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                                                                    EXHIBIT 10.7

                              SERVICES AGREEMENT

     This SERVICES AGREEMENT is made and entered into as of this ______ day of
__________, 2000 by and between ODETICS, INC., a Delaware corporation
("Odetics") and ITERIS, INC., a Delaware corporation ("Iteris").

                                   RECITALS

     WHEREAS, Odetics and Iteris have entered into a Separation and Distribution
Agreement pursuant to which Odetics will distribute all of its shares of Iteris
common stock to Odetics stockholders pursuant to a tax free spinoff under
Internal Revenue Code (S)355 (the "Distribution") and Iteris will issue
additional shares of its authorized but unissued common stock in a registered
and underwritten initial public offering (the "IPO"); and

     WHEREAS, Iteris desires Odetics to perform certain business, information
and facilities services on Iteris' behalf following the Distribution;

     NOW, THEREFORE, the parties hereto do hereby agree as follows:

     1.   Business Services. During the term of this Agreement, Odetics shall
provide to Iteris the services set forth in Exhibit A attached hereto (the
"Services") in substantially the same manner and to the same extent as currently
and heretofore provided.

     2.   PERFORMANCE OF SERVICES.

     2.1  Services to be provided by Odetics may, at Odetics's sole discretion,
be provided, in whole or in part, by affiliates of Odetics. Odetic's shall not
be obligated to acquire new or additional assets, or hire new or additional
employees, to perform the Services. In addition, Odetics may contract with one
or more third parties for the performance of all or any part of the Services
provided (i) the costs to Iteris for the Services to be provided by the third
party do not exceed the amounts that would have been charged by Odetics, (ii)
the level of service provided by the third party is at least substantially
equivalent to that provided by Odetics hereunder, and (iii) such third party is
reasonably acceptable to Iteris. It is currently contemplated that the Services
will generally continue to be provided by the organization that is providing
such Services as of the date hereof. Iteris agrees that all third parties
currently providing any Services are acceptable third parties to provide
Services.

     2.2  The Services to be provided by Odetics shall be provided to Iteris as
appropriate to reflect the organizational and operational structure of Iteris;
provided, however, that Odetics shall not be required to provide any Services to
the extent that the performance of such Services becomes more expensive for
Odetics as a result of an organizational or operations change by Iteris.

     2.3  Iteris shall provide to Odetics on a timely basis any and all
information which is necessary for Odetics to provide the Services. Iteris shall
be solely responsible for the timely delivery of such information, and the
accuracy and completeness thereof. Iteris shall have no right to obtain any
confidential or proprietary information of Odetics, and any such information so
obtained by Iteris shall be deemed to be confidential and treated in accordance
with the provisions of Section 7 hereof.

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     3.   LIMITATION OF SERVICES.

     3.1  Odetics shall not be required to provide any Service in a volume or
quantity which substantially exceeds that provided currently, at the date of
this Agreement.

     3.2  Odetics shall not be required to perform any information system
services to the extent such services would result in the breach of any software
license or other applicable contract. If Odetics believes it is unable to
provide any information systems services pursuant to the foregoing, Odetics
shall promptly notify Iteris. If requested by Iteris, Odetics shall use
reasonable efforts to obtain the rights necessary to provide such information
system services, including obtaining any appropriate consents from third
parties. Iteris shall be responsible for all additional costs and expenses
incurred by Odetics in order to allow Odetics to provide such information system
services, provided that Iteris approves such expenses in advance.

     3.3  Odetics shall not be required to provide any Services to the extent
the performance of such Services becomes impractical as a result of a cause or
causes outside the reasonable control of Odetics or to the extent the
performance of such Services would require Odetics to violate any applicable
laws, rules or regulations.

     3.4  ODETICS MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
AND ODETICS SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES TO BE PROVIDED
HEREUNDER.

     4.   FEES.

     4.1  Iteris shall pay to Odetics, as fees for the Services performed by
Odetics pursuant to this Agreement, the amounts set forth in Exhibit A. In
addition, Iteris shall reimburse Odetics for all direct third party costs
incurred by Odetics in connection with providing the Services, provided that
such third party costs have been approved in advance by Iteris.

     4.2  Odetics shall submit to Iteris, on a monthly basis, Odetics' invoice
for Services performed under this Agreement in the preceding month. Each invoice
shall be payable net thirty (30) days after the date of the invoice; however, in
the event that Iteris in good faith, questions any invoiced item, payment of
that item shall be made only after the satisfactory resolution of those
questions. Iteris shall pay a service charge of ____% per month for all overdue
amounts.

     5.   TERM.

     5.1  Unless terminated earlier as provided in this Section, this Agreement
shall terminate as of a date eighteen (18) months after the date of this
Agreement.

     5.2  Iteris may terminate any of the Services, in whole or in part, upon 30
days written notice to Odetics.

     5.3  This Agreement may be terminated at any time upon the mutual consent
of the parties.

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     5.4  Either party may terminate this Agreement if the other party is in
material default under this Agreement and fails to correct such default within
60 days after receiving written notice of such default.

     5.5  The parties acknowledge that the purpose of this Agreement is to
provide the Services on an interim basis to permit Iteris to obtain alternative
sources for the Services. Iteris shall use its commercially reasonable best
efforts to obtain alternative sources for the Services as soon as practicable.

     6.   INDEMNIFICATION.

     6.1  Iteris shall indemnify and hold harmless Odetics, its affiliates, and
their officers, directors, employees, and agents from and against all claims,
liabilities, obligations, suits, causes of action, or expenses (including
reasonable attorneys fees) (collectively "Claims") claimed to have resulted,
directly or indirectly, from the performance of Services by Odetics, provided,
however, that Iteris shall not be required to indemnify or hold harmless any
indemnitee to the extent the Claims are caused by the gross negligence or
willful misconduct of such indemnitee.

     6.2  An indemnitee shall provide written notice to Iteris of any Claims
with respect to which it seeks indemnification, and Iteris shall assume the
defense of such Claims with counsel reasonably satisfactory to the indemnitee.
If such defense is assumed by Iteris with counsel so selected, Iteris will not
be subject to any liability for any settlement of such Claims made by an
indemnified party without Iteris' consent (such consent to not be unreasonably
withheld or delayed). No indemnified party will be subject to any liability for
any settlement of such Claims made by Iteris without such party's consent (which
consent is not to be unreasonably withheld), and such settlement shall include
an unconditional release of all indemnitees from all liability on such Claims.
If an indemnified party desires to retain separate counsel, such indemnified
party shall have the right to do so, but Iteris will not be obligated to pay the
fees and expenses of such separate counsel. The parties hereto agree to
cooperate fully with each other in connection with the defense, negotiation or
settlement of any legal proceeding, claim or demand and to engage in no action
that would result in or increase liability on the part of another party.

     6.3  The provisions of this Section 6 shall survive termination of the
Agreement.

     7.   CONFIDENTIALITY.

     7.1  In the course of performance of this Agreement, either party
("Receiving Party") may acquire information that other party ("Disclosing
Party") deems confidential, including trade secrets and unpublished technical
information and data to which the Disclosing Party (or companies affiliated with
the Disclosing Party) has proprietary rights. Confidential information shall
also include information of a third party which the Disclosing Party is under an
obligation to maintain in confidence. All such information is referred to
hereinafter as "Disclosed Information."

     7.2  The Receiving Party shall retain Disclosed Information in strict
confidence and shall not communicate it to others without the Disclosing Party's
prior written agreement. Notwithstanding the foregoing, Odetics shall be allowed
to disclose Disclosed Information of Iteris to third parties as necessary to
perform the Services, provided such third parties have undertaken
confidentiality obligations substantially similar to those set forth in this
Section 7.

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     7.3  Nothing in this Agreement shall prevent the communication to others of
any Disclosed Information which the Receiving Party can show was known to it or
its representatives prior to its receipt hereunder, was lawfully received by the
Receiving Party and its representatives other than directly or indirectly from
the Disclosing Party or became public knowledge through no fault of the
Receiving Party.

     7.4  The provisions of this section 7 shall survive termination of this
Agreement for a period of three years.

     8.   MISCELLANEOUS.

     8.1  NOTICES. All notices, requests, claims and other communications
hereunder shall be in writing and shall be given or made (and shall be deemed to
have been duly given or made upon receipt) by delivery by hand, by reputable
overnight courier service, by facsimile transmission, or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 8.1) listed below:

          Odetics, Inc.
          1515 Manchester Avenue
          Anaheim, California   92802
          Attn:  Gregory Miner
          Facsimile:  (714) 780-7246

          Iteris, Inc.
          1575 Manchester Avenue
          Anaheim, California   92802
          Attn:  Jack Johnson
          Facsimile:  (714) 780-7246

or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five (5) calendar days after the date the same is
mailed. Notice given by reputable overnight courier shall be deemed delivered on
the next following business day after the same is sent. Notice given by
facsimile transmission shall be deemed delivered on the day of transmission
provided telephone confirmation of receipt is obtained promptly after completion
of transmission.

     8.2  FURTHER ASSURANCES. Subject to the provisions hereof, the parties
hereto shall make, execute, acknowledge, and deliver such other instruments and
documents, and take all such other actions, as may be reasonably required in
order to effectuate the purposes of this Agreement and to consummate the
transactions contemplated hereby. Subject to the provisions hereof, each of the
parties shall, in connection with entering into this Agreement, performing its
obligations hereunder and taking any and all actions relating hereto, comply
with all applicable laws, regulations, orders, and decrees, and promptly provide
the other parties with all such information as they may reasonably request in
order to be able to comply with the provisions of this Agreement.

     8.3  LIMITATION OF LIABILITY. In no event shall Odetics be liable to Iteris
for indirect, consequential, incidental or special damages, including but not
limited to lost profits, arising

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from or relating to any breach of this Agreement, regardless of any notice of
such damages. Nothing in this Section is intended to limit or restrict the
indemnification rights or obligations of either party.

     8.4  ENTIRETY OF AGREEMENT. This Agreement shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede all prior agreements and undertakings, both written and
oral, between the parties with respect to the subject matter hereof. This
Agreement may not be amended or modified except by an instrument in writing
signed by, or on behalf of, the parties.

     8.5  WAIVER.  The failure of either party in any one or more instances to
insist upon strict performance of any of the terms and conditions of this
Agreement shall not be construed as a waiver or relinquishment to any extent, of
the right to assert or rely upon any such terms or conditions on any future
occasion.

     8.6  DISCLAIMER OF AGENCY.  This Agreement shall not constitute either
party the legal representative or agent of the other, nor shall either party
have the right or authority to assume, create, or incur any third-party
liability or obligation of any kind, express or implied, against or in the name
of or on behalf of the other party except as expressly set forth in this
Agreement. The relationship of Odetics and Iteris shall be solely that of
contracting parties and no partnership joint venture or other arrangement of any
nature shall be deemed to be created hereby.

     8.7  SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.

     8.8  GOVERNING LAW.  This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of California as to all
matters.

     8.9  ASSIGNMENT.  Neither of the parties may assign or delegate any of its
rights or duties under this Agreement without the prior written consent of the
other party; provided that Iteris may assign its rights and obligations under
this Agreement in the event of a sale of all or substantially all of its assets
or a merger in which Iteris is not the surviving entity. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns, by merger, acquisition of assets or
otherwise.

     This Agreement is executed by the parties as of the date indicated above.

ITERIS, INC.                             ODETICS, INC.

By:___________________________           By:_______________________________
Name:  Jack Johnson                      Name:  Gregory Miner
Title: Chief Executive Officer           Title: Chief Financial Officer and
                                         Chief Operating Officer

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                                   EXHIBIT A

Description of Services                                  Calculation of Fees
-----------------------                                  -------------------

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                                                                    EXHIBIT 10.8

                                PROMISSORY NOTE

$_______                                                        _________ , 2000
                                                             Anaheim, California

          FOR VALUE RECEIVED, Iteris, Inc., a Delaware corporation ("Borrower"),
promises to pay to the order of Odetics, Inc., a Delaware corporation
("Lender"), at Anaheim, California, or at such other place as the holder of this
Note may from time to time designate in writing, the principal amount of
__________ dollars ($________), with interest on the principal amount from the
date of disbursement of the principal amount at the rate per annum set forth in
this Note, to be paid as set forth in this Note.

          The principal amount of this Note shall bear interest at the rate per
annum equal to Lender's cost of borrowing from Lender's principal bank during
the term of the Note, but shall not exceed the maximum rate of interest
permitted by applicable law.

          Borrower shall pay interest only for one year following the date of
this Note and shall subsequently pay the principal amount of this Note and
interest thereon in sixteen (16) equal quarterly installments at the end of each
calendar quarter commencing March 31, 2001 and continuing until all principal
and interest have been fully paid.  Each payment of principal shall be
accompanied by a payment equal to all interest accrued on the outstanding
principal amount of the Note.

          Borrower shall have the right to prepay the principal sum of this
Note, or any part thereof or interest thereon, at any time without penalty or
prepayment charge.

          Both principal and interest shall be paid by Borrower in lawful money
of the United States of America in cash or in the form of a cashier's or
certified check.

          If Borrower shall default in the timely making of any payment of
principal and/or interest due hereunder and if the same remains unpaid for
fifteen (15) days following receipt by Borrower of written notice of such
default Lender may declare the entire remaining indebtedness owing hereunder,
including any accrued interest, to become immediately due and payable.

          Upon the occurrence of any of the following, Lender may declare the
entire remaining indebtedness owing hereunder, including any accrued interest,
to become immediately due and payable: (i) the acquisition, directly or
indirectly, by any person or group (within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) of the beneficial ownership of
securities of the Borrower possessing more than fifty percent (50%) of the total
combined voting power of all outstanding securities of the Borrower; (ii) a
merger or consolidation in which the Borrower is not the surviving entity,
except for a transaction in which the holders of the outstanding voting
securities of the Borrower immediately prior to such merger or consolidation
hold, in the aggregate, securities possessing more than fifty percent (50%) of
the total combined voting power of all outstanding voting securities of the
surviving entity immediately after such merger or consolidation; (iii) a reverse
merger in which the Borrower is the surviving entity but in which securities
possessing more than fifty percent (50%) of the total combined voting power of
all outstanding voting securities of the Borrower are transferred to or acquired
by a person or persons different from the persons holding those securities
immediately prior to such merger; (iv) the sale, transfer or other disposition
(in one transaction or a series of related transactions) of all or

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substantially all of the assets of the Borrower; or (v) the approval by the
stockholders of the Borrower of a plan or proposal for the liquidation or
dissolution of the Borrower.

          Notwithstanding anything to the contrary in this Note, the total
liability of Borrower for payments in the nature of interest shall not exceed
the limits applicable to this Note or imposed by the usury laws of the United
States of America or the State of California.  If any payment in the nature of
interest made by Borrower or received by the holder of this Note is determined
to be in excess of  any limit applicable to this Note imposed by such usury
laws, then the amount of such excess shall constitute and be considered a
payment of principal, not interest, and such amount shall be applied to reduce
the principal sum so that the total liability of the Borrower for payments in
the nature of interest does not exceed the applicable limits, if any, imposed by
such usury laws.  In the event and to the extent such excess amount of interest
exceeds the outstanding unpaid principal balance hereunder, any such excess
amount shall be immediately returned to Borrower by Lender.

          No delay or omission on the part of the Lender hereof in exercising
any right hereunder shall operate as a waiver of such right or of any other
right under this Note.

          Neither this Note nor any term hereof may be waived, amended,
discharged, modified, changed, or terminated orally, nor shall any waiver of any
provision hereof be effective except by an instrument in writing signed by
Borrower and Lender.

          Whenever used herein, the words "Borrower" and "Lender" shall be
deemed to include their respective successors and assigns.

          All notices, requests, claims and other communications hereunder shall
be in writing and shall be given or made (and shall be deemed to have been duly
given or made upon receipt) by delivery by hand, by reputable overnight courier
service, by facsimile transmission, or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this provision) listed below:

                         Odetics, Inc.
                         1515 Manchester Avenue
                         Anaheim, California 92802
                         Attn:  Gregory Miner
                         Facsimile: (714) 780-7246

                         Iteris, Inc.
                         1575 Manchester Avenue
                         Anaheim, California 92802
                         Attn:  Jack Johnson
                         Facsimile: (714) 780-7246

or to such other address as any party may, from time to time, designate in a
written notice given in a like manner. Notice given by hand shall be deemed
delivered when received by the recipient. Notice given by mail as set out above
shall be deemed delivered five (5) calendar days after the date the same is
mailed. Notice given by reputable overnight courier shall be deemed delivered on
the next following business day after the same is sent. Notice given by
facsimile transmission shall be deemed

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delivered on the day of transmission provided telephone confirmation of receipt
is obtained promptly after completion of transmission.

          There are no oral agreements between Lender and Borrower relating to
this Note.  If any provision of this Note is held to be invalid or
unenforceable, it shall not affect the validity and enforceability of the other
provisions of this Note.   This Note has been executed and delivered in the
State of California and is to be governed by and construed according to the laws
thereof.

          IN WITNESS WHEREOF, the Borrower has executed this Note as of the date
first hereinabove written.

                              Iteris, Inc.

                              By:  ___________________________
                                   Jack Johnson
                                   Chief Executive Officer

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