnification,'" and "Gove rning I.aw,. 

shall survive atty termination of this AyeeanenL 

CiLi,s willful misconduct in fuUilling. and/or its negligem discharge or abandonment of. 

the-duties assigned hereunder shaU constitute a breach of this A_ll,TCcmcnt snd the Board will be 

entiLlcd lo tenninate lhis Agreement forthwith, withooL having to comply wiLh the rtquireU)et1lS of 

notice set forth above, without limitation of any other right-. and rcmcdic.<; under law and will 

release aod discharge the Board from aoy further obligations and liabilitjes hereunder. 

Other 

The Board acktlowledg.es that it is not relying on the advice of Citi fot ,ax, legal or 

aC001.mting msttc-rs. it is seeking and will rely on the advice-of its own professionals and advisors 

for such rlHmers and it will make an iodependent analysis atid decisioo regarding any Jinan<:iug or 

restructuring transs.c.ti<>n ba5Cd upon such advioc. 

Thi.s A~cment shall nol be assignable: without the prior written consent of the other 

party (and any purponed assignment without such oonseut shall be null and void). is intended to 

be soldy for Lhe bc:nc:Jit of the parties hereLu and is not int.ended to oonfcr any h<.."tlcfits upon. or 

create auy rights in favor of. auy person other than the parties hereto. This Ag.reemetlt may not be 

amendc:d or waived except by an in."1rnmc:nl in writing signod by each of the parries hcccto. 'fhis 

Agreement may be e.xecuted ill any number of counterparts, each of which shall be an original, 

and all <1f which, when taken togelhe r, shall cons,ltu!e one agrocment. Oclivcry of sn executed 

sjgoaturc page of this Agreement by facsimile or electronic mail transmjssion shall be eOe<:live as 

delivery of manually executed counterpart hereof. This Agreement is the only Agreement that 

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Exhibit 1 - Engagement Letter dated Jan. 27 2017 Page 5 of 8
J•nuary27, 2017 

Page 5 

hus been cntcrod into among us with respect to the sorvice-s to be pcovided hereondet and set forth 

the entire t1odel'Standing ofche parties wi1.b rtSpect thereto. 

[CONTINUcS UN ,·01,LUWINv l'Avlij 

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Exhibit 1 - Engagement Letter dated Jan. 27 2017 Page 6 of 8
José B. Carrión, III

Chair

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Exhibit 1 - Engagement Letter dated Jan. 27 2017 Page 7 of 8
January 27, 2017 

Page 7 

Appendix A 

lode.inuific-.ation 

1n coDJ1ection with the et1g~~inetl.l of Citi to assist the T3oord a.'i described in the Agreement to 

which this Appendix is stt.,chcd, i.ncluding modifications or future additions to such engagement and 

related activities p,riot to che date of the Agreemer1l (the .. Engagement'"), the l{oord agrees that it will 

indemnify and hold harmless Cili and its affiliates and their rc.spoctivc directors. officers. agents aod 

employees and ca<:h other person controlling Citi or any of its aililiates ( each, an "indemnifo::d party"), to 

the full extern lawful, from and against any losse.<;,, expense.-., d aim$ or liabilities (collcc-tivcly ... losses"') 

which any indemnified 1xu1y OJ3Y incur or become subject to (i) related to or arising out of (A) the 

oo,nents of oral or written information provided by the Board or iL'> <.--mployccs or its other agents. which 

infonn.3,tion either the Board or Citi provide to any actual ot potential buyers, sellers, inve:,.1ors or 

oHerees., or (B) ally other action or failure to act by the Board, it.5 c:mpl<.>yecs or its other agents or by Citi 

or sny indemnified party in accordance-with and at the Board's request ot with the Board's express 

written cou.seot. or (ii) olhet,vise relaled lo or arising out of the Engagement,. except that clauses (i) snd 

(ii) :J-iall not apply with respect U> any losses to the ex.tent such losses are fma.lly judicially determined to 

have. resulted from the gross negHgen,ce ot wilJful m.isconduct of such indemnified party or result fn:1m a 

chUm brought by the Board against an indemnified p3rty for breach of such indemnified patty's 

obligations he.re.under. if the Board bas obtained a final and non-appealable judgment in it,; favor on 5uch 

claim as detc:nnin«l by a court of competent juri.5diction ('"uncovered losses''). 1be Board futtber agrees 

that oo indemnified party shaU have any liabiliry (whether direct or indin:ct,. in oontmc-t or tort or 

otherwise) to the Board or any of the Commonwealth ·s creditors or security holders tOf or in connection 

with the .Engagement ot a.oy acrual ot proposed trailsaction relating to the Agreement involving Citi or 

other conduct in conneclion thm:with e.\:cept for k>sse.'i incurred by the Roard to the extent sucb losses are 

finally judicially dctcnniocd to have resulted from the gross uegligeoce or willful misconduct of such 

indenu1ilicd party; provided. bowcxg, that the foregoing shall in no manner relieve or excuse Citi from 

:my liability ~rising from a.ny breacb by Cjti of the Agreement. 

The .Board ,..,ill also promptly reimburse each inde.ilrnified party for all n?aSonable a11d 

documented expenses (including reawnahle fc,cs and expense$ of outside counsel, which sh.all be limited 

to the fees aud expenses of one couuseJ in each ceJevant jurisdiction) as they are incurred by such 

indemnified party in connection with invcsligating. preparing for, defending, or providing evidence in, 

any pending or threatened claim or prooecdfng, i.D respect ofwbicb indemu.illcation or oo-ntribution may be 

sought hereuoder (whether or not Citi or any indemnified party is a party to such claim or pn:,cccding) or 

in cnforcfog this Appendix. 

'fhe foregoing: provisions are i.n additioo to any rights any indemnified party may have at 

COJllJllOO law or othenvise and shall be binding on and inure to the-. benefit of any successors, assigns. ao.d 

personal reprcsc:-ntativcs of the. Soard ;md C.lch indemnified party. A.l.~Y RIGHT TO TRIAL BY JURY 

WITH RESPECT TO ANY CLAIM OR PROCEEDING ARTSING lfF.RF.(JNDER 1$ Wt,JVU l . 

The provisions of thi.s Appendix shall remain in full force-and effect ootwitbSUUldi.ng (i) any in\•est.ig.ation 

m.lde by or on behalf of Citi or (ii) die cornpletion or termination of the Engagement 

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Exhibit 1 - Engagement Letter dated Jan. 27 2017 Page 8 of 8