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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

Exhibit 10.7  

 
 

AWARD LETTER    
  

This
Award Letter (this "Award Letter") is made on and as of the 20th day of May, 2002 ("Effective Date") by and between Dot Hill Systems Corporation ("Dot Hill") and Solectron Corporation
("Supplier"), pursuant to the Manufacturing Agreement, dated as of May 20, 2002, made between the parties (the "Agreement"). Capitalized terms not defined in this Award Letter have the meanings
set forth in the Agreement. The parties agree as follows: 

	1.
	Scope: Neither this Award Letter nor the Agreement constitutes a commitment by Dot Hill to purchase Products unless Dot Hill, in its
sole discretion, issues one or more P.O.'s in the manner described in the Agreement.

	2.
	Products and Pricing/Initiatives:

	2.1
	Products and Pricing. Dot Hill may purchase Product(s) from Supplier at the prices in U.S. dollars as set forth in the  Attachment
A to this Award Letter. Such pricing will be determined by the parties within thirty (30) days after the execution of the Award Letter
by both parties and, at such time, the parties will add Attachment A to this Award Letter. Dot Hill shall receive a reduction in price for the cost
reductions described in the last sentence of Section 3.3.3 (Cost Reductions) of the Agreement. Additionally, Dot Hill may elect to receive on a rolling annual basis (or such shorter period that
may
be mutually agreed by the parties) from the Effective Date of this Award Letter, and Supplier shall provide to Dot Hill, an additional reduction in pricing for Products through either:

	(a)
	[...***...],
or

	(b)
	[...***...]).

In
Attachment A, for the initial annual period (or such shorter period as may be mutually agreed by the parties) that begins after the execution of this
Award Letter, Dot Hill will elect either to accept such Supplier committed fixed price reduction or the cost reduction in the penultimate sentence of Section 3.3.3 (Cost Reductions) of the
Agreement. 

Supplier
shall provide a detailed cost breakdown to Dot Hill for each Product covered by this Award Letter, updated quarterly two (2) weeks prior to product cost review submission, covering the
then current quarter and estimates for the following six (6) quarters. 

	2.1
	Demand Replenishment Initiative. The terms and conditions applicable to the Demand Replenishment Program including without limitation
Demand Replenishment Product Leadtimes, Demand Trigger Frequency and Delivery/Title are set forth in Exhibit D to the Agreement.

	2.2
	Business Continuity Plan. The Product-specific Business Continuity Plan is set forth as  Attachment
D to this Award Letter. 

	3.
	Supply Plan Communication: Dot Hill's material organization representative shall provide Supplier with an updated Supply Plan on at
least a quarterly basis and subsequent updates as needed. In the event that Supplier has not received this information within ten (10) days after the beginning of a quarter, Supplier will
notify Dot Hill accordingly.

	4.
	Product Leadtimes: Product Leadtimes for the Products are described in Exhibit D
to the Agreement. 

 
	5.
	Upside Support: Dot Hill may request all or any part of Upside Support quantity at anytime during the applicable quarter up to the
maximum amount indicated beginning with Dot Hill's announcement general availability of the Dot Hill product or system that incorporates the Product(s) ("GA"). Supplier shall
sell, manufacture and ship such Upside Support quantities to Dot Hill on a "first-in, first-out" basis after Dot Hill's written
request. 

	Timeframe
	 	Upside Max. Percentage Increase

	

[...***...]	
 	

[...***...]
	

[...***...]	
 	

[...***...]
	

[...***...]	
 	

[...***...]

Supplier
shall use reasonable efforts to accommodate any request from Dot Hill to accelerate delivery of Upside Support quantities of Products within the timeframes indicated above. With respect to
any request for quantities in excess of Upside Support described above, the parties shall negotiate in good faith acceptable delivery dates. 

	6.
	Customer Support and Quality: Supplier will provide in-warranty and out-of-warranty customer service
and support in accordance with Exhibit B to the Agreement. Supplier shall deliver Product(s) which conforms to the Specification(s) attached as  Attachment E to this Award Letter and shall comply with Supplier's Quality Program attached as
Exhibit C to the Agreement and Customer Support Quality Requirements attached as  Exhibit C-1 to the Agreement. The quantity of Product(s)
delivered to Dot Hill shall not exceed the Defects Per Million ("DPM")
levels set forth in Exhibit C to the Agreement.

	7.
	Turnkey Components, Material Leadtimes and EOQ:

Dot
Hill will provide a components parts list indicating approved vendors for each component. Supplier will use that list to identify current Material Leadtimes and vendor requirements, if any, for
economic order quantities ("EOQ") for each component.(the "List"). The initial version of the List will be added
to this Award Letter as Attachment B within thirty (30) days after execution of this Award Letter by both parties. Thereafter updates to the List
will be set forth in a separate written document which is hereby incorporated by reference. Supplier shall update the List, subject to Dot Hill's approval, at least once each quarter. As part of the
List, Supplier will identify EOQ components which are required to be procured in a minimum order quantity ("MOQ") so that Dot Hill and Supplier can evaluate, as necessary, the costs of procuring the
EOQ versus the MOQ. 

	8.
	Tooling: The list of Dot Hill-owned Tooling related to this Award Letter is set forth in an Attachment to  Attachment C
to this Award Letter.

	9.
	Notices: Dot Hill and Supplier shall each assign an individual to administer the Agreement throughout its term (the "Administrators").
Each party shall inform the Administrator of the other in writing of a change of Administrator or such Administrator's address or telephone number. 

	Dot Hill's Administrator shall be:
 
	 	Supplier's Administrator shall be:

	Rich McGee, Sr. V.P.—Operations	 	Joe Regan, Vice President Strategic Opportunity Management
	Dot Hill Systems Corporation

6305 El Camino Real

Carlsbad, California 92009

Ph: (760) 931-5534

Fax: (760) 931-5527	 	Solectron Corporation

847 Gibraltar Drive, Building 5

Milipitas, California 95035

Ph: (408) 956-6660

Fax: (408) 945-7101

2

 
	10.
	Award Letter Components: The parties agree to be bound by these terms and conditions which consists of the Award Letter and the
following exhibits indicated below that are incorporated by reference herein: 

	

ý	
 	
Attachment A (Product Pricing Matrix)
	

ý	
 	
Attachment B (Turnkey Components and EOQ)
	

ý	
 	
Attachment C (Tooling)
	

ý	
 	
Attachment D (Business Continuity Plan)
	

ý	
 	
Attachment E (Specification)

The
undersigned duly authorized representatives of the parties have executed and delivered this Award Letter as of the Effective Date. Solectron Corporation hereby assigns this Agreement on behalf of
itself and those Solectron subsdiaries and affiliates described in the introductory paragraph of the Agreement. 

	Dot Hill Systems Corporation	 	Solectron Corporation
	 	 	 
	

By	
 	

By
	
	 	

	Name	 	Name
	
	 	

	Title	 	Title
	
	 	

	Date	 	Date
	
	 	

3

 
 
 

ATTACHMENT A
  
    PRODUCT PRICING MATRIX    
  

Warranty Period for Products and FRUs:                        .  

Products:  

[...***...]

FRUs:  

	Part Number
 
	 	FRU Description
	 	Unit Pricing Schedule

	TBD.	 	 	 	 

[...***...]

[*]
= Confidential Treatment Requested. 

4

 
 
 

ATTACHMENT B
  
    TURNKEY COMPONENTS AND EOQ    
  

[*]
= Confidential Treatment Requested. 

5

 
 
 

ATTACHMENT C
  TOOLING    
  

1.    PURPOSE. The purpose of this Attachment is to define Supplier's responsibilities with respect to Tooling for the Product(s) and its use
thereof. 

2.    DEFINITIONS

        2.1  Tooling shall mean all tools, equipment, dies, devices, aids, gauges, models, drawings, software programs (including test
programs) that Dot Hill chooses to provide to Supplier for use by Supplier in the manufacture or test of the Products or prototypes thereof. 

        2.2  Tooling Specifications shall mean the applicable technical specifications and/or drawings related to the Tooling that Dot
Hill may provide to Supplier. 

3.    IDENTIFICATION OF TOOLING. On or before the date on which Dot Hill may provide Tooling to Supplier, Dot Hill will identify to Supplier
the Tooling it desires to provide to Supplier, if any, and provide information to Supplier regarding its required use in the manufacture and/or test of Products or prototypes thereof. 

4.    CHANGES TO TOOLING. Dot Hill may make changes to the Tooling at any time upon written notice to Supplier. If the change causes a
material increase in the cost or time required by Supplier for the manufacture or test of Products, Supplier shall notify Dot Hill in writing. Supplier shall not modify or change the form, fit,
function, design, process or appearance of the Tooling, except upon Dot Hill's prior written approval, which approval may or may not be given by Dot Hill, at Dot Hill's sole discretion. 

5.    INSPECTION RIGHTS. Dot Hill and Dot Hill's applicable customer for which such Tooling is to be used to produce Products shall have the
right to perform, upon request, a first article inspection of the use of the Tooling at the Supplier's manufacturing facility upon reasonable notice. 

6.    OWNERSHIP, USE AND REMOVAL

        6.1  Ownership Rights. All Tooling and Tooling Specifications provided by Dot Hill to Supplier and all replacements or
revisions thereof and material fixed or attached thereto, shall be and remain the property of Dot Hill or Dot Hill's applicable customer. Dot Hill or Dot Hill's applicable customer shall have all
right, title and interest therein. Supplier shall keep the Tooling and Tooling Specifications free of all liens, claims, encumbrances and interests of third parties. Supplier shall cooperate with Dot
Hill and execute any agreements, instruments and other documents required to evidence or perfect the rights of Dot Hill or Dot Hill's customer in the Tooling. 

        6.2  Permitted Use. Supplier shall use the Tooling solely for the purpose of manufacturing and/or testing Products or
prototypes thereof for distribution to Dot Hill, Dot Hill's customers or Dot Hill's Contractor(s). Supplier shall not substitute any of its property for the Tooling or any part thereof. Supplier shall
not deliver or make available to any third party the Tooling, or any property or goods developed, manufactured or created with the aid of the Tooling. Supplier shall not use the Tooling, or any
property or goods manufactured, developed, or created with the use of the Tooling, except to manufacture Products or prototypes thereof for distribution to Dot Hill, Dot Hill's customers or Dot Hill's
Contractor(s). 

        6.3  Tooling Location. Except as otherwise agreed to by the parties in writing, Supplier shall maintain the Tooling at the
Supplier's manufacturing facility. Supplier shall not move, remove or dispose of Tooling without Dot Hill's prior written approval. 

        6.4  Removal. Supplier shall return the Tooling to a Dot Hill-designated location upon demand by Dot Hill using
whatever reasonable means Dot Hill deems most expedient. Upon 

6

 

request by Dot Hill, Supplier shall prepare for shipment and deliver the Tooling to Dot Hill, Dot Hill's customer or Dot Hill's Contractor(s), as Dot Hill shall direct. Supplier shall not in any
manner prevent, hinder or obstruct Dot Hill's removal of Tooling. 

        6.5  Condition of Tooling. Dot Hill will use commercially reasonable efforts to ensure that all Tooling and Tooling
Specifications will be free in all material respects from defects and fit in all material respects for use as anticipated in Supplier's manufacturing processes for the manufacture of the Products. 

7.    ADDITIONAL SUPPLIER RESPONSIBILITIES

        7.1    Markings. Supplier shall not remove, alter or obscure any identification number, labels or tags which are provided by Dot
Hill with or included on the Tooling. 

        7.2  Operation. Supplier shall, at its expense, maintain the Tooling in good working order (including proper calibration of
test equipment) and in the same condition as delivered to Supplier, normal wear and tear excepted. 

        7.3  Risk of Damage. All Tooling, while in Supplier's possession or control, will be held at Supplier's risk and will be kept
insured by Supplier at Supplier's expense in an amount equal to the replacement cost, with loss payable to Dot Hill. Supplier shall provide Dot Hill with the certificate of insurance, upon request by
Dot Hill. 

        7.4  Entry. Dot Hill and Dot Hill's applicable customer that owns or has rights in the Tooling shall have the right at all
reasonable times and upon reasonable notice to enter Supplier's premises to inspect any and all of the Tooling, including, without limitation, opening dies for the Tooling. 

8.    WARRANTY DISCLAIMER. DOT HILL PROVIDES NO WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE TOOLING OR THE TOOLING SPECIFICATION, OR THEIR USE BY SUPPLIER IN THE
MANUFACTURE OF PRODUCTS. ALL WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY EXPRESSLY EXCLUDED.

9.    Indemnification. Dot Hill will defend, at its expense, any action or claim brought against Supplier or its subsidiaries alleging that
Tooling or the Tooling Specifications provided to Supplier by Dot Hill under this Agreement infringe any patent, copyright, trademark, or any other proprietary right, and Dot Hill will pay all costs
and damages (including attorney's fees) incurred by Supplier or its subsidiaries in such actions that are attributable to such actions or claims provided that Supplier (i) gives Dot Hill prompt
written notice of any such action or claim made to Supplier or any of its subsidiaries in writing, (ii) cooperates with Dot Hill, at Dot Hill's expense, in the defense of such action or claim,
and (iii) gives Dot Hill the right to control the defense and settlement of any such action or claim to the extent covered by the indemnification provided herein. Should the use of the Tooling
be enjoined or become the subject of an action or claim of infringement for which indemnity is provided under this Section 9, Dot Hill may, at Dot Hill's option and at no expense to Supplier,
(a) by license or other release, procure for Supplier the right to continue to use the same, (b) replace or modify the same to make it non-infringing; or (c) if
neither alternative is commercially feasible, require Supplier to discontinue promptly the use of the Tooling and the Tooling Specifications and immediately return the same to Dot Hill. 

[*]
= Confidential Treatment Requested. 

7

 
ATTACHMENT D

BUSINESS CONTINUITY PLAN
  (See attached Supplier Business Continuity Plan) 

[*]
= Confidential Treatment Requested. 

8

 
SOLECTRON®

QUALITY SOLUTIONS    •    GLOBAL PARTNERSHIPS  

  
 

    DISASTER RESPONSE / RECOVERY
  PROGRAM
  (DRRP)    
  

        [...***...] 

[*]
= Confidential Treatment Requested. 

9

 
 
 

ATTACHMENT E
  
    SPECIFICATION    
  

	1.
	Engineering
Specification for the Minnow 2U Fibre Channel Data Storage Systems Document No. 950-4131-01 Rev. 1.0

	2.
	Engineering
Specification for the Minnow 2U SCSI Ultra 160 Data Storage Systems Document No. 950-4132-01 Rev. 1.2

	3.
	Engineering
Specification for the Minnow 1U SCSI Ultra 160 Data Storage Systems Document No. 950-4133-01 Rev. 1.0 

[*]
= Confidential Treatment Requested. 

10

 
 
 

Engineering Specification
  
    for the [...***...]    
  

[*]
= Confidential Treatment Requested. 

11

 
 
 

CORPORATE DISASTER RESPONSE AND RECOVERY    
  

	SOLECTRON CORPORATION	 	Revision Date

2/21/01	 	Document Number

CORSAF-10-025440
	

PROCEDURE	
 	

Revision Level

B	
 	

Page 1 of 26,

 
 

CORPORATE
  DISASTER RESPONSE AND RECOVERY    
  

	Originator Approval:

Raelene Wong	 	Approval Date:

February 21, 2001
	

Manager Approval:

Bob Fernandes	
 	

Approval Date:

February 21, 2002
	

Manager Approval:

Philip Fok	
 	

Approval Date:

February 21, 2001

[...***...]

[*]
= Confidential Treatment Requested. 

12

 
 
 

Engineering Specification
  
    for the [...***...]    
  

[*]
= Confidential Treatment Requested. 

13

 
 
 

Engineering Specification
  
    for the [...***...]    
  

[*]
= Confidential Treatment Requested. 

14

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AWARD LETTER

ATTACHMENT A PRODUCT PRICING MATRIX

ATTACHMENT B TURNKEY COMPONENTS AND EOQ

ATTACHMENT C TOOLING

DISASTER RESPONSE / RECOVERY PROGRAM (DRRP)

ATTACHMENT E SPECIFICATION

Engineering Specification for the [...***...]

CORPORATE DISASTER RESPONSE AND RECOVERY

CORPORATE DISASTER RESPONSE AND RECOVERY

Engineering Specification for the [...***...]

Engineering Specification for the [...***...]QuickLinks
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Exhibit 10.3.1    
  

 
 

FIRST AMENDMENT TO EMPLOYEE BENEFITS AGREEMENT    
  

        This First Amendment to Employee Benefits Agreement (the "Amendment"), dated as of this 2nd day of August, 2002, by and among Helmerich &
Payne, Inc., a Delaware corporation ("HP Co."), Cimarex Energy Co. (formerly known as Helmerich & Payne Exploration and Production Co.), a Delaware corporation and wholly-owned
subsidiary of HP Co. ("Cimarex"), and Key Production Company, Inc. a Delaware corporation ("Key"). 

        WHEREAS,
HP Co. and Cimarex entered into a Distribution Agreement dated as of February 23, 2002 (the "Distribution Agreement"), pursuant to which HP Co. will transfer or cause to
be transferred to Cimarex or a subsidiary of Cimarex certain assets and liabilities attributable to Cimarex's business and pursuant to which all of the outstanding common shares of Cimarex will be
distributed to the holders of common stock of HP Co. as of the record date for such distribution, all in accordance with the terms of the Distribution Agreement (the "Distribution"); 

        WHEREAS,
HP Co. and Cimarex entered into an Employee Benefits Agreement dated as of February 23, 2002 (the "Employee Benefits Agreement") for purposes of allocating current and
former employees and assets, liabilities, and responsibilities with respect to employee compensation, benefits and other matters in connection with the Distribution; 

        WHEREAS,
following the Distribution, Mountain Acquisition Co., a Delaware corporation and wholly-owned subsidiary of Cimarex ("Merger Sub"), will merge with and into Key with Key being
the surviving corporation and Key becoming a wholly-owned subsidiary of Cimarex (the "Merger"), pursuant to the terms of the Agreement and Plan of Merger dated as of February 23, 2002, by and
among HP Co., Cimarex, Merger Sub and Key (the "Merger Agreement"); 

        WHEREAS,
Section 5.14 of the Employee Benefits Agreement provides that HP Co. and Cimarex may amend the Employee Benefits Agreement by an agreement signed in writing; 

        WHEREAS,
pursuant to Section 6.2 of the Merger Agreement, HP Co. and Cimarex agreed not to take certain actions without Key's written consent; 

        WHEREAS,
HP Co. has granted restricted stock (the "HP Restricted Stock") to certain of its employees, including individuals (the "Cimarex Employees") who have or will become employees of
Cimarex in connection with the Distribution; 

        WHEREAS,
pursuant to the terms of the HP Restricted Stock and the Distribution Agreement, the Distribution will cause the Cimarex Employees to receive a pro-rata distribution
of shares of Cimarex in respect of the HP Restricted Stock that will be subject to the same restrictions applicable to the HP Restricted Stock in respect of which it is distributed (the "Dividend
Restricted Stock"); 

        WHEREAS,
HP Co., Cimarex and Key intend that, effective as of the Distribution, the HP Restricted Stock shall convert into similarly restricted shares of Cimarex (the "Converted
Restricted Stock") and that the Converted Restricted Stock and the Dividend Restricted Stock shall be subject to restrictions in respect of employment of the Cimarex Employees by Cimarex, not HP Co.; 

        WHEREAS,
the Employee Benefits Agreement does not presently address the treatment of the HP Restricted Stock; 

        WHEREAS,
HP Co. and Cimarex desire to amend the Employee Benefits Agreement in respect of the foregoing; and 

        WHEREAS,
Key desires to consent to such amendment and to the transactions contemplated thereby for purposes of Section 6.2 of the Merger Agreement and for all other purposes for
which such consent might be required in connection with the Transaction Agreements (as such term is defined in the Merger Agreement). 

 

        NOW,
THEREFORE, HP Co., Cimarex and Key hereby agree as follows: 

        1.    The
Employee Benefits Agreement shall be, and hereby is, amended by adding a new Section 4.4 immediately following Section 4.3 thereof to read in its
entirety as follows, effective as of the date of this Amendment: 

        4.4  Restricted Stock. Not later than immediately before the Distribution, HP Co. and Spinco shall have adopted such
resolutions and taken such other actions as may be required to provide that, effective as of the Distribution Date, each equity-based award (including each share of restricted stock but excluding HP
Co. Stock Options) granted to a Spinco Employee and outstanding under the HP Co. Incentive Plans as of the Distribution Date shall be converted into restricted stock of and assumed by Spinco under the
Spinco 2002 Stock Incentive Plan as of the Distribution Date in accordance with its terms and conditions as in effect immediately prior to the Distribution, with such adjustments to such terms and
conditions as are appropriate to preserve the value inherent in such equity-based award with no detrimental effects on the holders thereof, provided that any restrictions to which the awards are
subject in respect of employment by HP Co. of the holders thereof shall be deemed restrictions in respect of employment by Spinco. 

        2.    Key
consents to the foregoing amendment to the Employee Benefits Agreement and to the taking of any and all actions necessary or appropriate to implement the foregoing
amendment to the Employee Benefits Agreement. 

        3.    Except
as provided herein, the Employee Benefits Agreement shall remain in full force and effect. 

        4.    This
Amendment may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 

* * *  

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written. 

	 	 	HELMERICH & PAYNE, INC.
	

 	
 	

By:	
 	

/s/  HANS HELMERICH      

	 	 	Name: Hans Helmerich

Title: President and Chief Executive Officer
	

 	
 	
CIMAREX ENERGY CO.
	

 	
 	

By:	
 	

/s/  STEVEN R. MACKEY      

	 	 	Name: Steven R. Mackey

Title: Vice President
	

 	
 	
KEY PRODUCTION COMPANY, INC.
	

 	
 	

By:	
 	

/s/  PAUL KORUS      

	 	 	Name: Paul Korus

Title: Chief Financial Officer

2

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Exhibit 10.3.1

FIRST AMENDMENT TO EMPLOYEE BENEFITS AGREEMENT

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