Exhibit 10.6
VENDOR AGREEMENT
ThisVendor Agreement (the"Agreement")is made effective as of the 28 day ofOctober,2013 ("Effective Date"), by and between Baker Hughes Oilfield Operations,Inc.,a California corporation, with aplaceof business at 9110 Grogans Mill Road,TheWoodlands, Texas 77380 ("BakerHughes")and SuperiorDrillingProducts, LLC, a Utah corporation, with its principal place of business at1583South 1700East,Vernal,Utah84078 (''Superior'1
WITNESSETH:
WHEREAS,Superior has certain expertise in the manufacture, repair and reconditioning of earth boring drill bits,corebits, hybrid drill bits that include atleastone roller cone and at least one blade, eccentric or bicenterbits,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 desirestohave Superior perform the Work;
NOW,THEREFORE,theParties hereby agree to thefollowingterms and conditions governing the Work hereunder
1. Baker Hughes Purchases from Superior
1.1 Baker Hughes shallprovideSuperior arightof first refusaltoperform all repair and reconditioning of BakerHughes Toolscommercialized within its Western United States Geo-Market, which may change from time to time, excluding BakerHughes Toolscommercialized in Texas and Oklahoma.IfSuperior isunableorunwillingtoperformsaid repair and reconditioning efforts for any reason, BakerHughesshall havetherighttoobtain repair and reconditioning ofitsTools that are commercialized within its WesternUnitedStates Geo-Market from athird party.
1.2. The standard hours of work shall be in accordance with the standard hour schedule postedin SAP.Baker Hughes shall bear all freight charges for shipping the bits to andfromthe Superior Facility where the Work is performed.
1.3 Superior shall not be responsible for invoicing customers of BakerHughesfor 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 oftherepair activity. Contents of the report will be as defined by Baker Hughes.
2. Term and Termination
2.1 The Term of this Agreementshallbe for four (4) years from the EffectiveDatehereof ("InitialTerm").Duringthe Initial Termor 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 InitialTermofthisAgreement and during thetermof any subsequent renewalthereof,should the quality of the Work provided by Superior fall below thequalityof Baker Hughes' standards, as reasonably determined by BakerHughes,BakerHughesshall advise Superior in writing of the problem and makerecommendationsto correct the problem.IfSuperior does not correct thequalityproblemto BakerHughes' satisfaction within thirty (30)daysafternoticefrom Baker Hughes, BakerHughesshall havetheright to immediately terminate this Agreement.
2.3 Followingtermination of this Agreement, for whatever reason, the partieswilltake such steps to ensurethatproperty and Confidentialinformationisreturned to its rightful owner and that neitherparty isunduly disadvantaged. Anydisputesarising willberesolved in accordancewiththe provisions of Article 15.
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2.4 Superior will performtheworkunderthis Agreement at itsfacility locatedat1583South1700East, Vernal, Utah 84078 (suchland andallImprovements thereon being hereinafterreferred toasthe "SuperiorFacility"). Effective upon termination of thisAgreementforwhateverreason, BakerHughes will have firstrightof refusal topurchase theSuperiorFacility andequipmentundertheterms and conditionssetforthinthisSection 2.4.Thisfirstrightofrefusal doesnotobligate Baker Hughes inany way to purchase theSuperior Facilityor, subjectto Section2.5below,equipment.Baker Hughes has noobligation,under anycircumstances, topurchaseanyIntangible assetsassociated with Superior'soperations orbusiness including,but not limited to,good will.
(a) Baker Hugheswillhavefirst right of refusalto purchase(i) theSuperior Facilityatitsthen-currentFair MarketValue (hereinafter defined)and (ii) the equipmentused at the Superior Facilityfor performing the Work required hereunderatfair marketvalue..(b) Asused herein, Fair Market Value shall mean theappraised valueof the SuperiorFacilityas determined bythefollowing method:
(i) Within thirty(30) calendardays following the noticeofterminationof this Agreementand Baker Hughes' decisionto purchasetheSuperiorFacility, BakerHughes will forward to Superiorawrittenappraisalof the Superior Facilityprepared by anMAJ (or equivalent) certified appraiser with atleast fifteen (15)years' experience appraisingindustrial properties,with at least five (5) years'experiencebeingin the Vernal, Utaharea.
(ii) Withinfifteen(15) businessdaysfollowingreceiptofBakerHughes' appraisal, Superior shallnotify BakerHughesinwriting of either itsagreement tothe Fair Market Value as statedin theBakerHughes'appraisal, oritsintentiontoprovideits own appraisal, which appraisal shallbe providedwithinthirty(30) calendardaysofthe date ofsuchnoticeand shallbepreparedbyan appraiser withthesamequalificationsprovidedfor above.
(iii) If such appraisal iswithin15%ofthevalue determinedby Baker Hughes'appraiser,the FairMarket Value shall betheaverage of such twoappraisals.
(iv) If Superior'sappraisal variesby an amount in excessof15%ofBaker Hughes' appraisal, then the partiesshall either negotiate an agreedFairMarket Value, orfailingtodoso withinthirty (30)calendardays, then the first twoappraisers shall appoint a thirdappraiser("Independent Appraiser) andtheFair Market Value of the property shallbedeemed to be the average between the valuedetermined by theIndependent Appraiser andthat determinedby whichever of Baker Hughes' appraisal and Superiors appraisalIsclosestto thevaluedeterminedby the Independent Appraiser.
In connection with any such sale, Superior shall bear the cost of anownerpolicy of title Insurance,anytransfer taxes, and preparation of a survey of the propertyreasonably acceptable toBaker Hughes and the title company and sufficient to remove anyboundaryor survey exceptions from thetitlepolicy. Baker Hughes shall bear the cost of preparation of a general warranty deed conveying the Superior Facilityand recordingthe same. Superior shall convey the Superior Facilityfree and clearof all liens and encumbrances exceptthoseset forth in any subdivision plats andfor utilitiesservingtheSuperior Facility and which do not adverselyimpactthe use of the SuperiorFacilityfor thepurposesset forthin this Agreement. BakerHughes willnotifySuperiorinwritingno laterthan sixty (60) days prior to termination ofthis Agreement inthe event that it expirespursuant to its termsorno laterthan sixty (60)days following thedatenotice of terminationis givenin theevent thisAgreement is terminatedpriortoits statedterminationdate.Priortoclosing Baker Hughesshallhave until the forty-fifth(45th)dayfollowing delivery of the survey andtitlecommitment(andcopies of all documentsthereincontained)toreview suchtitleand surveyinformationandto review alloperating,repairand other propertyrelatedInformationinSuperior's possession and to conduct physicalinspections of theSuperior Facility. Superior shallprovideSeller with aten-yearindemnity for any environmental conditions existing as of the date oftransferoftheSuperior Facility. BakerHughesshallhavethe righttofile a memorandum describing this option in the relevant real property records.
2.5 Termination of this Agreement does not affect thetermsand conditions of Articles 4, 5, 6,8, 9,13,14 and15ofthisAgreement.
3. Equipment and Training; Baker Hughes Security Interest
3.1 BakerHugheswill provide, at no costtoSuperior, training andtechnicalsupport toqualifyand certify personnel of Superior in BakerHughes'processesand shall beableto conduct periodic audits of Superiorinorder for Superior to maintain such certification.
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3.2 Baker Hughes will provide, atnocost 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 thosevendorsconsider extending Baker Hughes' pricing to Superior. No vendor'sdecisionregarding what pricing to extend to Superior shall in anywayaffect thevalidityof this Agreement.
3.3 At the request of Baker Hughes,Superiorwill provide any necessary documentation,orassist 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 Superioragreesall Work performed for Baker Hughes shall be the property of Baker Hughes. Notwithstanding the foregoing, Superior understands and agrees that Superior is an Independentcontractorand controlsandassumes full responsibility for allWorkperformed 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,comprisingall or any part of the Work or containing information of the typesetforth hereunder which (i) come intothepossession andcustodyof Superiors employees or agents, or (ii) are prepared or compiled by Superiororany of itsemployeesor 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 usedinthe Agreement ('Confidential information"):
Confidential information is highly sensitive,confidentialinformation or other proprietary information, either written or oral, of Baker Hughes orSuperior.Such information may include, but is notlimitedto, ideas, concepts, research or development, development plans for neworimproved products or processes, data, formulae, techniques, designs,sketchesknow-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 productsornew uses for oldproducts,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 businessofBaker Hughes or Superior thatisnot generally available to the public.This list is merely illustrative and Confidential Information is notlimitedto these illustrations.
5.2 Either Baker Hughes or Superior may discloseorexchange Confidential Information to the other Party (hereinafter the disclosing party issometimesreferred to as the 'Discloser"). Either Baker Hughes orSuperiormay receive Confidential Information from theotherParty(hereinafterthe receiving party issometimesreferred to as the Receiver").
5.3 The Receiver hereby covenantsandagrees that it shall not (either directly or indirectly) reveal or disclose or allow any Confidential Information to be obtained byanyother third party person, partnership, association, or corporation; it shall not usesuchinformation for any purpose whatsoever without the priorwrittenconsent of Discloser, except as expressly contemplatedbythis Agreement; it shall treat all such Confidential Information received from the Discloser as a tradesecretproprietary in nature to the Discloser and will use its best efforts tosafeguardthe secrecy of the Confidential Information.
5.4 Property in all Confidential Informationshallremain vested in the Discloser and nothing in this Agreement shall be construed as granting anyrightsof license to useordeal with theConfidentialInformation in any way other than permitted by this Agreement. The Confidential Information and all copies or notes relating thereto will bereturnedby the Receiver immediately on the request of the Discloser.
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5.5 Nothing herein above containedshalldeprive the Receiver the right to use or disclose any information:
(a) whichis, at the time of disclosure, known to the trade or the public;
(b) whichbecomes at a later date known to the trade or the public through no fault of the Receiver and then only aftersaidlater date;
(c) which ispossessed bytheReceiver, asevidencedbywrittenrecords, before receipt thereof from the Discloser;
(d) which is disclosed to theReceiverin good faith by a third party who has an independent right to such information.
(e) whichis developed byemployees ofReceiver independently of anyknowledgeoftheConfidentialInformationof Discloser.
5.6 Each Party hereto agreesthatallConfidentialInformation furnishedbythe Disclosertothe Receiver or which is developed by one Party for theotherwhether taking place before, afteror in contemplationof aWorkOrder or Purchase Order,willbe Confidential Information.
5.7 Upon termination, the Receiver shallremainobligated under theprovisionsof this Paragraph 5 to maintain the Confidential Informationof theDiscloser and not use same for their own benefit or the benefit of third parties.
5.8 In theeventthat the Receiverorany of its Affiliates or Representatives become legally compelled (by deposition, interrogatory,requestfor document, subpoena, civil investigative demand or similar process) to disclose anyof suchConfidential Information, the Receivershallprovide the Discloser with promptpriorwritten noticeof such requirementsothatthe Discloser may seek a protective order or other appropriate remedyor waivecompliance with the terms of this Agreement. In the event that such protective order or otherremedyis not obtained, or that the Discloserwaivescompliancewiththe provisions hereof, theReceiveragrees to furnish only that portionof such ConfidentialInformation that the Receiver isadvised by writtenopinion of counsel is legally required and to exercise its besteffortsto obtain assurance thatconfidentialtreatment 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 itsemployeesor agents inviolationof this Agreement may causesevereand irreparable damage to the Discloser and agrees that moneydamages wouldnot be a sufficient remedy for any breach of this Agreement. The Receiverunderstandsand agrees further that the Discloser is entitled and authorized, in theeventof any breachofthisAgreement,to seek a restraining order and/or injunction from any competent courtofequity to enjoin and restrain Receiver and its employees or agents from any disclosure of proprietary and Confidential Information of the Discloser without the necessity ofcomplying with theprovisionsofArticle 15 regarding resolution of disputes.Such equitable remedies shall be inadditionto and not in lieu of any damages to which the Discloser maybe entitledby law. The Receivershallnotify the Discloser immediately, andcooperate withthe Discloser, upon theReceiver's discoveryof any loss or compromise of the Discloser's Confidential Information.
6. Patents,Trademarks,Copyrights and otherIntellectualProperty
6.1 Superior shall promptly andfreelydisclosetoBaker Hughesanyand allintellectualproperty, includingconceptions,inventions, improvements,suggestionsfor improvements andvaluablediscoveries,whetherpatentableornot, which areconceivedor made by Superior solely or jointly with anotherorothersduringthe term of this Agreement and which are related to Superior'sworkfor Baker Hughesorwhich Superiorconceivesas a result of theservicesrendered to Baker Hughes andSuperiorhereby assigns, and agrees toassign,all interests and related rights therein to Baker Hughes or its nominee. Superiorunderstandsand agrees that all copyrights, patents, trademarks, trade secrets orotherintellectual property rights associatedwithanyideas, concepts,techniques, inventions, processes, or works of authorship developed orcreatedby Superior or its personnel during thecourseof performing Baker Hughes's Workshallbelong exclusively to Baker Hughes.
6.2 Superior automatically assignsand shall causehis personnel automatically toassign,at the time of creation of the Work,withoutany requirement of furtherconsideration,any rights, title, or interest it or they may have insuchintellectual property, including any patents,copyrights,or any other intellectualproperty rightspertaining thereto. Upon requestaboveby Baker Hughes, Superiorshall takesuch further actions, and shall cause its personnel to takesuchfurther actions, includingexecution anddelivery of instruments ofconveyancewhich Baker Hughes shalldeem necessary to be executed in order to apply for and obtain patents, copyrights, or other intellectual property protection in the United States or any foreigncountry,or to protect otherwise Baker Hughes's interest therein.
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7. Warranties
In the event thatSuperior'sWork fails toconformto the specifications of Baker Hughes set forth in the relevant scope ofworkdocument, then as BakerHughes'sole remedy for suchnonconformance,Superior shall repair or replace such defective Work brought toSuperior'sattention by Baker Hughes. Except as otherwise provided In this Paragraph, Superior makes nowarranty, eitherexpressor implied(includingwithoutlimitation, impliedwarrantiesof merchantability or fitness for a particular purpose).
8. Indemnity
8.1 SUPERIOR HEREBY INDEMNIFIES, DEFENDS AND AGREES TO HOLD BAKER HUGHES, AND BAKER HUGHES'SPARENT,SUBSIDIARY ANDAFFILIATEDCOMPANIES,AND ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVESORINVITEES(COLLECTIVELY, "BAKERHUGHES GROUP") HARMLESS AGAINST ANY AND ALLCLAIMS,JUDGMENTS, SETTLEMENTS, FINES, PENALTIES, EXPENSES(INCLUDINGBUT NOT LIMITED TO ATTORNEY FEES AND COURT COSTS), COSTS AND LIABILITIES AS A RESULTOFOR RELATING TO PERSONAL INJURY, BODILY INJURY, ILLNESS, DEATH OR DESTRUCTION OR LOSS OF PROPERTYORANY OTHER THEORYOFLOSS OR LIABILITY (COLLECTIVELY, "CLAIMS") ARISING FROMORRELATING TO THE NEGLIGENCE, ACTIONS, OMISSIONS,STRICTLIABILITY, PRODUCTS LIABILITYOROTHER FAULT OR RESPONSIBILITY OF SUPERIOR,ORARISING FROM OR RELATING TO, DIRECTLY OR INDIRECTLY FROM, SUPERIOR'S PERFORMANCE, THESUBJECTMATTER OR BREACH OF THIS AGREEMENT, OR FROM ANYCLAIMSRELATING 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 HOLDBAKERHUGHES AND THE OTHER MEMBERS OF THE BAKER HUGHES GROUP HARMLESS FROM ANY CLAIMS (AS DEFINED ABOVE) ASSERTED BY (ON BEHALF OF),ARISINGIN FAVOR OF OR RELATING TO ANY EMPLOYEES, AGENTS, REPRESENTATIVES OR INVITEESOFSUPERIOR,(ANDRELATING TO BAKER HUGHES, WITH REGARD TO SUPERIOR'S OWN PROPERTY OR LOSSES), REGARDLESS OF THE NEGLIGENCE,STRICTLIABILITY, BREACHOFCONTRACT, PREMISES LIABILITY, PRODUCTS LIABILITY OR OTHER FAULT "OR RESPONSIBILITY OF SUPERIOR, BAKER HUGHES, ANY OTHER MEMBER OF BAKER HUGHES GROUP OR ANY OTHER PERSONORPARTY. THIS INDEMNITY SHALL BE BINDING UPON THE SUCCESSORS, ASSIGNS AND HEIRS OF SUPERIOR.
8.2 BAKER HUGHES HEREBY INDEMNIFIES, DEFENDS AND AGREESTOHOLD SUPERIOR, AND SUPERIOR'S PARENT, SUBSIDIARY ANDAFFILIATEDCOMPANIES, AND ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES ORINVITEES(COLLECTIVELY,'SUPERIORGROUP') HARMLESS AGAINST ANY AND ALL CLAIMS, JUDGMENTS,SETTLEMENTS,FINES, PENALTIES, EXPENSES (INCLUDING BUT NOT LIMITED TO ATTORNEY FEES ANDCOURT COSTS),COSTS AND LIABILITIES AS A RESULT OF OR RELATING TO PERSONAL INJURY, BODILY INJURY, ILLNESS, DEATH ORDESTRUCTIONOR LOSS OF PROPERTY OR ANY OTHER THEORY OF LOSS OR LIABILITY (COLLECTIVELY,"CLAIMS") ARISINGFROM OR RELATING TO THE NEGLIGENCE, ACTIONS, OMISSIONS,STRICTLIABILITY, 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 SUBJECTMATTEROR BREACH OF THISAGREEMENT,OR FROM ANY CLAIMS RELATING TO INFRINGEMENT, THEFTORUNAUTHORIZED USEOFANY PATENTS, COPYRIGHTS, TRADEMARKS, TRADE SECRETS OR INTELLECTUAL PROPERTY OR PROPRIETARY RIGHTSOFANY PERSON. IN ADDITION, BAKER HUGHES SHALL INDEMNIFY, RELEASE, DEFEND AND HOLD SUPERIOR AND THE OTHER MEMBERS OF THE SUPERIOR GROUP HARMLESS FROMANYCLAIMS(ASDEFINEDABOVE)ASSERTED BY (ON BEHALF OF), ARISING IN FAVOR OF OR RELATINGTOANY EMPLOYEES,AGENTS,REPRESENTATIVES OR INVITEESOFBAKER HUGHES, (AND RELATING TO SUPERIOR, WITH REGARD TO BAKER HUGHES'S OWN PROPERTY OR LOSSES), REGARDLESS OF THENEGLIGENCE,STRICT LIABILITY, BREACH OF CONTRACT, PREMISES LIABILITY,"PRODUCTS LIABILITYOROTHER FAULT OR RESPONSIBILITY OF BAKER HUGHES,SUPERIOR,ANYOTHERMEMBEROF SUPERIORGROUP 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 Superioragrees that during the termofthis Agreement, Superiorwillnot perform the work for any other party.
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9.2 Superiormay engage in other activitynotrelatedto orin competitionwith the business of BakerHughes to theextentthatsuch otheractivityshall not be considered a breachofthis Agreement. If Superior is already in a business thatBaker Hugheslater enters, Superiorcancontinueto operatein that business. If a court of competent jurisdiction concludesthat the parametersof this restrictive covenant are over-broad and thereby unenforceable,the partiesagreethat thecourtmay reformthe parameters soas to make theagreementenforceable.
10. Insurance
10.1 At all timeswhenSuperior is performingWorkpursuant to thisAgreement, Superior agrees to procureand maintainand Superioragrees to have its agents,contractorsorsubcontractors maintain, the followinginsurance coverages:
(a) CommercialGeneral Liabilitycoveringbodilyinjury andpropertydamage with a limit ofnotlessthan$2,000,000 for each occurrence;
(b) Workers'Compensationinsurance (or maintenance ofalegally permittedandgovernmentally approved program of self-insurance) covering Superior'semployees pursuantto applicable state workers' compensationlawsfor workrelatedinjuries suffered by employeesofSuperior; and
(c) EmployersLiabilityinsurance withlimitsofnot less than$1,000,000foreach accident.
10.2 Superior agreesto provide Baker Hugheswith a CertificateofInsurance evidencing thatthe abovecoverages are infull force and effect.
10.3 Superior willname Baker Hughes as an additional insuredpartyon theCommercial General Liabilitypolicy described above.
11. Compliance with Laws
Eachpartyrepresents,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 allnecessaryor requiredprotectiveequipmentand devices.Each party agrees to abide by and be boundunder theother party's policies governing the conduct and safety of personnel having access to the other party'sfacilitiesoritscustomersfacilities,including without limitation, the other party's policiesregarding illegaland unauthorized articles, anddrugand alcohol policies, but shallhave noresponsibility fortheadequacy of such policies; provided that only such policiesof a party providedtothe other party in writing shall be applicable to the otherparty,andin theabsence of such written policies, the other party shall berequiredto comply with its own policies andthe highest industryandHSEstandards governingthe matterslisted above. Withoutlimitingthe generalityof the foregoing,Superior agrees to notify Baker Hughes in writing in the event that Superior discovers anyhazardous materials in connectionwith performingthe Work hereunder.
12. Notices
All notices, authorizations andrequestsin connection with this Agreement shall be deemed given onthedaytheyare (i) depositedIn the mail,postage prepaid, certified or registered,return receiptrequested; or (ii) sent by air express courier (e.g, DHL, Federal Express or Airborne), charges prepaid,returnreceipt requested, and addressed as set forth below:
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Superior: | SuperiorDrilling Products, LLC |
P.O. Box1656 Vernal, UT84078 | |
telephone: 435.789.0594 | |
Attn:Annette Meier,President | |
Baker Hughes: | Baker HughesOilfield Operations,Inc |
9110 Grogans Mill Road | |
The Woodlands,TX 77380 telephone: 281.363.6130 | |
e-mail: jay.clinksclaes@bakerhughes.com | |
Attn: Jay Clinkscales,AMOManager |
13. ConsequentialDamages
Except with regard to a breach bySuperioror Baker Hugheswithrespect to Paragraphs 5 or 6,neither Partyshallbe liable to theotherfor any indirect,special,punitive, exemplary orconsequentialdamages including but notlimitedto, damages forlostproduction, lost revenue, lost product, lost profitsorlost businessorbusinessinterruptions,from anycause whatsoever,including but notlimitedto the negligence or breach of duty (statutory or otherwise),strictliability, product liability orotherfaultor responsibility ofeither Party and each Party hereby releasesthe otherin thisregard.
14. AncillaryProvisions
14.1 No waiver,modification or amendmentof any term, conditionor prov1s1on of this Agreement noranyaddition theretoshallbe valid or of anyforce or effectunless made inwriting and signedbyanauthorized representativeoftheParties.
14.2 Superiorshall not assign thisAgreement withoutpriorwrittenapprovalof BakerHughes. Anyattemptto so assignshallbevoid.Assignmentwith such approval shallnotoperateto relieveSuperior ofanyofits obligationsunderthisAgreement.
14.3 Superioris and shall remainanindependentcontractor inits performance of this Agreement. Notwithstanding anything herein that may beconstruedtothe contrary,this Agreement shallnot constitute, create,or inany waybeinterpretedas,ajointventure,partnership or formal business organizationofanykindand nothingcontainedin thisAgreement shall beconstruedas establishingany jointobligationsbetweentheparties. Each party hereto retains therightto conduct itsown businessas it seesfitand each party shall act as an independentcontractorof theotherandshallnot,except as specificallyauthorized hereunder,actasanagentorrepresentativeofthe other party foranypurposewhatsoever.Except asexpresslyprovided herein, (a) no partyshallhave theauthorityto bindthe otherpartyor make any commitmentor incur any costs or expenses for or in the nameofthe other party, and (b)noparty hereto shall be responsible in anywayfor anyobligationor liability incurred orassumedby any other party. None of the parties' employees shall be deemed to be theemployeesorservantsof the other party for any purpose. No party shall haveanyfiduciary duty to the other, no special relationship between the partiesshallbe deemed toexist,and no duties notspecifically setforth in this Agreement shallexist.
14.4 This Agreement shall be interpreted under the laws of theStateof Texas,excluding conflictsoflaw andchoiceof law statutes.
14.5 Ifanyprovision of this Agreementshall beheldby a court of competentjurisdictiontobe illegal, invalidorunenforceable, the remainingprovisionsshallremain infull forceand effect.No waiverofany breach of any provision of this Agreement shallconstitutea waiver of any other breach of thesameor anyother provisionshereof,andnowaivershallbeeffective unless made inwiltingand signed by an authorized representative of thewaivingparty.
14.6 Neither party shallbe responsible for any failureordelay incomplying withtheterms of this Agreement wheresuchfailureor delay is due tocausesbeyonditsreasonable control. Thesecauses shallinclude, but not be restrictedto,fire,storm,flood,earthquake, explosion, accident,actsofthe publicenemy, war,rebellion,insurrection, sabotage,epidemic, quarantinerestrictions,labor disputes, labor shortages,transportationembargoesorfailures or delays in transportation, inability tosecurenecessary raw materialsormachinery, actsofGod, actsof anygovernment,whethernational, municipal or otherwise,orany agency thereof, andjudicialaction. The party soaffectedby theforcemajeure shall notify the other party assoonas practicableofits existence. The parties shallthenmeetand endeavor to alleviate the effect and extentthereof.If the force majeure persists for a period in excess of180days either partymayterminatethisAgreement by giving the other party 90 days' written notice thereof.
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14.7 This Agreement,includingany and all Schedules attachedhereto,constitute the entire agreement between the parties withrespect to thesubject matter of this Agreementand supersedeall previous agreements andunderstandings,whether oral or written, express or implied.Thepartiesspecificallyintend to replace and supersedetheprevious Vendor AgreementbetweenBakerHughesand Superior,datedMay 1, 2006 and terminated effective June 30, 2009.Tothe extentthe termsand conditions of this Agreement are in conflict with any terms or conditions in any Schedule, Confidentiality Agreement, work order, proposal,purchaseorder, invoice or othertermsand conditions in any otherdocument, theterms and conditions ofthisAgreement shallcontrol.This Agreementmaynot be altered, amended, ormodified exceptby writteninstrument signedby thedulyauthorized representatives of all parties.The termsonany WorkOrder,PurchaseOrder or otherform submitted bySuperior to BakerHughesshall notapply tothisAgreement.
15. Conciliation/ Arbitration
15.1 Any disputes,claimsor controversies connected with, arising out of, or related to, this Agreement and therightsand obligations createdherein,or the breach, validity, existence or termination hereof (the'Dispute"), shallfirstbe submitted tothe respective representativesof the partiesforresolution. Ifthosedesignated representatives are unable toresolvesuchdispute, claimor controversy withinthirty(30) days of such submission, the dispute,claimor controversy shallthen besubmitted to the Presidents of therespectiveparties for resolution. If the respective Presidents oftheparties areunable to resolve such dispute, claim or controversy within thirty (30) days of submission, thedispute,claim or controversy shall then be submittedtomandatory, binding arbitration in accordance with Clause 15.2below.
15.2 Any Disputearisingout of or connected with this Agreement which cannot be resolved utilizing the procedures setforthIn Clause15.1above, shall be referredto and finallyresolved by arbitration. Upon noticebyeitherpartyto theother, all disputes,claims,questions,or differences (includingissues relatingto theformation oftheagreement andthevalidityof thisarbitrationclause)shall befinallysettled by binding arbitration administered by the American Arbitration Association ("AAA") in accordance withthe provisionsofitsCommercial Arbitration Rules, as well as the Federal Rules of Civil Procedure and the Federal Rules of Evidence, and judgment on the awardrendered by the arbitrator(s)may beentered in any court having jurisdiction thereof.
15.3 The arbitrationPanelshall consist of a single arbitrator, unless otherwise agreed to by the parties. The place of arbitration shallbe Houston,Texas. If the parties arenotable 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 inintellectualproperty matters. All proceedings will be conducted in English.
Thepartiesagree to holdtheentirety of the arbitration proceedings,includingknowledge of the existence of any dispute or controversy, completely confidential except for suchdisclosuresasmightbe required bylaw
Thisarbitration agreement doesnot limitor affect the right of either Partytoseek from any court having jurisdiction anyinterim, interlocutory,or provisional relief thatisnecessary to protect the rights or property of that party. Alternatively, either Party may apply to the AAA pursuantto theAAAOptionalRules for Emergency Measures seeking injunctive reliefuntil thearbitration award is rendered orthecontroversy is otherwiseresolved.
16. Power and Authority
EachParty heretorepresentsthat ithas full power and authority (corporateor otherwise) to execute this Agreement and bind the Party on whosebehalfit 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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