Exhibit 10.6


 


VENDOR AGREEMENT


 


This
Vendor Agreement (the "Agreement")
is made effective as of the 28 day of October,
2013 ("Effective Date"), by and between Baker Hughes Oilfield Operations, Inc.,
a California corporation, with a place
of business at 9110 Grogans Mill Road, The
Woodlands, Texas 77380 ("Baker Hughes")
and Superior Drilling
Products, LLC, a Utah corporation, with its principal
place of business at 1583 South
1700 East, Vernal,
Utah 84078
(''Superior'1


 


WITNESSETH:


 


WHEREAS,
Superior has certain expertise in the manufacture, repair and reconditioning of earth boring drill bits, core
bits, hybrid drill bits that include at least one
roller cone and at least one blade, eccentric or bicenter bits,
or any combination of the foregoing ("Tools”) that employ polycrystalline diamond
compact (PDC) cutters for the oil, gas, water and geothermal drilling industries ("Work");


 


WHEREAS, Superior
desires to perform the Work for Baker Hughes and Baker Hughes desires to have
Superior perform the Work;


 


NOW, THEREFORE,
the Parties hereby agree to the following
terms and conditions governing the Work hereunder


 


1.             Baker
Hughes Purchases from Superior


 


1.1           Baker
Hughes shall provide Superior a right
of first refusal to perform
all repair and reconditioning of Baker Hughes Tools commercialized
within its Western United States Geo-Market, which may change from time to time, excluding Baker Hughes
Tools commercialized in Texas and Oklahoma. If Superior
is unable or unwilling
to perform said repair
and reconditioning efforts for any reason, Baker Hughes shall
have the right to obtain
repair and reconditioning of its Tools that are commercialized
within its Western United States Geo-Market from a third
party.


 


1.2.          The
standard hours of work shall be in accordance with the standard hour schedule posted in SAP.
Baker Hughes shall bear all freight charges for shipping the bits to and from
the Superior Facility where the Work is performed.


 


1.3           Superior
shall not be responsible for invoicing customers of Baker Hughes for
any Work performed hereunder.


 


1.4           Terms
of payment to Superior for the Work shall be net thirty (60) days from receipt of invoice.


 


1.5           Superior
shall provide to Baker Hughes a weekly report describing the extent of the repair
activity. Contents of the report will be as defined by Baker Hughes.


 


2.             Term
and Termination


 


2.1           The
Term of this Agreement shall be for four (4) years from
the Effective Date hereof ("Initial Term").
During the Initial Term or
subsequent annual renewals, this Agreement can be terminated by either party with a one (1) year notice in writing prior to such
termination date.


 


2.2           Notwithstanding
any other provision in this Agreement, during the Initial Term of
this Agreement and during the term
of any subsequent renewal thereof,
should the quality of the Work provided by Superior fall below the quality
of Baker Hughes' standards, as reasonably determined by Baker Hughes,
Baker Hughes shall
advise Superior in writing of the problem and make recommendations to
correct the problem. If Superior does not correct the quality
problem to Baker Hughes'
satisfaction within thirty (30) days after notice
from Baker Hughes, Baker Hughes
shall have the right
to immediately terminate this Agreement.


 


2.3           Following
termination of this Agreement, for whatever reason, the parties will
take such steps to ensure that property
and Confidential information is returned
to its rightful owner and that neither party is unduly
disadvantaged. Any disputes arising will be
resolved in accordance with the
provisions of Article 15.


 




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2.4           Superior
will perform the work under
this Agreement at its facility located at
1583 South 1700 East,
Vernal, Utah 84078 (such land and all Improvements
thereon being hereinafter referred to as the
"Superior Facility"). Effective upon termination of this Agreement
for whatever reason,
Baker Hughes will have first right of
refusal to purchase the Superior Facility
and equipment under the
terms and conditions set forth
in this Section 2.4.
This first right of
refusal does not obligate
Baker Hughes in any way to purchase the Superior Facility
or, subject to Section 2.5
below, equipment. Baker
Hughes has no obligation, under any circumstances,
to purchase any Intangible
assets associated with Superior's operations or business
including, but not limited to, good will.


 


(a)           Baker
Hughes will have first
right of refusal to purchase (i) the Superior
Facility at its then-current
Fair Market Value (hereinafter defined) and
(ii) the equipment used at the Superior Facility for performing
the Work required hereunder at fair market value..
(b) As used herein, Fair Market Value shall mean the appraised
value of the Superior Facility as
determined by the following method:


 


(i)          Within
thirty (30) calendar days following the notice of
termination of this Agreement and
Baker Hughes' decision to purchase the Superior
Facility, Baker Hughes will forward to Superior a
written appraisal of
the Superior Facility prepared by an MAJ (or equivalent)
certified appraiser with at least
fifteen (15) years' experience appraising industrial properties,
with at least five (5) years' experience
being in the Vernal, Utah area.


 


(ii)         Within
fifteen (15) business days
following receipt of
Baker Hughes' appraisal, Superior shall notify
Baker Hughes in writing
of either its agreement to the Fair Market Value as stated
in the Baker Hughes'
appraisal, or its intention
to provide its own
appraisal, which appraisal shall be
provided within thirty (30)
calendar days of the
date of such notice and
shall be prepared by
an appraiser with the same
qualifications provided for
above.


 


(iii)        If
such appraisal is within 15% of the value
determined by Baker Hughes' appraiser, the
Fair Market Value shall be the average
of such two appraisals.


 


(iv)        If
Superior's appraisal varies by an amount in excess of
15% of Baker Hughes'
appraisal, then the parties shall either negotiate an agreed Fair
Market Value, or failing to
do so within thirty
(30) calendar days, then the first two appraisers
shall appoint a third appraiser ("Independent Appraiser)
and the Fair Market Value of the property shall be
deemed to be the average between the value determined by
the Independent Appraiser and that determined by
whichever of Baker Hughes' appraisal and Superiors appraisal Is closest
to the value
determined by the Independent Appraiser.


 


In connection
with any such sale, Superior shall bear the cost of an owner policy
of title Insurance, any
transfer taxes, and preparation of a survey of the property reasonably
acceptable to Baker Hughes and the title company and sufficient to remove any boundary
or survey exceptions from the title policy.
Baker Hughes shall bear the cost of preparation of a general warranty deed conveying the Superior Facility and
recording the same. Superior shall convey the Superior Facility free
and clear of all liens and encumbrances except those set
forth in any subdivision plats and for utilities serving
the Superior Facility and which do not adversely impact
the use of the Superior Facility for
the purposes set forth in
this Agreement. Baker Hughes will notify Superior
in writing no later
than sixty (60) days prior to termination of this Agreement
in the event that it expires pursuant to its terms or
no later than sixty (60) days
following the date notice of termination is
given in the event this Agreement
is terminated prior to its
stated termination date.
Prior to closing Baker
Hughes shall have until the forty-fifth (45th)
day following delivery of the survey and title
commitment (and copies
of all documents therein contained) to
review such title and
survey information and to
review all operating, repair and
other property related Information in
Superior's possession
and to conduct physical inspections of the Superior Facility.
Superior shall provide Seller with a ten-year
indemnity for any environmental conditions existing as of the date of transfer
of the Superior Facility.
Baker Hughes shall have
the right to file a
memorandum describing this option in the relevant real property records.


 


2.5           Termination
of this Agreement does not affect the terms and conditions
of Articles 4, 5, 6,8,
9,13,14 and 15 of this
Agreement.


 


3.             Equipment
and Training; Baker Hughes Security Interest


 


3.1           Baker
Hughes will provide, at no cost to
Superior, training and technical support
to qualify and certify personnel of Superior in Baker Hughes'
processes and shall
be able to conduct periodic
audits of Superior in
order for Superior to maintain such certification.


 




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3.2           Baker
Hughes will provide, at no cost to Superior, an inventory
of PDC Cutters to be used in the performance of the Work to be performed by Superior. Baker Hughes will also supply bit boxes and
nozzles to Superior. Baker Hughes shall retain title to all PDC Cutter inventories, new and used, and supply of bit boxes and nozzles.
Baker Hughes will contact relevant vendors and request that those vendors consider
extending Baker Hughes' pricing to Superior. No vendor's decision regarding
what pricing to extend to Superior shall in any way affect
the validity of this Agreement.


 


3.3           At
the request of Baker Hughes, Superior will provide any
necessary documentation, or assist Baker Hughes, with the
filing of appropriate documentation (e.g., UCC Financing
Statements, etc.) required to establish and evidence the Baker Hughes title and retained interest in the PDC Cutter inventories,
new and used, and supply of bit boxes and nozzles inventory.


 


4.             Ownership
of Work


 


4.1           Superior
agrees all Work performed for Baker Hughes shall be the
property of Baker Hughes. Notwithstanding the foregoing, Superior understands and agrees that Superior is an Independent contractor
and controls and assumes
full responsibility for all Work performed under the Agreement.
Superior further understands and acknowledges that Baker Hughes does not control the Work but is relying on the skill and expertise
of Superior in performing such Work.


 


4.2           Superior
agrees that all programs, drawings, tracings, specifications, technical notations, calculations,
data, memoranda, cutter inventories, bit boxes, nozzles,
notes and other information or material, including all copies and excerpts thereof, comprising
all or any part of the Work or containing information of the type set
forth hereunder which (i) come into the possession
and custody of Superiors employees or agents, or (ii) are
prepared or compiled by Superior or any of its employees
or agents at any time during the term of this Agreement, shall be delivered to Baker Hughes
upon request of Baker Hughes.


 


5.             Confidential
information


 


5.1           The
following is a definition of confidential information as used in the
Agreement ('Confidential information"):


 


Confidential information is highly
sensitive, confidential information or other proprietary
information, either written or oral, of Baker Hughes or Superior. Such
information may include, but is not limited to, ideas,
concepts, research or development, development plans for new or improved
products or processes, data, formulae, techniques, designs, sketches know-how,
photographs, plans, cutters, cutter designs, nozzles, drawings,
facts or knowledge concerning the processes, specifications, samples,
test specimens, report., scientific studies or analyses, details of training methods, new products or
new uses for old products, refining
technology, merchandising and selling techniques, contracts and licenses, purchasing, accounting, business systems and computer
programs, long-range planning, financial plans and results, pricing or price lists, and customer lists, findings, studies, inventions,
designs, costs, strategic and industry analyses, advertising and marketing plans and other
information relating to the business of Baker Hughes or
Superior that is not generally available to the public.
This list is merely illustrative and Confidential Information is not limited
to these illustrations.


 


5.2           Either
Baker Hughes or Superior may disclose or exchange Confidential
Information to the other Party (hereinafter the disclosing party is sometimes referred
to as the 'Discloser"). Either Baker Hughes or Superior may
receive Confidential Information from the other Party (hereinafter
the receiving party is sometimes referred
to as the Receiver").


 


5.3           The
Receiver hereby covenants and agrees that it shall not
(either directly or indirectly) reveal or disclose or allow any Confidential Information to be obtained by any
other third party person, partnership, association, or corporation; it shall not use such
information for any purpose whatsoever without the prior written
consent of Discloser, except as expressly contemplated by
this Agreement; it shall treat all such Confidential Information received from the Discloser
as a trade secret proprietary in nature to the Discloser
and will use its best efforts to safeguard the secrecy
of the Confidential Information.


 


5.4           Property
in all Confidential Information shall remain vested in
the Discloser and nothing in this Agreement shall be construed as granting any rights of
license to use or deal with the Confidential
Information in any way other than permitted by this Agreement. The Confidential Information
and all copies or notes relating thereto will be returned by
the Receiver immediately on the request of the Discloser.


 




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5.5          Nothing
herein above contained shall deprive the Receiver the right
to use or disclose any information:


 


(a)           which
is, at the time of disclosure, known to the trade or the public;


 


(b)           which
becomes at a later date known to the trade or the public through no fault of the Receiver and
then only after said later date;


 


(c)           which
is possessed by the Receiver,
as evidenced by written
records, before receipt thereof from the Discloser;


 


(d)           which
is disclosed to the Receiver in good faith by a third party
who has an independent right to such information.


 


(e)           which
is developed by employees of Receiver
independently of any knowledge of the
Confidential Information of
Discloser.


 


5.6         Each
Party hereto agrees that all Confidential
Information furnished by the
Discloser to the Receiver or which is developed by one
Party for the other whether taking place before, after
or in contemplation of a Work
Order or Purchase Order, will be
Confidential Information.


 


5.7         Upon
termination, the Receiver shall remain obligated under
the provisions of this Paragraph 5 to maintain the Confidential
Information of the Discloser and not use same for their
own benefit or the benefit of third parties.


 


5.8         In
the event that the Receiver or
any of its Affiliates or Representatives become legally compelled (by deposition, interrogatory,
request for document, subpoena, civil investigative demand
or similar process) to disclose any of such Confidential
Information, the Receiver shall provide the Discloser with
prompt prior written notice of
such requirement so that the
Discloser may seek a protective order or other appropriate remedy or waive compliance
with the terms of this Agreement. In the event that such protective order or other remedy is
not obtained, or that the Discloser waives compliance with
the provisions hereof, the Receiver agrees
to furnish only that portion of such Confidential Information
that the Receiver is advised by written opinion of counsel
is legally required and to exercise its best efforts to
obtain assurance that confidential treatment will be accorded
such Confidential Information.


 


5.9          The
Receiver of Confidential Information understands and agrees that the unauthorized use or disclosure of any Confidential Information
by Receiver and its employees or agents in violation
of this Agreement may cause severe and
irreparable damage to the Discloser and agrees that money damages would not
be a sufficient remedy for any breach of this Agreement. The Receiver understands and
agrees further that the Discloser is entitled and authorized, in the event of
any breach of this Agreement,
to seek a restraining order and/or injunction from any competent court of
equity to enjoin and restrain Receiver and its employees or agents from any disclosure of proprietary
and Confidential Information of the Discloser without the necessity of complying with the provisions
of Article 15 regarding resolution of disputes.
Such equitable remedies shall be in addition to
and not in lieu of any damages to which the Discloser may be entitled by
law. The Receiver shall notify the Discloser immediately,
and cooperate with the Discloser, upon the Receiver's
discovery of any loss or compromise of the Discloser's Confidential Information.


 


6.           Patents,
Trademarks, Copyrights and other Intellectual
Property


 


6.1         Superior
shall promptly and freely disclose to
Baker Hughes any and
all intellectual property, including conceptions,
inventions, improvements, suggestions for
improvements and valuable discoveries, whether
patentable or not,
which are conceived or made by Superior solely or jointly
with another or others during
the term of this Agreement and which are related to Superior's work
for Baker Hughes or which
Superior conceives as a result of the services
rendered to Baker Hughes and Superior hereby
assigns, and agrees to assign, all interests and related
rights therein to Baker Hughes or its nominee. Superior understands and
agrees that all copyrights, patents, trademarks, trade secrets or other intellectual
property rights associated with any ideas,
concepts, techniques, inventions, processes, or works of authorship developed or created
by Superior or its personnel during the course of
performing Baker Hughes's Work shall belong exclusively
to Baker Hughes.


 


6.2         Superior
automatically assigns and shall cause his personnel automatically
to assign, at the time of creation of the Work, without
any requirement of further consideration, any
rights, title, or interest it or they may have in such intellectual
property, including any patents, copyrights, or any other
intellectual property rights pertaining thereto. Upon request
above by Baker Hughes, Superior shall
take such further actions, and shall cause its personnel to take such
further actions, including execution and delivery
of instruments of conveyance which Baker Hughes shall
deem necessary to be executed in order to apply for and obtain patents, copyrights, or other intellectual
property protection in the United States or any foreign country, or
to protect otherwise Baker Hughes's interest therein.


 




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7.             Warranties


 


In the event that Superior's
Work fails to conform to
the specifications of Baker Hughes set forth in the relevant scope of work document,
then as Baker Hughes' sole remedy for such nonconformance,
Superior shall repair or replace such defective Work brought to Superior's
attention by Baker Hughes. Except as otherwise provided In this Paragraph, Superior makes no
warranty, either express or
implied (including without limitation,
implied warranties of merchantability or fitness for a
particular purpose).


 


8.             Indemnity


 


8.1           SUPERIOR
HEREBY INDEMNIFIES, DEFENDS AND AGREES TO HOLD BAKER HUGHES, AND BAKER HUGHES'S
PARENT, SUBSIDIARY AND AFFILIATED
COMPANIES, AND ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, REPRESENTATIVES OR INVITEES (COLLECTIVELY,
"BAKER HUGHES GROUP") HARMLESS AGAINST ANY AND ALL CLAIMS,
JUDGMENTS, SETTLEMENTS, FINES, PENALTIES, EXPENSES (INCLUDING
BUT NOT LIMITED TO ATTORNEY FEES AND COURT COSTS), COSTS AND LIABILITIES AS A RESULT OF
OR RELATING TO PERSONAL INJURY, BODILY INJURY, ILLNESS, DEATH OR DESTRUCTION OR LOSS OF PROPERTY
OR ANY OTHER THEORY OF
LOSS OR LIABILITY (COLLECTIVELY, "CLAIMS") ARISING FROM OR
RELATING TO THE NEGLIGENCE, ACTIONS, OMISSIONS, STRICT
LIABILITY, PRODUCTS LIABILITY OR OTHER
FAULT OR RESPONSIBILITY OF SUPERIOR, OR ARISING FROM OR
RELATING TO, DIRECTLY OR INDIRECTLY FROM, SUPERIOR'S PERFORMANCE, THE SUBJECT MATTER
OR BREACH OF THIS AGREEMENT, OR FROM ANY CLAIMS RELATING
TO INFRINGEMENT, THEFT OR UNAUTHORIZED USE OF ANY PATENTS, COPYRIGHTS, TRADEMARKS,
TRADE SECRETS OR INTELLECTUAL PROPERTY OR PROPRIETARY RIGHTS OF ANY PERSON. IN
ADDITION, SUPERIOR SHALL INDEMNIFY, RELEASE, DEFEND AND HOLD BAKER HUGHES
AND THE OTHER MEMBERS OF THE BAKER HUGHES GROUP HARMLESS FROM ANY CLAIMS (AS DEFINED ABOVE) ASSERTED BY (ON BEHALF OF), ARISING
IN FAVOR OF OR RELATING TO ANY EMPLOYEES, AGENTS,
REPRESENTATIVES OR INVITEES OF SUPERIOR, (AND
RELATING TO BAKER HUGHES, WITH REGARD TO SUPERIOR'S OWN PROPERTY OR LOSSES), REGARDLESS OF
THE NEGLIGENCE, STRICT LIABILITY, BREACH OF
CONTRACT, PREMISES LIABILITY, PRODUCTS LIABILITY OR OTHER FAULT "OR RESPONSIBILITY OF
SUPERIOR, BAKER HUGHES, ANY OTHER MEMBER OF BAKER HUGHES GROUP OR ANY OTHER PERSON OR PARTY.
THIS INDEMNITY SHALL BE BINDING UPON THE SUCCESSORS, ASSIGNS AND HEIRS OF SUPERIOR.


 


8.2           BAKER
HUGHES HEREBY INDEMNIFIES, DEFENDS AND AGREES TO HOLD SUPERIOR,
AND SUPERIOR'S PARENT, SUBSIDIARY AND AFFILIATED COMPANIES,
AND ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES OR INVITEES
(COLLECTIVELY, 'SUPERIOR GROUP')
HARMLESS AGAINST ANY AND ALL CLAIMS, JUDGMENTS, SETTLEMENTS, FINES,
PENALTIES, EXPENSES (INCLUDING BUT NOT LIMITED TO ATTORNEY FEES AND COURT COSTS), COSTS
AND LIABILITIES AS A RESULT OF OR RELATING TO PERSONAL INJURY, BODILY INJURY, ILLNESS, DEATH OR DESTRUCTION
OR LOSS OF PROPERTY OR ANY OTHER THEORY OF LOSS OR LIABILITY (COLLECTIVELY, "CLAIMS")
ARISING FROM OR RELATING TO THE NEGLIGENCE, ACTIONS, OMISSIONS, STRICT
LIABILITY, PRODUCTS LIABILITY OR OTHER FAULT OR RESPONSIBILITY OF BAKER HUGHES, OR ARISING
FROM OR RELATING TO, DIRECTLY OR INDIRECTLY FROM, BAKER HUGHES'S PERFORMANCE, THE SUBJECT MATTER
OR BREACH OF THIS AGREEMENT, OR
FROM ANY CLAIMS RELATING TO INFRINGEMENT, THEFT OR UNAUTHORIZED
USE OF ANY PATENTS, COPYRIGHTS, TRADEMARKS, TRADE SECRETS
OR INTELLECTUAL PROPERTY OR PROPRIETARY RIGHTS OF ANY PERSON.
IN ADDITION, BAKER HUGHES SHALL INDEMNIFY, RELEASE, DEFEND AND HOLD SUPERIOR AND THE OTHER MEMBERS OF THE SUPERIOR GROUP HARMLESS
FROM ANY CLAIMS (AS
DEFINED ABOVE) ASSERTED
BY (ON BEHALF OF), ARISING IN FAVOR OF OR RELATING TO ANY
EMPLOYEES, AGENTS, REPRESENTATIVES OR INVITEES OF
BAKER HUGHES, (AND RELATING TO SUPERIOR, WITH REGARD TO BAKER HUGHES'S OWN PROPERTY OR LOSSES),
REGARDLESS OF THE NEGLIGENCE, STRICT LIABILITY, BREACH
OF CONTRACT, PREMISES LIABILITY, "PRODUCTS LIABILITY
OR OTHER FAULT OR RESPONSIBILITY OF BAKER HUGHES, SUPERIOR,
ANY OTHER MEMBER OF
SUPERIOR GROUP OR ANY OTHER PERSON OR PARTY, THIS INDEMNITY SHALL BE BINDING UPON THE SUCCESSORS,
ASSIGNS AND HEIRS OF BAKER HUGHES.


 


9.             Non-competition


 


9.1           Superior
agrees that during the term of this
Agreement, Superior will not perform the work for any other
party.


 




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9.2          Superior
may engage in other activity not related
to or in competition with
the business of Baker Hughes to the extent that
such other activity shall
not be considered a breach of this Agreement. If Superior
is already in a business that Baker Hughes later enters,
Superior can continue to
operate in that business. If a court of competent jurisdiction concludes that
the parameters of this restrictive covenant are over-broad and thereby unenforceable, the
parties agree that the court
may reform the parameters so as
to make the agreement enforceable.


 


10.          Insurance


 


10.1        At
all times when Superior is performing Work
pursuant to this Agreement,
Superior agrees to procure and maintain and Superior agrees
to have its agents, contractors or subcontractors
maintain, the following insurance coverages:


 


(a)   Commercial
General Liability covering bodily
injury and property damage
with a limit of not less than
$2,000,000 for each occurrence;


 


(b)   Workers'
Compensation insurance (or maintenance of a
legally permitted and
governmentally approved program of self-insurance)
covering Superior's employees pursuant to applicable state
workers' compensation laws for work related
injuries suffered by employees of Superior;
and


 


(c)   Employers
Liability insurance with limits
of not less than $1,000,000
for each accident.


 


10.2        Superior
agrees to provide Baker Hughes with a Certificate of
Insurance evidencing that the above coverages
are in full force and effect.


 


10.3        Superior
will name Baker Hughes as an additional insured party on
the Commercial General Liability policy described above.


 


11.         Compliance
with Laws


 


Each party
represents, warrants and covenants that all work performed
hereunder shall be conducted in accordance with all applicable governmental safety regulations, standards, procedures and precautions,
and that in connection therewith it employs all necessary or
required protective equipment and
devices. Each party agrees to abide by and be bound under
the other party's policies governing the conduct and safety of personnel having access to the
other party's facilities or its
customers facilities, including
without limitation, the other party's policies regarding illegal and
unauthorized articles, and drug and alcohol policies, but
shall have no responsibility for the
adequacy of such policies; provided that only such policies
of a party provided to the
other party in writing shall be applicable to the other party, and
in the absence of such written policies, the other party
shall be required to comply with its own policies and the
highest industry and HSE standards
governing the matters listed
above. Without limiting the
generality of the foregoing, Superior agrees to notify
Baker Hughes in writing in the event that Superior discovers any hazardous materials in connection
with performing the Work hereunder.


 


12.         Notices


 


All notices, authorizations and
requests in connection with this Agreement shall be deemed
given on the day they
are (i) deposited In the mail, postage
prepaid, certified or registered, return receipt requested;
or (ii) sent by air express courier (e.g, DHL, Federal Express or Airborne), charges prepaid, return
receipt requested, and addressed as set forth below:


 




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	Superior:	Superior Drilling
Products, LLC 
	 	P.O. Box 1656
    

Vernal, UT 84078
	 	telephone: 435.789.0594
	 	Attn: Annette Meier, President
	 	 
	Baker Hughes:	Baker Hughes Oilfield Operations, Inc
	 	9110 Grogans Mill Road 
	 	The Woodlands, TX 77380 

telephone: 281.363.6130
		e-mail: jay.clinksclaes@bakerhughes.com
	 	Attn: Jay Clinkscales, AMO Manager


 


13.          Consequential
Damages


 


Except with regard to a breach
by Superior or Baker Hughes with
respect to Paragraphs 5 or 6,neither Party shall be
liable to the other for any indirect, special,
punitive, exemplary or consequential damages
including but not limited to, damages for lost
production, lost revenue, lost product, lost profits or
lost business or business
interruptions, from any cause
whatsoever, including but not limited to
the negligence or breach of duty (statutory or otherwise), strict liability,
product liability or other fault or
responsibility of either Party and each Party hereby releases the
other in this regard.


 


14.           Ancillary
Provisions


 


14.1         No
waiver, modification or amendment of any term, condition
or prov1s1on of this Agreement nor any addition
thereto shall be valid or of any force
or effect unless made in writing and signed by
an authorized representative of
the Parties.


 


14.2         Superior
shall not assign this Agreement without prior
written approval of
Baker Hughes. Any attempt to
so assign shall be void.
Assignment with such approval shall not
operate to relieve Superior
of any of its obligations
under this Agreement.


 


14.3         Superior
is and shall remain an independent
contractor in its performance of this Agreement. Notwithstanding
anything herein that may be construed to the
contrary, this Agreement shall not constitute, create,
or in any way be interpreted
as, a joint venture,
partnership or formal business organization of any
kind and nothing contained
in this Agreement shall be construed
as establishing any joint obligations
between the parties.
Each party hereto retains the right to conduct its own
business as it sees fit and
each party shall act as an independent contractor of the
other and shall not,
except as specifically authorized hereunder, act
as an agent or
representative of the
other party for any purpose whatsoever.
Except as expressly provided
herein, (a) no party shall have the authority
to bind the other party
or make any commitment or incur any costs or expenses for
or in the name of the other party, and (b) no
party hereto shall be responsible in any way for
any obligation or liability incurred or assumed
by any other party. None of the parties' employees shall be deemed to be the employees
or servants of the
other party for any purpose. No party shall have any fiduciary
duty to the other, no special relationship between the parties shall be
deemed to exist, and no duties not specifically
set forth in this Agreement shall exist.


 


14.4         This
Agreement shall be interpreted under the laws of the State of
Texas, excluding conflicts of law
and choice of law statutes.


 


14.5         If
any provision of this Agreement shall
be held by a court of competent jurisdiction
to be illegal, invalid or
unenforceable, the remaining provisions shall
remain in full force and
effect. No waiver of
any breach of any provision of this Agreement shall constitute
a waiver of any other breach of the same or
any other provisions hereof, and
no waiver shall be
effective unless made in wilting and
signed by an authorized representative of the waiving party.


 


14.6         Neither
party shall be responsible for any failure or delay
in complying with the terms
of this Agreement where such failure or
delay is due to causes beyond its
reasonable control. These causes shall include,
but not be restricted to, fire, storm,
flood, earthquake, explosion, accident, acts
of the public enemy,
war, rebellion, insurrection, sabotage, epidemic,
quarantine restrictions, labor disputes, labor shortages,
transportation embargoes or
failures or delays in transportation, inability to secure
necessary raw materials or machinery,
acts of God, acts of
any government, whether national,
municipal or otherwise, or any agency thereof, and judicial
action. The party so affected by
the force majeure shall notify the other party as soon
as practicable of its
existence. The parties shall then meet and
endeavor to alleviate the effect and extent thereof. If
the force majeure persists for a period in excess of 180 days
either party may terminate this
Agreement by giving the other party 90 days' written
notice thereof.


 




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14.7         This
Agreement, including any and all Schedules attached hereto,
constitute the entire agreement between the parties with respect
to the subject matter of this Agreement and supersede all
previous agreements and understandings, whether oral or
written, express or implied. The parties specifically
intend to replace and supersede the previous
Vendor Agreement between Baker Hughes
and Superior, dated May
1, 2006 and terminated effective June 30, 2009. To the
extent the terms and conditions of this Agreement are in
conflict with any terms or conditions in any Schedule,
Confidentiality Agreement, work order, proposal, purchase order,
invoice or other terms and conditions in any other document,
the terms and conditions of this Agreement
shall control. This Agreement may
not be altered, amended, or modified except by
written instrument signed by the duly
authorized representatives of all parties. The terms on
any Work Order, Purchase
Order or other form submitted by Superior
to Baker Hughes shall not apply
to this Agreement.


 


15.           Conciliation/
Arbitration


 


15.1         Any
disputes, claims or controversies connected with, arising
out of, or related to, this Agreement and the rights
and obligations created herein, or
the breach, validity, existence or termination hereof (the
'Dispute"), shall first
be submitted to the respective representatives of
the parties for resolution. If those
designated representatives are unable to resolve such
dispute, claim or controversy within thirty
(30) days of such submission, the dispute, claim
or controversy shall then be submitted
to the Presidents of the respective parties for resolution.
If the respective Presidents of the parties are unable
to resolve such dispute, claim or controversy within
thirty (30) days of submission, the dispute, claim or controversy
shall then be submitted to mandatory, binding arbitration
in accordance with Clause 15.2 below.


 


15.2         Any
Dispute arising out of or connected with this Agreement
which cannot be resolved utilizing the procedures set forth In
Clause 15.1 above, shall be referred to
and finally resolved by arbitration. Upon notice by either
party to the other,
all disputes, claims, questions, or
differences (including issues relating to the formation
of the agreement and the
validity of this arbitration
clause) shall be finally
settled by binding arbitration administered
by the American Arbitration Association ("AAA") in accordance with the provisions
of its Commercial Arbitration
Rules, as well as the Federal Rules of Civil Procedure and the Federal Rules of Evidence, and judgment on the award rendered
by the arbitrator(s) may be entered in any court having
jurisdiction thereof.


 


15.3         The
arbitration Panel shall consist of a single arbitrator,
unless otherwise agreed to by the parties. The place of arbitration shall be Houston, Texas.
If the parties are not able to decide upon a neutral third
party arbitrator within thirty (30) days of the request for arbitration, then the AAA shall select an arbitrator
having at least twenty (20) years of experience in intellectual property
matters. All proceedings will be conducted in English.


 


The parties
agree to hold the entirety
of the arbitration proceedings, including knowledge of
the existence of any dispute or controversy, completely
confidential except for such disclosures
as might be required
by law


 


This
arbitration agreement does not limit or
affect the right of either Party to seek from any court
having jurisdiction any interim, interlocutory, or provisional
relief that is necessary to protect the rights
or property of that party. Alternatively, either Party may apply to the AAA pursuant to the
AAA Optional Rules
for Emergency Measures seeking injunctive relief until
the arbitration award is rendered or the controversy
is otherwise resolved.


 


16.           Power
and Authority


 


Each Party
hereto represents that it has
full power and authority (corporate or otherwise) to execute
this Agreement and bind the Party on whose behalf it is
signing.


 




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SIGNATURES ON FOLLOWING
PAGE


 


IN WITNESS
WHEREOF, this Agreement has been executed on behalf of each party as of the day and year set forth at its beginning.


 


	 	SUPERIOR DRILLING PRODUCTS, LLC
	 	 	 
	 	By:	/S/ Annette Meier
	 	 	 
	 	 	Title 	Member
	 	 	 	 
	 	BAKER HUGHES Oilfield Operations, Inc. 
	 	 
	 	By 	/s/ [Rol Rol?]
	 	 	 
	 	Title:  Vice President, Drill Bits


 




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EXHIBIT A


 


Superior's hourly rate will be $62.02
until December 31,2013.


 


Thereafter, the charge per standard hour will
be calculated based upon a ten percent (10%) premium to the documented standard hour rate posted in SAP for Baker Hughes USL AMO
centers.


 


The Baker Hughes USL standard hour rate is adjusted
based on a balance sheet calculation maintaining a cost neutral P&L for USL AMO.


 




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