EXHIBIT 1 

Engagement Letter

Case:17-03283-LTS Doc#:2944-1 Filed:04/23/18 Entered:04/23/18 10:33:50 Desc:

Exhibit 1 Page 1 of 8
Financ-i:tl Oversight and Managc:mc:nt Board 

for Puerto Rico 

fly Email Transmittal 

Aneotioo: Jc>se B. Ca.rri6n~ Chajr 

Deal' Sirs: 

Oveniew 

January 27, 2017 

Citigroup ob~l Markets Inc. is pleased lQ acc(.-pt our a.p}l()intmc:nt by the: Finunc.i-al 

(}.·might and Management Board for Puerto Rico (the "Board"). established under the Puetto 

Rico Oversight. Manage-men~ and Economic Stability Act, 48 U.S.C. Chapter 20 ('"PROMF ... ~A "'), 

to sen-e as iovestment banker and financ:iaJ advisor to the Board iu coJlJlectiou with the Board's 

statutO')' dut-ies under PROMESA and its task of working with lhe pcoplt: and governme-nt of 

Puerto Rico (the "'Comruon,vea1th") to create tbe Ueoe5S3J)' founda tio.o for economic grov.-1h and 

to reston:: uppOrtunity to lhe J)d>ple of Puerto Rioo. Citi welcomes the <>ppc.>rtunity to bring our 

expet1ise in municipal ftnaUoc, capital m8-rkcts.. rcsm»CtUring (boch in and out of court) snd 

fras.t uct~ and utility finance to bear in assisting the Board in seekiog to pnwide the 

Commonwealth with tbe necessary tools to rtstn.Jcturc its de-bt, access the ~ph;s l markets and ge-t 

back on a path to economic recovery. The lenns and oonditions of Citi's appointrnent are set 

forth in this letter agrce.meut (thls .. Agreement"'). 

As used herein ... Citi" shall mean Citigroup (jlol:>sl Markets Inc. and its succ~sors and 

penn iued assigns. 

In connectit)n with this engagement, Ciri will otter the services set forth beJow: 

I. E\·aluate the CommonweaJth~s current fiscal siruation. and interface with the Hoard 

and its otbcr of~s onal adviSQrs in connection therewith; 

2. Review mel (.':Valuate the Commonwealth's capital Slructu.re-. and advise t.he Board 011 

possible restructuring strategies (including developing fmaocing: and debt issuance 

models and aftcnu.tivcs) and in negotiating with the Commonwcahh atld the 

Conunonweall.h 's creditocs: 

3. Advise the Board 011 the Commonwealth's ability to access the capital tn<l.rkets. 

inc-luding providing advice on market strategy; 

4. d~rtake discussions on bdlalf of the Board with r<lling agtr1cie~ cn:ditors, and 

other tbicd panies as r¢qoested by tbc: Board: 

5. Perform sucb other iu\'estment b..'\Jlkin_g and fwanciaJ advisory ser\'ioes as the Board 

may rea.••onahly equc:~"l in connection with this engagement., including providing 

testimony in connection with the seiVices provided uuder this Agreement. 

1 The tenn "'('..ommonwealth" s.~ w;ed in this $ection sh:tll indude-its "'covered entitie$., (s.s defined below). 

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Exhibit 1 Page 2 of 8
Janu;vy27. 2017 

Page2 

The fce<oo Ciri und<nhis _.,...., sball U.Ciud< lloe followmg: 

(i) • fixed moolbJy reoaioer of $250.000. poyabk -ly in anears (upoo lloe 

submission of monthly in''OiOC$) comrncocins on the dale of this Agreement 

(such reoaU.Cr to be pro rated fo.- any portia! monlh). plus 

(ii) a wcccss fcc equal to0.0333% of (be paramount ufany bonds(A) issued by the 

Commonwealth or any of iLo; agencies., authorities. pul>lie corporations or 

instrumentalirics (''covered cntitics-.2) as part of a PROMESA related 

rc.nrucruring., for the avoidaflce of doubt, cxc:hKifng any bonds issued i.u 

connection with sny bonds rcs:tn.tcturcd tulder dause B below, ur (B) Tl:!5truc.tu.rcd 

as patt of a PROMESA related re.~truclurin; (cttlcul:ncd by multiplying 0.000333 

times the. restructured bond par amount). in each ease. without duplication, and 

subject in aU cases to an aggn::gatc cCCOis fee cap ofS I 0 million. A success tee 

shall be due and payable upon each successful closins; of all or a portion of a debt 

~rn!Ctu iog of the existing debe: of lhe Common~alth and ito\ covered entities. ~ht:tber accomplished pursuant to Tide ll ~ fide: Vl ofPROMESAor 

odlc:rwisc. and whether completed in a singJe ttan.saction or multiple tmnsactioos. 

ben in all cases subj«t 10 lloe ~ '"""'"' fee eap refereoc:ed above. 

The suc:cess fee payable by lloe Boord shall be subject"' reductioo in tbe """" 

!hat Ciri, with lbc prior p«mis.sioo oflbc Boord.,.....,. u eithc< a senior 

maoa&int or co.,...io< ~ undcrwrittr on any deb< issued by tbe 

Common·woeahh of Puerto Rico or its co~~otftd enlil ~ as part of such debt 

rcsnuc:turing. lA lhat e-eot.lloe ,...,....,. fcc >hall be reduced by 8(J'~oftbe 

amount of any compensation n::c:civcd by Citi fi'om tbe Commonwealth or any 

covered eotity pursuant to such rclobvcturifl$ bond underwriting engagements. 

'l'hc Bo.'td a~ to reimburse t~ upon request, for 4111 our reasonable. documented ootor .. pockct e.\.pt:tiSC:S directly related to this Agreement. iucludina bul not limited 10 ~asonuble fc:t.-:s 

und expenses of a single outside counsel to Citi on a monthly bu.11i~ upon submission to tbe Board 

or an invoice or invoic(.-s. Such reimbursement of cxpe.ues shall be subj~t to an annual 

oggregutc c.1p (co•nmenci.og on tbe date of this Ag~ment) ()( S2SO.OOO, subject to modifteatioo 

by mutual ngrtement of the parties hereto. 

ConditioGJI 

Thb ~cnt is not a commitment. CXprt::S$ or implied. on Ilk part of Citi to underwrite 

ur pu:rd\a,_...: my ~ « to COClalit any capital nor docs: it obi~ !;IS to enter into an 

undcfwririn& qreoment. cleakr """"'!~"' agn:cmcn1 or sunilar comm.,_t. Citi's p:utjcipolioo 

in any financ:in.g ""nsocrioo will be subj«t TO . ..-.g Olhc< thinp. (i) sorisfattocy 0001ple<ioo of 

all documentation for the transaction (including.. bu1 oot Um.ited to, one or more disclosure 

documCTitJ and a b&er man•ge:r ag,reeme.nL other documents ncc:cssuy to the consummatioo of a 

' "'CO'Yered crttil.in"' ~those identified by the Roltrd in ilS tl>t of'"lDJdal covered emit~ subject tO o,•e:rsi,ght ~ 

the PROMESA Acr'" po!F>ttd (N'l No,•M1btr l8. 2016 on lbc BOII'd's wttKitc: (hnl"$:1/ji.JnUlSUIXf'Vision pr.gov/Y.~ 

coottntA1pload:Wwprd/50158345e7119bd5a.pdf). 

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Exhibit 1 Page 3 of 8
)lblU:lt)' 21,2011 

Pasc3 

b:l'ldc:r or cxchttn:oc,r offer); (ii) sati:sfac101y cucnpleliol• or 1 c~omat) due di.ligeoce revic'"'-: (iii) 

in OUt deluminatioo. 1be Jbsencc of any material ad" ~ change in thC' financial matids or io lhe 

financial condition, operations or prospec:c.s of tbe issuc:t. ta.kin& info account thci:r cum:nt 

filwloial coodition; (iv) receipt of all rcquin:d gu>""""""lal and---.Is and -"'re 

1oga1 op;n;.,.,., including a I<JI>.S disclosure opinioo delivcrcd by-· ~le 1n lhe ;.,.,.,. 

and """"''lse in fonn and subsnmcc acocplal>le 1D Citi ond ;,. oounscl and (v) awrovaJ of our 

inlcmal ~it and commitmc:nl committees. 

The Board uoderstands that Citigroup Global Matkc:t.~ Inc. and its alliliutes (logc:tht:r, the 

"'Oroup") are engaged in a wide range of 1ii'Wldal services and businesses (including investment 

management,. till&lCiJlg, securities tradi.ng. corporntc and investment bunking and rese~b). 

Members o r the: GTQup and bu..iinesses within the Group generally act independently of each 

other. both tOr their owu respective. accounts and for the iiOI:Ounts or c::licnL'i. Accordingly, there 

may be si1u11ions where part-. of the Group a.ndlor their clients eitMr now have or may in the 

1Utu.re b3vc interests. or t#ke :M:tions tbat may oonfli(:l with the nt~ s of the Commonwealth 

and its cov~rcd c:nlities. For e.'t3tl:lple. the Group may. in the ordinary course ofhus:incss, engage 

in trading In f'inanci~l pruducto; or undata.ke olher inve~Lmenl businesses for its own a.rxounf or 

on behalf of (l(her dients. includio~ but not lirnin:d to. crading in or holding long, short or 

deriv1rkrc potcirionS in $CC'uritics, loans or ocher fmanciaJ products o(the Cool.m.OO'\\u.ttb. and its 

CO\ ~ cntitio llJ'ld any omer entities in\"Otved .in tbc rt:SO'UCNrin.a of the Commonwealth's debt. 

Subj<ct to !be last senten<e of 1IUs ~ nc:nhcr thi• A~~ lhe r=ipt by !be 

Group of conrldential information nor any othter matter shall ci\ t rise to any ftduciary. equitable 

or con1niC!Ual duties (includillg witboot llinitorlon ony duty of tru<1 or conf"""""') that would 

p&"C\'cnt or restrict the Group from acting oo behalf of ochtr customers ot for its 0"-'n account. 

F urlhtrl'nOte. the Board agrees tbat oci:thcr tbc Group nor any member or business of lhe Group is 

under a duty tO di~lose to the Board or use on behalf of cbe Board any infonna.-jon whatS(IC\o·cr 

about or dtrived from those activities Of to account for any revenue or profits obtained in 

connection wi1h sueh activities. However. cons-istent with tlle Group's long-staoding policy to 

hukl in eotllidenee the affairs of its C\Jstomcrs and tbc obligstions impostd by ito; own policies aod 

proced re~, the Group will not use confidential ioJOnnation obtained from the Soard except in 

connection witJ1 its setvjces to, and its relationship with, lho Ro1u·d. 

The Bo."'rd and Citi (\eknowlodgc that all o f the serv ce:~ to bo pe:rfOnned by Citi tlndec 

thi1 Agrecmenl nrc solely for or on behalf of the Board. Nchher chc Commonw<.-ahh nor any of 

its covtred entities shaU be a elienf or recipient of direct or indirect advice of Citi UJlder this 

Agreement. ll is Citi's undersLanding that the Board docs 0(1( consdrutc a. '"municipal entity"" oor 

.. obliiated pt:rsotl .. as suc:b. terms 3:rc defined under the: Securities and Exchange Commission's 

Municipal Advisor Rule (Lhe ""MA Rule'"). As sucb.. il is Ciri's undemanding. thai Citi is noc 

aclina as a "municipal advisor' (as defined in lhe MA Rule) 0< foduc:iary 1D the lloanl « ""Y 04he.. 

I""'>' hc!'Cundcr. The Boord~ to ootif) Citi if~ b«:oolts l'l'"a<e of a dwlge inns"""" tlw 

coutd result in it being considcnxl a municipal entity. oblipled ~ or an issutt of municipal 

.....ntic>, Fwthennore. !be Boord ~ t1w ~ is sokly mponsibk f« malting ds O"n 

judgmc:n3 in connec:rion with any particular trwnsK:ticm \hal it :sc:cb to unc:krtake or any ad\ iee it 

~ to con"f!Y 10 the Commonv.ealtb or its covered eotities. 

lndcmniraotion 

n"' Board agrees to indemnjfy and hold barmlcs5 tbc .. indemnified panics" as provided 

in Appendix A attached hereto, the tenns of which an:: incorponi'tcd into this Agreement in tbe.it 

entitety. 

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Exhibit 1 Page 4 of 8
Janual)' 27,2017 

Page4 

'Jbis Agreement is governed by the Jav.'S of the State of New Yori< without 1"egatd. to 

..::onOicls o f law principles and will be bind ing upon and inure to the benefit o f the 'Roard nnd Citi 

ao.d tbeir respective successors and assig.ns. Any suit action. 01' proceeding brought in coruttction 

with Lhi.s Agrec:mc:nt ll be bruughl c:xdusivc:-.ly in the Federal Courts <,1f the Commonwealth of 

!>uetto Rico. San Juau, Puerto Rico, and the parties hereby irrevocably consent to the exclusi\•e 

j urisdiction of ::;.uch court in any pn)Cccding arising out of o r relating to this Agreement ;tnd a__~ 

uot to coLwueuoe any suit. action. or proceeding relatiug, thereto e.xoept in such oourt, and waiv-e, 

lu the ll~st extent pennillc:d by law, the right to move to dismiss or tnmsfer any s:ui~ action ur 

roc eding.~ brought in such court on the basis of any objections as to vc~:~oc o r inconvenient 

forum ot on the basis of any o~ ec ion to petsOnal jurisdiction. 

TI•e Board aod Citi agree to waive trial by jury in any aetioa, proceeding, or ooumerclaim 

brought by or on bchslf of either party with respect to any matter whatsoever relating to or 3rising 

out of My a.crual or proposed IJ'atlsactioo or dle engagement of or perfonnance by Citi of its 

services: hcn:undt..'T. 

Termin:ettioo 

This Ag.reernt nt shall ~ effective as of the: date first above written and may only k 

terminated by a pany bcrcto with 30 days' notice to t:be non·fcnninatiug party, except as noted 

below; pro\•ided that if the Commonwc:-<~.hh taminatc.; this Af:,'T«ment for any reason other thun 

those set forth in the ocxt paragropb. the Commonwealth shaU pay to Citi. in ljeu of any other 

fees or expenses otht:rwise provided undeT this Ag.rt:ement, an amount equaJ to 12 months' 

retainer fcc (i.e., S3 million) in :)ddition to :my amounts otherwise. owed 'mder this Agreement 

through the date of such termination. The. provisions of this paragraph and lhe provisions set 

fonh under the captions "Certain Acknowledgments,- .. Indemnification,'" and "Governing Law,. 

shall survive atly termination of this ~nenL 

Citi,s willful misconduct in fuUilling. and/or its negligent disc.harge or abandonment of. 

tho dutie-s assigned bcrcundcr sbaU constitute a breach of this A_ll,TCcmcnt snd the Board will be 

entitled to tenninate this Agreement forthwith, without having to comply with the rtquirtU)etllS of 

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

release aod discharge the Board from any futthec obligations and liabilities hereunder. 

Other 

The Board acktlowledg.es that it is not relying Oil the advi<:e of Citi for lax, legal or 

3COOI.Jnting mattc-rs. it is seeking and will rely on the advice. of its own prQfcssionals and advisors 

for such rnauers and it will make an irklependent analysis at!d decisioo regarding any Jinan<:iug or 

restructuring transac-tion ba5Cd upon such advioc. 

This A~ement shall nul be a...;;signablc: without the prior written consent of the other 

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

bt: soldy fur the bc:nc:Jit of the parties hereto and is not int.endOO to oonfcr any h<.-"tlcfits upon, or 

cre.ne any rights in favor of. any person other than the parties hereto. This Agreemetlt may not be 

amen<kd or waived except by an in.'W"umcnt in writing signod by each of the parties hcccto. 'fhis 

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

and all <If which, when taken togelher, shall con,.,ltu!e one agrocment. Oclivcry of sn executed 

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

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

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Exhibit 1 Page 5 of 8
Januaoyl7,l017 

Pas• s 

ha5 bc;,.en cntcn:d fnto among US \lloizh n:spttf to dJc $C'n'i«S 10 be ptOVidod hereunder aad set forth 

tbe eo~ uodtt1Wlding or me parties wilh rtSpe<:l thett&O. 

[CONTINUeS UN WvWWINO I'AUJ::j 

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Exhibit 1 Page 6 of 8
José B. Carrión, III

Chair

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Exhibit 1 Page 7 of 8
ltl.tluat)' 27,2017 

raae7 

App<ndh.A 

la connection with the eng.a.:,~eo1 of Cili to ~i:o.t the Board u described in the Agrccmcnc to 

which this Appendix is attached. incl\)(iiog roodiftcatioos or furure additM>ns to such engagement and 

related activhlcs prior to tbe date of r.he Agreen1ertl (the "'l!ngaq;ement'"). the fkwd agrees that it will 

indemnify and hold hannles..'> Citi and its affiliates and 1hcir respective di.rc:ctors. oft1cers.. agems and 

employees and each ocher person controlling Clti or any or its aililiates (each, an "indemnified party .. ), lo 

lhe run extent lawrul. from and against any &osses, expcnl'e~ clllims or liabilities (collectively. ·· os~'") 

which :my indemnified .ny may incur or become subject to (l) rtltued to or arisins out of (A) the 

contenLS of oral or written information provided by the Board or its employees or its other agents. which 

infomunlon ehhcr the Bo.1rd or em provide to ;my actual or poterujal buyers, sellers, invelo'tors or 

onerees.. or (D) any other action or failure lO act by the Board. it.'l employees or its other agents or by Cht 

or- any indemnified party in :tecordancc with and at the Soard's rcqueu ot with the Board's t;<press 

wrineo consent. or (ii) olbetwise rel:ated to or arisin~ out or the Cnga~oem~nt. except that clauses (i) and 

(ii) :.hall nut apply with ~ to any losses to the extent such los.1es arc ftnaJJy judicially detetm.ioed to 

have rt"SUtted ftom the gross ~~e ot willful misc::ood'uc:l or such indemnified party or result from a 

c~m ~~ by the llnard ag>tin.<t an indcmn;ficd pony for b<uc:h of sucb indemnified patty's 

obliptklos bc:rau'der. if tbe Board bas obtaioed a ftQ&) and ~JabJ~ judgment in its fa,-or on such 

elaim .. clcknn;ncd by a court of compctc:nt juris<Ucrion (..,_vercd looses"). 1be Bootd furtbet _. 

that no indcmnif10d pany sba1l bave any liabilit)' (~hethc:r direct or indin:ct, in contraa or tQn or 

othcfwi)C) lU the Boxnl or any of the Commonwealth·' cn:d 1101'S or securiry boldets for or in coo.oectioo 

with the J::.n&a.ccmem or aay acrual or proposed ttaft5aClion relating 10 the Agrc:cmcnt invotving Citi or 

other conduet in connection ~herewith except for lo:s.o;cs inc:um:d by the Roard ro me cxn:rn such iosscs are 

finally judicially dtcennincd to have rcsuhed from tbc eross nea,l.ismoe or willful misooodua of such 

indc:mnifted party; providal, bows;:m. that the foregoins, shall in no manner relieve or excuse Citi fTom 

any li~tbility 1rising from MY bre#b by Citi oftbe ~mtol. 

The: t),oard wiU also promptly reimburse each indemnified party for all reasonable and 

dl>\:umentcd cxpen:ies (including n:awnablc. foes and expenses of out~~ ide counsel. whic.h shall be limited 

to tho fees and expenses of one counsel in each relevant jt.~risd io } as they are incu~ by such 

indemnified party in connection with invc:stigating. preparing (or, dcrcnding. or providing evidence in. 

any pcndin,g or th!'«ltcncd claim or proc:::eeding i.o respect ofwbich indemnification or ooutributjon may be 

soua,ht hereunder (whether or not Cili or any indemnified (Nltty is a purty kl such claim o r proceeding) m 

in c:nfon:ing this Appendix. 

I he: forcgolng provisions are in additioo to any ri&hts any i~mnir~ party may have: It 

corrunon law or Olhtrw~ and shall be binding on and inUR 10 the benefit of any successors., assigns.. a.od 

p:nonal ....,._.,..,;,..,.of the ll<>ud and each indemnified pony. ASY R!GIIT TO TRIAL BY JURY 

WITH RESPECT TO A.I\"Y CLAIM OR PROCU:DIXC ARISING RF.Rf.IIN"OER IS WAJV~D. 

The prov~ions of this Appendix shall remain in full fon:c and dfccc oocwdhslandin& (i) any investigation 

macle by or on behalf ofCiti or(ii) the <X>mpletioo or tennm.bon or the F.n_...,..L 

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Exhibit 1 Page 8 of 8