Exhibit 10.4

 

CONSULTING AGREEMENT

 

This Consulting Agreement (“Agreement”) is dated this 26th day of May 2020 (the
“Effective Date”), by and between Carbon Energy Corporation, a Delaware
corporation (“Carbon”), and Mark D. Pierce (“Contractor”). (Carbon and
Contractor may sometimes be referred to in this Agreement individually as a
“Party” or together as the “Parties.”) Contractor is a Agent and Representative
as defined under the Transition Services Agreement with Diversified Gas and Oil.

 

AGREEMENT

 

In consideration of the mutual covenants and conditions contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Carbon and Contractor agree as follows:

 

1. Services. Carbon hereby engages Contractor on a non-exclusive basis to carry
out such services as described in Exhibit “A” attached hereto (the “Services”)
and such other services as may be agreed to in writing by Carbon and Contractor
from time to time, in accordance with the terms and conditions of this
Agreement. In performing the Services, Contractor shall (i) act in a skillful,
diligent, workmanlike, careful, and safe manner; (ii) only use competent
personnel approved in advance by Carbon; and (iii) comply with Carbon’s
applicable policies and procedures as amended from time to time and as provided
to Contractor. The Services to be provided by Contractor to or for the benefit
of Carbon shall be performed and provided by Contractor with diligence and in
accordance with good industry practices and procedures; however, Contractor does
not warrant or guarantee any of the results or products of the Services to be
provided by Contractor.

 

2. Compensation. Carbon shall pay Contractor for performance of the Services in
accordance with Exhibit “B” attached hereto. Contractor shall maintain records
in sufficient detail with regard to the dates, length of time, and Services
provided, together with reasonably detailed records of all expenses and costs
incurred by Contractor in connection with the Services provided.

 

3. Term. The term (“Term”) of this Agreement shall commence on the Effective
Date and shall continue for the period ending three (3) months after the
Effective Date. Thereafter, the Term of this Agreement may be extended on a
monthly by mutual agreement of the Parties, in writing; provided that the
Parties may not mutually agree to extend the Term of this Agreement beyond a
period ending six (6) months after the Effective Date. Either Party may
terminate this Agreement at any time, with or without cause and without payment
or penalty, on not less than thirty (30) days prior written notice of such
termination to the other Party. Notwithstanding the foregoing, this Agreement
shall terminate automatically without payment or penalty in the event of death,
incapacity or permanent disability of Contractor.

 

 

 

 

4. Intellectual Property, Confidentiality, Non-Disclosure, Non-Circumvent and
Non-Solicitation.

 

(a)All intellectual property and all technical information, including but not
limited to all inventions, discoveries, improvements, designs, methods,
developments, “know-how,” ideas, suggestions, trade secrets and processes,
whether patentable or not, which are discovered, disclosed to or otherwise
obtained by Contractor or Contractor’s agents under or in connection with this
Agreement are confidential, proprietary information and shall belong exclusively
to Carbon. Contractor shall assign or transfer, and shall ensure that
Contractor’s personnel assign or transfer, all such proprietary rights in and
ownership of such material to Carbon.

 

(b)Contractor (i) shall keep confidential and shall not disclose to any third
party without Carbon’s prior written consent any information created or acquired
(directly or indirectly) by Contractor in connection with this Agreement
(“Confidential Information”), (ii) shall use commercially reasonable efforts to
safeguard the Confidential Information and to prevent any unauthorized access,
reproduction, disclosure, and/or use of any of the Confidential Information and
(iii) shall notify Carbon immediately upon any unauthorized disclosure of
Confidential Information. Contractor shall return all Confidential Information
to Carbon and destroy any copies or extracts thereof, including that which is
electronically stored, promptly upon Carbon’s request or upon termination of
this Agreement. For purposes hereof, the term “Confidential Information” shall
not include: (x) information which was publicly available or was in Contractor’s
possession from a source other than Carbon prior to the date hereof; (xi)
information which, after Contractor’s receipt of the Confidential Information
becomes publicly available not as a result of disclosure by or on behalf of
Contractor or Contractor’s agents or employees or is acquired by Contractor from
a third party which third party was not under a confidentiality obligation to
Carbon; (xii) information which Carbon informs Contractor in writing is not
Confidential Information; and (xiii) information which is required to be
produced in compliance with applicable law or a court order, provided Carbon is
first given reasonable notice of such law or order and an opportunity to attempt
to preclude or limit such production.

 

(c)The Confidential Information shall not be used for purposes of circumventing
Carbon in connection with its business activities, past, present or future
business plans, strategic development, operations and current or potential
co-participants. Contractor shall not, directly or indirectly, utilize, exploit,
or otherwise profit from the Confidential Information.

 

(d)During the Term of this Agreement and for a period of one (1) year
thereafter, Contractor will not, directly or indirectly, hire or attempt to hire
any consultant or employee of Carbon (including for this purpose any person who
was a consultant or employee of Carbon within twelve (12) months prior to such
hiring or attempted hiring), assist in such hiring by any other person or
entity, or encourage any such consultant or employee to terminate his or her
relationship with Carbon.

 

(e)The covenants contained in this Section 4 shall be construed as independent
of the existence of any claim or cause of action by Contractor against Carbon,
whether predicated on this Agreement or otherwise, and shall not constitute a
defense to the enforcement by Carbon of such covenants.

 

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(f)The Parties agree that Carbon would be irreparably injured by a breach of the
provisions of this Section 4 and that Carbon shall be entitled to equitable
relief, including injunctive relief and specific performance, in the event of
any breach of the provisions of this Section. Such remedies shall not be deemed
to be the exclusive remedies for a breach of this Section, but shall be in
addition to all other remedies available at law or in equity. Carbon shall be
entitled to recover the costs, expenses, and fees incurred in any such
proceeding brought to enforce this Section, including without limitation,
attorneys’ fees and expenses.

 

(g)Under the federal Defend Trade Secrets Act of 2016, Contractor shall not be
held criminally or civilly liable under any federal or state trade secret law
for the disclosure of a trade secret that: (a) is made (i) in confidence to a
federal, state, or local government official, either directly or indirectly, or
to an attorney; and (ii) solely for the purpose of reporting or investigating a
suspected violation of law; or (b) is made to Contractor’s attorney in relation
to a lawsuit for retaliation against Contractor for reporting a suspected
violation of law; or (c) is made in a complaint or other document filed in a
lawsuit or other proceeding, if such filing is made under seal.

 

(h)The terms of this Section 4 shall survive the termination of this Agreement.

 

5. Special Conditions. The additional provisions, if any, set forth in Exhibit C
(“Special Conditions”) are incorporated herein by reference.

 

6. Conflicts of Interest. During the Term of this Agreement, Contractor may
provide services to other parties, except that (i) Contractor will use his or
her best efforts to give first priority to Carbon; and (ii) Contractor agrees
not to provide services of a like nature to the Services to any other person or
entity in those instances where there is, or there is a likelihood of the
development of, a conflict of interest, without the prior written consent of
Carbon. Because Contractor will have access to confidential, nonpublic
information in connection with this Agreement, Contractor further agrees that,
during the Term of this Agreement, Contractor will not be interested, directly
or indirectly, in any form or manner, as partner, officer, director, employee,
advisor, stockholder or trustee of any entity or person that is a client of
Carbon. Contractor has not entered into, nor will Contractor enter into, any
agreement, oral or written, which conflicts with this Agreement, and each Party
hereby consents to the notification of third parties, as Carbon may in good
faith deem necessary, of the existence of this Agreement.

 

7. Independent Contractor. In the performance of the Services, Contractor shall
conclusively be deemed an independent contractor, with the authority and right
to direct and control all of the details of the Services, Carbon being
interested only in the results obtained. However, all work shall meet the
standards required under this Agreement and shall be subject to the general
right of inspection by Carbon. Carbon shall have no right or authority to
supervise or give instructions to Contractor’s agents or representatives, and
such agents or representatives shall at all times be under the direct and sole
supervision and control of Contractor. Any suggestions or directions which may
be given by Carbon or its employees shall be given only to Contractor or to the
other person in charge of Contractor’s employees, agents or representatives. It
is the understanding and intention of the Parties hereto that no relationship of
master and servant or principal and agent shall exist between Carbon and
Contractor and any agents or representatives of Contractor. Neither Contractor
nor any agents or representatives of Contractor is or shall be an agent of
Carbon nor shall any such person be entitled to bind Carbon contractually or
otherwise. Contractor shall provide Contractor’s own employees, implements and
materials, as applicable, at Contractor’s own costs.

 

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8. Taxes. Contractor understands that, as an independent contractor, Contractor
is solely responsible for payment of federal, state, and local taxes that may
arise from the compensation provided for hereunder and that Carbon shall not
withhold any taxes from such compensation, nor remit such amounts to any
governmental authorities on behalf of Contractor. Further, Carbon shall not make
any payments as an employer to any federal, state or local government or other
governmental taxing authority on behalf of Contractor for purposes of
unemployment compensation. Contractor hereby knowingly and voluntarily waives
any right to claim any coverage and/or benefits under Carbon’s workers’
compensation insurance policy.

 

9. Failure to Enforce. Failure by Carbon, at any time, or from time to time, to
enforce or to require strict observance of any of the terms, conditions or
provisions of this Agreement shall not constitute a waiver of, nor limit or
impair, such terms, conditions or provisions. In addition, any such failure
shall not affect the right of Carbon to avail itself at any time of such
remedies as it may have for any default hereunder by Contractor.

 

10. Assignment. This Agreement is not assignable by Contractor. This Agreement
shall be assignable by Carbon and shall be binding upon and inure to the benefit
of Carbon and its successors and assigns.

 

11. Entire Agreement / Amendments. This Agreement and any exhibits hereto
comprise the whole agreement between the Parties and supersede all prior
agreements, understandings or representations, either written or oral, between
the Parties in respect of the Services. No modification of or amendment to this
Agreement will be effective unless in writing and signed by both Carbon and
Contractor.

 

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12. Notices: All notices or other communications required or permitted to be
given under this Agreement shall be given by electronic transmission (E-mail or
facsimile), by personal delivery or courier or by prepaid mail addressed as
follows:

 

If to Carbon: If to Contractor: Carbon Energy Corporation Mark D. Pierce 1700
Broadway, Suite 1170 323 Helms Deep Denver, CO 80290 Versailles, KY 40383
Attention:  Erich Kirsch   Phone: (720) 407-7055 Phone: (606) 922-3918 E-mail:
ekirsch@carbonenergycorp.com E-mail:_________________________

 

All Notices shall be effective and shall be deemed delivered: (a) if by personal
delivery, on the date of delivery if delivered during normal business hours, or
if not so delivered, on the next business day following delivery, and (b) if by
electronic communication, on the next business day following receipt of the
electronic communication. Parties may at any time change their address for
future notices hereunder by notice in accordance with this Section.

 

13. Dispute Resolution—Mediation/Arbitration. In the event that there is any
dispute arising out of or in any way related to this Agreement, the Parties
agree to mediate such dispute with the Judicial Arbiter Group in Denver,
Colorado. In the event the Parties are unable to fully resolve their disputes by
mediation, the Parties agree to submit any such disputes to binding arbitration
before a single arbitrator with the Judicial Arbiter Group in Denver, Colorado,
which shall conduct such arbitration to the fullest extent possible under the
rules (but not the auspices) of the American Arbitration Association then in
effect. The Arbitrator shall not have any authority to award consequential,
exemplary or punitive damages. Unless the mediator or arbitrator determines
otherwise, each Party shall pay one-half of the compensation and expenses of the
mediation/arbitrator and bear and pay their own costs and expenses, including
reasonable attorneys’ fees.

 

14. Miscellaneous.

 

(a)The Parties have consulted with their own legal, tax, financial, and
accounting advisors with respect to the subject matter of this Agreement to the
extent they have deemed necessary.

 

(b)The individual provisions of this Agreement are severable. Any provision
found to be invalid or unenforceable shall not affect the remaining terms and
provisions. With respect to any such unenforceable provision, an enforceable
provision, which most closely meets the intent of the Parties, will be deemed to
be substituted.

 

(c)The headings in this Agreement are solely for convenience of reference and
shall be given no effect in the construction or interpretation of this
Agreement.

 

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(d)This Agreement shall be governed and construed according to the laws of the
State of Colorado, United States of America, without giving effect to any choice
or conflict of law provision, and shall be subject to the exclusive jurisdiction
of the courts of such State.

 

(e)This Agreement may be executed in counterparts, each of which shall be deemed
an original instrument, but which together shall constitute but one and the same
instrument. Any counterpart may be delivered by facsimile, e-mail or other
electronic media.

 

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF, the Parties have executed this AGREEMENT as of the date
first written above.

 

CARBON ENERGY CORPORATION   a Delaware corporation       By: /s/ Erich Kirsch  
Erich Kirsch,   Senior Vice President Finance & Accounting       CONTRACTOR:  
Mark D. Pierce         By: /s/ Mark D. Pierce   Mark D. Pierce  

 

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EXHIBIT A

Services

 

-Tasks include:

oAssist with transition of all functions to DGOC

oAssist on other projects at Carbon’s request

 

 

 

 

EXHIBIT B

Payment Provisions

 

1. Remuneration. Contractor shall devote that amount of time to the Services
which Carbon, in its judgment exercised in good faith, deems necessary and
required. In consideration therefore, Carbon agrees to pay Contractor according
to fee schedule below, Contractor will provide the Services with a minimum of 40
hours per week. Contractor will provide a monthly time sheet showing the hours
of service for the preceding month.

 

May 26-June 25  $25,000   Payment Due 7/10/20 June 26-July 25  $25,000   Payment
Due 8/10/20 July 26-August 25  $25,000   Payment Due 9/10/20

 

2. Reimbursement of Expenses. Carbon will reimburse Contractor for reasonable
direct expenses, including parking, travel and lodging, incurred in the course
of providing the Services, provided that Contractor obtains prior authorization
from Carbon or its designee for any such expenses which exceed $100.00 per month
in total.

 

3. Payment terms. Carbon agrees to pay Contractor according to fee schedule.

 

 

 

 

EXHIBIT C

Special Conditions

 

None