Document:

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.

 

    2

     

    

 

		(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.

 

    3

     

    

 

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.

 

    4

     

    

 

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.

 

    5

     

    

 

		(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]

 

    6

     

    

 

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	 

 

    7

     

    

 

EXHIBIT
A

Services

 

		-	Tasks
                                         include:

		o	Assist
                                         with transition of all functions to DGOC

		o	Assist
                                         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

 

NoneExhibit 10.5

 

 

 

PROMISSORY
NOTE

 

	
        Principal

        $1,338,700.00
	
        Loan Date

        05-13-2020
	
        Maturity

        05-13-2022
	
        Loan No

        52472374-01
	Call / Coll 

4A0 / 9A	Account	
        Officer

        11611
	Initials
	References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. 

Any item above containing “***” has been omitted due to text length limitations.

 

	Borrower:	
        Carbon Energy Corporation

        1700 Broadway, Suite 1170

        Denver, CO 80290
	Lender:	
        UMB BANK, n.a.

        SBA Paycheck Protection Program

        1010 Grand Boulevard

        Kansas City, MO 64106

        (816) 860-7000

 

 

 

	Principal Amount: $1,338,700.00	Date of Note: May 13, 2020

 

SBA PROGRAM. Paycheck Protection Program.

 

PROMISE TO PAY. Carbon
Energy Corporation (“Borrower”) promises to pay to UMB BANK, n.a. (“Lender”), or order, in lawful money of
the United States of America, the principal amount of One Million Three Hundred Thirty-eight Thousand Seven Hundred & 00/100
Dollars ($1,338,700.00), together with interest on the unpaid principal balance from May 13, 2020, calculated as described in the
“INTEREST CALCULATION METHOD” paragraph using an interest rate of 1.000% per annum based on a year of 360 days, until
paid in full. The interest rate may change under the terms and conditions of the “INTEREST AFTER DEFAULT” section.

 

PAYMENT. Borrower will
pay this loan in 18 payments of $75,352.17 each payment. Borrower’s first payment is due December 13, 2020, and all subsequent
payments are due on the same day of each month after that. Borrower’s final payment will be due on May 13, 2022, and will be for
all principal and all accrued interest not yet paid. Payments include principal and interest. Unless otherwise agreed or required
by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any late charges;
and then to any unpaid collection costs. Borrower will pay Lender at Lender’s address shown above or at such other place as Lender
may designate in writing. All payments must be made in U.S. dollars and must be received by Lender consistent with any written
payment instructions provided by Lender. If a payment is made consistent with Lender’s payment instructions but received after
5:00 PM Central time, Lender will credit Borrower’s payment on the next business day.

 

LOAN FORGIVENESS. Borrower
may apply to Lender for forgiveness of certain amounts advanced hereunder based upon Borrower’s expenditures during the 8-week
period beginning on the date of the first disbursement of this loan on costs which determined to be forgivable in accordance with
the requirements of the U.S. Small Business Administration Paycheck Protection Program, including the provisions of Section 1106
of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) (P.L. 116-136). Not more than 25% of the amount
forgiven may be for expenditures not constituting payroll costs.

 

Once the forgiveness amount
is determined, Lender will re-amortize monthly payments based on the current balance such that Borrower will make equal monthly
payments of principal and interest in an amount necessary to fully amortize the loan by the maturity date.

 

MAXIMUM INTEREST RATE.
Under no circumstances will the interest rate on this Note exceed the lesser of 18.000% per annum or the maximum rate allowed
by applicable law.

 

INTEREST CALCULATION
METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of
360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.
All interest payable under this Note is computed using this method. This calculation method results in a higher effective interest
rate than the numeric interest rate stated in this Note.

 

PREPAYMENT. Borrower
may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule. Rather, early
payments will reduce the principal balance due and may result in Borrower’s making fewer payments. Borrower agrees not to send
Lender payments marked “paid in full”, “without recourse”, or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further
amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions
or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: UMB Bank, n.a., Attn: Loan Accounting,
PO Box 419226 - MS #1170203 Kansas City, MO 64141-6226.

  

     

    

    

 

	PROMISSORY NOTE
	Loan No: 52472374-01	(Continued)	Page 2

 

LATE CHARGE. If a
payment is more than 29 days late, Borrower will be charged 10.000% of the unpaid portion of the regularly scheduled payment
or $50.00, whichever is less.

 

INTEREST AFTER DEFAULT.
Upon default, including failure to pay upon final maturity, the total sum due under this Note will continue to accrue interest
at the interest rate under this Note.

 

DEFAULT.
Each of the following shall constitute an event of default (“Event of Default”) under this Note:

 

Payment
Default. Borrower fails to make any payment when due under this Note.

 

Other Defaults. Borrower
fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related
documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between
Lender and Borrower.

 

False Statements. Any
warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Note or the related
documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading
at any time thereafter.

 

Insolvency. The dissolution
or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower.

 

Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the
loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event
of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which
is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

 

Events Affecting Guarantor.
Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness
or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of,
or liability under, any guaranty of the indebtedness evidenced by this Note.

 

Change In Ownership. Any change in ownership
of twenty-five percent (25%) or more of the common stock of Borrower.

 

Adverse Change. A
material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of
this Note is impaired.

 

LENDER’S RIGHTS. Upon
default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due,
and then Borrower will pay that amount.

 

ATTORNEYS’ FEES; EXPENSES.
Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount.
This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses whether or not
there is a lawsuit, including attorneys’ fees and expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court costs, in addition
to all other sums provided by law.

 

GOVERNING LAW. This Note
will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of
Missouri without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State of Missouri.

 

CHOICE OF VENUE. If
there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of Jackson County, State
of Missouri.

 

DISHONORED ITEM FEE.
Borrower will pay a fee to Lender of $25.00 if Borrower makes a payment on Borrower’s loan and the check or preauthorized charge
with which Borrower pays is later dishonored.

 

RIGHT OF SETOFF. To
the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower
may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would
be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing
on the debt against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender
to protect Lender’s charge and setoff rights provided in this paragraph.

 

     

    

    

 

	PROMISSORY NOTE
	Loan No: 52472374-01	(Continued)	Page 3

 

COLLATERAL. This loan is unsecured.

 

ADDITIONAL TERMS. Borrower
shall not a) voluntarily transfer any assets into trust or, b) if already owned in trust, shall not voluntarily transfer title
to such trust assets to any other person or entity, without giving Lender at least 30 days prior written notice thereof.

 

SBA PROVISION. When SBA
is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use
state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using
such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note,
Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt
federal law. 

 
JURY WAIVER. BORROWER
HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY AND IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING
OR COUNTERCLAIM OF ANY KIND, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED, ARISING OUT OF, PERTAINING TO OR OTHERWISE
RELATING TO THIS AGREEMENT, THE LOAN, ANY OF THE LOAN DOCUMENTS OR LENDER’S CONDUCT IN RESPECT OF ANY OF THE FOREGOING.

 

SBA PAYCHECK PROTECTION
PROGRAM. In underwriting and processing this SBA Paycheck Protection Program loan from Lender to Borrower, Lender has relied
on the terms of the Interim Final Rule for the Paycheck Protection Program issued on April 2, 2020.

 

SUCCESSOR INTERESTS.
The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors and
assigns, and shall inure to the benefit of Lender and its successors and assigns.

 

GENERAL PROVISIONS. If
any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay or forgo enforcing any
of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses
this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the
terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect
Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice
to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the
party with whom the modification is made. The obligations under this Note are joint and several.

 

ORAL OR UNEXECUTED AGREEMENTS
OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW
SUCH DEBT ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT.
TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH MATTERS
ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
AGREE IN WRITING TO MODIFY IT.

 

PRIOR TO SIGNING
THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE.

 

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY
OF THIS PROMISSORY NOTE. 

 

BORROWER:

 

	CARBON ENERGY CORPORATION	 
	 	 	 
	By:	/s/ Patrick R. McDonald	 
	 	Patrick R. McDonald, CEO of Carbon Energy Corporation	 

 

 

 

 

LaserPro,
Ver. 19.4.10.036 Copr. Finastra USA Corporation 1997, 2020. All Rights Reserved. - MO S:\APPS\hfs\CFI\LPL\D20.FC TR-173792 PR-2657

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