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Contract analysis / supplemental-engagement-letter-ofac-vsd.docx
supplemental-engagement-letter-ofac-vsd.docx
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I. Introduction
I. Introduction This supplemental engagement letter (this "Supplemental Letter") is entered into by and between Calderwood & Harkness LLP ("Calderwood & Harkness" or the "Firm") and Dunmore Energy Holdings Ltd. ("Dunmore" or "DEH"), a Cayman Islands exempted company with limited liability (Registration No. MC-334821), and amends and supplements that certain Engagement Letter dated April 14, 2022 (the "Original Engage
II. Background
II. Background The following recitals provide context for the expanded scope of engagement set forth in this Supplemental Letter: A. On April 14, 2022, Dunmore retained Calderwood & Harkness to represent Dunmore in connection with an inquiry by the U.S. Department of Justice ("DOJ") concerning potential violations of U.S. sanctions laws, including programs administered by OFAC, and U.S. export control regulations. Th
III. Expanded Scope of Engagement
III. Expanded Scope of Engagement A. Additional Services In addition to the services described in the Original Engagement Letter, which shall continue without interruption, the Firm shall provide the following additional legal services in connection with the preparation and filing of the OFAC voluntary self-disclosure (collectively, the "OFAC VSD Workstream"):
1. Preparation of VSD Narrative. Calderwood & Harkness will prepare a comprehensive volun
1. Preparation of VSD Narrative. Calderwood & Harkness will prepare a comprehensive voluntary self-disclosure narrative for submission to OFAC's Office of Compliance and Enforcement. The VSD narrative will cover all apparent violations of OFAC-administered sanctions programs identified during the internal investigation. Specifically, the VSD narrative will address: (a) The nine (9) tainted crude oil swap transactions
2. Legal Analysis of Applicable Sanctions Programs. The Firm will prepare a thorough lega
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⚑ Liability cap to check against exposure
2. Legal Analysis of Applicable Sanctions Programs. The Firm will prepare a thorough legal analysis of the OFAC-administered sanctions programs implicated by the identified conduct, including but not limited to Executive Order 14024 (Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation), Directive 2 issued under Executive Order 13662, and the regulations s
3. Penalty Framework Assessment and Mitigating Factors. Calderwood & Harkness will prepar
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3. Penalty Framework Assessment and Mitigating Factors. Calderwood & Harkness will prepare a detailed assessment of the OFAC Economic Sanctions Enforcement Guidelines (31 C.F.R. Part 501, Appendix A) and the applicable civil monetary penalty framework. This assessment will include identification and presentation of mitigating factors applicable to Dunmore's case, including but not limited to the following: (a) The fi
4. Coordination with DOJ. The Firm will coordinate with the DOJ National Security Divisio
4. Coordination with DOJ. The Firm will coordinate with the DOJ National Security Division — specifically, Assistant United States Attorney Meredith Calloway and Trial Attorneys Samuel Kovacs and Diana Pressman — regarding the OFAC filing, to ensure consistency between the DOJ cooperation strategy being pursued under the Original Engagement Letter and the OFAC voluntary self-disclosure. This coordination will include
5. OFAC Follow-Up. Calderwood & Harkness will respond to any follow-up inquiries from OFA
5. OFAC Follow-Up. Calderwood & Harkness will respond to any follow-up inquiries from OFAC in connection with the VSD, including requests for additional information, documentation, or clarification from OFAC Compliance Analyst Erin Matsuda or other OFAC staff assigned to the matter. The Firm will manage all communications with OFAC on behalf of Dunmore, unless otherwise agreed.
6. BIS Voluntary Self-Disclosure Advisory. The Firm will provide strategic advice regardi
6. BIS Voluntary Self-Disclosure Advisory. The Firm will provide strategic advice regarding whether a parallel voluntary self-disclosure to the Bureau of Industry and Security ("BIS"), U.S. Department of Commerce, is advisable in connection with the export control aspects of the matter, including the oilfield equipment exports potentially implicating EAR §746.5 and involving goods classified under Export Control Clas
7. Coordination with Compliance Consultants. Calderwood & Harkness will coordinate with P
7. Coordination with Compliance Consultants. Calderwood & Harkness will coordinate with Pemberton Investors Solutions LLC ("Marlowe Asset Management"), specifically Dr. Anton Bremer, Lead Consultant, regarding the description of remediation measures to be included in the VSD filing. Marlowe Asset Management has been engaged by Dunmore to assist with the design and implementation of enhanced sanctions compliance contr
8. Supplemental Filings. The Firm will prepare and submit any supplemental information, d
8. Supplemental Filings. The Firm will prepare and submit any supplemental information, documentation, or amended filings requested by OFAC following the initial VSD submission, as part of the ongoing review process. This includes responding to OFAC's standard follow-up procedures and any additional requests for information that may arise during the agency's review of the VSD. B. Matters Excluded from Expanded Scope
1. Individual Representation. This Supplemental Letter does not cover the representation
1. Individual Representation. This Supplemental Letter does not cover the representation of any individual officers, directors, employees, or agents of Dunmore or any of its subsidiaries (including DTI) in their personal capacities. As previously discussed and acknowledged, the following former Dunmore personnel have retained separate personal counsel in connection with this matter: (a) Gerald Fisk, former Chief Comp
2. Individual OFAC Enforcement. This Supplemental Letter does not cover representation of
2. Individual OFAC Enforcement. This Supplemental Letter does not cover representation of Dunmore or any individual in connection with any separate enforcement action that OFAC might bring against individual officers, directors, employees, or agents of Dunmore or its subsidiaries based on the conduct described in the VSD or otherwise.
3. BIS Voluntary Self-Disclosure Filing. While the Firm will provide advisory services re
3. BIS Voluntary Self-Disclosure Filing. While the Firm will provide advisory services regarding the advisability of a parallel BIS voluntary self-disclosure (as described in Section III.A.6 above), the actual preparation and filing of any BIS VSD, if ultimately pursued, would be addressed in a further supplemental engagement letter to be negotiated and executed by the parties at that time.
IV. Staffing
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IV. Staffing The following Calderwood & Harkness attorneys and support personnel will be assigned to the OFAC VSD Workstream: Victoria Chambers, Partner, White Collar & Investigations, Washington, D.C., will continue to serve as the lead partner and Responsible Partner for the overall engagement, including the OFAC VSD Workstream. Ms. Chambers will oversee all aspects of the VSD preparation and filing, provide strate
V. Estimated Fees and Budget
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V. Estimated Fees and Budget Fees for the expanded scope of work described in this Supplemental Letter will be billed in accordance with the billing rates and terms set forth in the Original Engagement Letter dated April 14, 2022, as adjusted by the annual rate schedule update effective January 1, 2023 (see Exhibit C hereto). All time expended by attorneys and professional staff on the OFAC VSD Workstream will be rec
VI. Billing and Payment Terms
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⚑ Penalty / liquidated damages
VI. Billing and Payment Terms The billing and payment terms set forth in the Original Engagement Letter remain unchanged and shall apply to all fees and expenses arising in connection with the OFAC VSD Workstream. For convenience of reference, the key billing and payment terms are summarized as follows: • Invoices will be rendered on a monthly billing cycle, reflecting all fees and expenses incurred during the prior
VII. Confidentiality and Privilege
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VII. Confidentiality and Privilege The Firm and Dunmore hereby reaffirm that all communications, work product, memoranda, analyses, draft filings, and advice rendered in connection with the preparation and filing of the OFAC voluntary self-disclosure are protected by the attorney-client privilege and the work product doctrine, to the fullest extent permitted by applicable law. The parties acknowledge and reaffirm the
VIII. Coordination with Other Counsel and Advisors
VIII. Coordination with Other Counsel and Advisors In connection with the OFAC VSD Workstream, the Firm anticipates the need to coordinate with the following outside counsel and advisors:
1. Greystone Capital Partners Fund IV, L.P. Calderwood & Harkness will coordinate with Ha
1. Greystone Capital Partners Fund IV, L.P. Calderwood & Harkness will coordinate with Harwood & Pennington LLP (Arthur Pennington III, engagement partner), counsel for Greystone Capital Partners Fund IV, L.P., under the Common Interest Agreement regarding the OFAC filing and its implications for Greystone as the majority shareholder (holding approximately 62.5% of Dunmore's equity). This coordination will include sh
2. Personal Counsel for Separated Employees. Calderwood & Harkness will not share privile
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2. Personal Counsel for Separated Employees. Calderwood & Harkness will not share privileged or confidential information with personal counsel for separated employees — specifically, Blackthorn & Associates LLP (counsel for Gerald Fisk), Wexford Keane LLP (counsel for Natasha Sorokin), or Overstreet & McClain PLLC (counsel for Derek Hargrave) — absent specific written authorization from Dunmore. If circumstances aris
3. Outside Auditors. Calderwood & Harkness will coordinate with Ashford & Whitmore LLP (K
3. Outside Auditors. Calderwood & Harkness will coordinate with Ashford & Whitmore LLP (Kenneth Ashford, engagement partner), Dunmore's independent outside auditors, to the extent that the OFAC VSD or its outcome has implications for Dunmore's financial reporting, internal controls disclosures, or contingent liability assessments. Such coordination will be conducted in a manner consistent with applicable privilege pr
IX. Client Responsibilities
IX. Client Responsibilities In connection with the OFAC VSD Workstream, Dunmore agrees to the following client responsibilities, which are in addition to and consistent with the client cooperation obligations set forth in the Original Engagement Letter:
1. Full Cooperation. Dunmore will continue to provide full and timely cooperation to the
1. Full Cooperation. Dunmore will continue to provide full and timely cooperation to the Firm in connection with the OFAC VSD Workstream, including making available all relevant documents, records, data, electronic files, and personnel reasonably requested by the Firm. Dunmore acknowledges that the quality and completeness of the VSD filing depends upon the prompt and thorough provision of information by Dunmore.
2. Primary Client Contacts. Dunmore designates the following individuals as the primary c
2. Primary Client Contacts. Dunmore designates the following individuals as the primary client contacts for the OFAC VSD Workstream: (a) Marcus Wellbourne, General Counsel, who will serve as the primary legal contact and will be responsible for coordinating internal approvals and Board-level communications; and (b) Priya Nayar, Chief Compliance Officer (appointed August 1, 2022), who will serve as the primary operati
3. Government Communications. Dunmore will promptly notify Calderwood & Harkness, within
3. Government Communications. Dunmore will promptly notify Calderwood & Harkness, within twenty-four (24) hours of receipt, of any communications received directly from OFAC, the DOJ, the Bureau of Industry and Security, or any other U.S. or foreign government agency relating to the matters covered by this engagement. Dunmore will not respond to any such government communications without first consulting with the Fir
4. Review and Approval of VSD. Dunmore will review and provide comments on drafts of the
4. Review and Approval of VSD. Dunmore will review and provide comments on drafts of the OFAC VSD narrative and cover letter in a timely manner, and will approve the final versions of these documents before their submission to OFAC. Dunmore understands that the VSD narrative will contain factual representations attributed to Dunmore, and Dunmore will be responsible for confirming the accuracy and completeness of all
X. Conflicts
X. Conflicts The Firm's conflict check, originally conducted on April 13, 2022, and periodically updated thereafter in the ordinary course, has been refreshed in connection with the expanded scope of engagement described in this Supplemental Letter. Based on the refreshed conflict check, no new conflicts of interest have been identified. Specifically, the Firm confirms that it does not currently represent, and has no
XI. Termination
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XI. Termination Either party may terminate this Supplemental Letter and the expanded scope of engagement described herein upon written notice to the other party, subject to the terms governing termination set forth in the Original Engagement Letter. Termination of this Supplemental Letter shall not affect the Firm's representation of Dunmore under the Original Engagement Letter (i.e., the DOJ defense engagement), unl
XII. Governing Law and Dispute Resolution
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XII. Governing Law and Dispute Resolution The governing law and dispute resolution provisions set forth in the Original Engagement Letter shall apply to this Supplemental Letter. For ease of reference, the Original Engagement Letter provides that the engagement shall be governed by the laws of the State of New York, without regard to conflict of laws principles, and that any dispute arising out of or relating to the
XIII. Counterparts and Execution
XIII. Counterparts and Execution This Supplemental Letter may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Facsimile and electronic (including PDF) signatures shall be deemed to have the same force and effect as original signatures for all purposes. By signing below, the parties confirm their agreement to the ter
XIV. Enclosures
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XIV. Enclosures The following documents are incorporated by reference into this Supplemental Letter: Exhibit A: Original Engagement Letter dated April 14, 2022, between Calderwood & Harkness LLP and Dunmore Energy Holdings Ltd. (Matter No. 1016-00009) Exhibit B: Memorandum re: Privilege & Work Product Protections — Protocol for Selective Waiver to DOJ & OFAC, dated July 1, 2022 Exhibit C: Current Billing Rate Schedul