EXHIBIT 10.7
SERVICES AGREEMENT
This SERVICES AGREEMENT (as amended, supplemented or otherwise
modified from time to time and at any time, this "Services Agreement"), is
entered into as of September 5, 2003, between INDIAN-XXXXXX, INC., a Nevada
corporation ("IM, Inc."), and XXXXXX YALE INDUSTRIES INC. ("Seller" or in its
capacity as servicer, the "Servicer"), a corporation incorporated under the laws
of Indiana.
DEFINITIONS
Unless otherwise defined herein or the context otherwise
requires, certain terms that are used throughout this Services Agreement are
defined in Exhibit 1 to the Receivables Purchase Agreement, dated as of even
date herewith, between IM, Inc. and Seller, which definitions set forth on said
Exhibit 1 are incorporated herein by this reference.
PRELIMINARY STATEMENTS
As of the Effective Date, IM, Inc. is purchasing Receivables
and Related Rights from Seller, pursuant to one or more of the Receivables
Purchase Agreements between IM, Inc. and Seller and others, together with
Receivables and Related Rights currently owned by Indian-Xxxxxx XX, a Swiss
corporation (the "Swiss Subsidiary"), which were previously sold to the Swiss
Subsidiary by Seller and others.
IM, Inc. desires to appoint Seller as the Servicer to collect
Assigned Receivables and Related Rights as IM, Inc. is and will be purchasing
from Seller and the Swiss Subsidiary (the "Swiss Receivables") arising from
prior transactions with Seller commencing as of the Effective Date and may from
time to time thereafter purchase from Seller.
Seller is willing to undertake to act as the Servicer for IM,
Inc.
NOW THEREFORE, in consideration of the mutual promises and
provisions herein contained, the parties agree as follows:
ARTICLE 1 COLLECTION SERVICES
Section 1.01. Appointment of Servicer. IM, Inc. hereby
appoints Seller to perform the duties and obligations of the Servicer.
Section 1.02. Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such
actions as may be necessary or advisable to collect each Assigned Receivable and
each Swiss Receivables from time to time, all in accordance with this Services
Agreement and all applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the Credit and Collection Policy.
(b) The Servicer shall set aside for the account of IM,
Inc. the amount of the Collections to which IM, Inc. is entitled in accordance
with the Receivables Purchase Agreement and shall deposit for the account and
benefit of IM, Inc. the amount of such Collections as IM, Inc. shall direct the
Servicer. The Servicer, if instructed by IM, Inc. or its lender, will instruct
all Obligors to cause all Collections to be sent to a Lock-Box Account. In the
event that Seller receives Collections directly from any Obligor, Seller shall
deposit such Collections into a Lock-Box Account by the end of the then current
four week accounting period of Seller.
(c) The Servicer, at the direction of IM, Inc. or its
lender, shall commence or settle any legal action to enforce collection of any
Assigned Receivable or to foreclose upon or repossess any Related Property.
(d) The Servicer shall perform such other acts and
provide such other services as IM, Inc. or its lender may from time to time
reasonably request and the Servicer may agree to perform or provide.
(e) The Servicer will maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Assigned Receivables in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Assigned Receivables (including, without limitation, records
adequate to permit the daily identification of each new Assigned Receivable and
all Collections of and adjustments to each existing Assigned Receivable), but
only for a period of at least forty-eight (48) months from the date of the
origination thereof.
(f) The Servicer shall permit IM, Inc. or its lender on
reasonable notice at any time during normal business hours to inspect, audit,
check and make abstracts from accounts, records, correspondence and other papers
pertaining to the Assigned Receivables. IM, Inc. shall deliver to the Servicer
and the Servicer shall hold for the benefit of IM, Inc., all records and
documents (including without limitation computer tapes or disks) with respect to
each Assigned Receivable.
ARTICLE 2 CONSIDERATION FOR PERFORMANCE OF SERVICER'S ACTIVITIES
Section 2.01. Compensation for Performance of Servicer's
Activities. In consideration for the performance of the Servicer's collection
and servicing activities set forth in Article 1 of this Services Agreement (the
"Servicing Activities"), commencing as of the Effective Date, IM, Inc. shall
compensate the Servicer in an amount equal to the Operating Costs incurred by
the Servicer plus the Percentage Fee. The term "Operating Costs" shall mean the
costs of those Services as set out in Annex 1 to this Services Agreement. The
term "Percentage Fee" shall equal the percentage of Operating Costs as
determined pursuant to an economic transfer pricing study as calculated by an
independent third party acceptable to both IM, Inc. and the Servicer. IM, Inc.
and the Servicer agree that until otherwise agreed the initial Percentage Fee
shall equal 2.23% of Operating Costs based upon the economic transfer pricing
study that has been previously agreed to by IM, Inc. and Servicer.
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Section 2.02. Reports. The Servicer shall provide reports to
IM, Inc. listing the Servicing Activities that the Servicer has provided for IM,
Inc. during each fiscal quarter of the Servicer. Each Report shall be submitted
no later than fifteen (15) days following the end of each quarter of the
calendar year, and shall be in the form of Annex 2 to this Services Agreement.
Section 2.03. Payment by IM, Inc. IM, Inc. shall pay the
amount stated in a Report to the Servicer within thirty (30) days following
receipt of such Report.
Section 2.04. Currency. All financial obligations originating
from the terms and conditions of this Article 2 shall be denominated in U.S.
dollars.
ARTICLE 3 INDEPENDENT CONTRACTOR
Section 3.01. Independent Contractor. The Servicer is, and
shall remain, an independent contractor, and not an employee or partner of IM,
Inc. The Servicer shall be solely liable for any loss or damage caused by it or
its employees or agents.
Section 3.02. Servicer Not an Agent. IM, Inc. does not appoint
the Servicer as its agent or authorize the Servicer to hold itself out as agent
of IM, Inc., nor does IM, Inc. authorize the Servicer to pledge the credit of,
or enter into any contract on behalf of, IM, Inc.
Section 3.03. Contracts. The Servicer shall not have the right
to assume or create any obligation of any kind, either express or implied, on
behalf of IM, Inc., except as expressly provided for in this Services Agreement.
No agreement or commitment made on behalf of IM, Inc. is binding on IM, Inc.
without a confirmation by cable, facsimile, or other writing by a person duly
authorized to act on IM, Inc.'s behalf.
ARTICLE 4 INDEMNIFICATION
The Servicer agrees to indemnify IM, Inc. and each of its
permitted assigns, officers, directors, employees, agents, lenders or secured
creditors (each of the foregoing Persons being individually called an
"Indemnified Party") against, and hold IM, Inc. and each Indemnified Party
harmless from, any and all claims asserted against IM, Inc. or any Indemnified
Party by any third party arising out of any wrongful or negligent act or
omission of the Servicer in performing any of the activities that the Servicer
shall perform or furnish for IM, Inc. pursuant to the provisions of this
Services Agreement; provided however, that IM, Inc. shall promptly notify the
Servicer in writing of each such claim made or suit thereon instituted against
IM, Inc. or any Indemnified Party and the details thereof, and shall not pay or
compromise any such claim or suit without the written approval of the Servicer,
and the Servicer shall be permitted to assume and direct the defense of any such
suit by counsel of its own choosing.
ARTICLE 5 COMPLIANCE WITH LAW
The Servicer agrees that it shall not violate any applicable
law or regulation of any country or political subdivision in performing or
purporting to perform its obligations arising out of, or in connection with,
this Services Agreement. The Servicer agrees to maintain any
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records required by applicable laws and regulations and to provide all written
assurances required by IM, Inc. or its lender in connection with compliance with
this Article 5.
ARTICLE 6 PAYMENTS AND COMPUTATIONS
Section 6.01. Amounts Paid by Servicer and IM, Inc. All
amounts to be paid or deposited by the Servicer and IM, Inc. hereunder shall be
paid or deposited no later than 2:00 p.m. (Central time) on the day when due in
same day funds. All amounts received after 2:00 p.m. (Central time) will be
deemed to have been received on the immediately succeeding Business Day.
Section 6.02. Business Day. Whenever any payment or deposit to
be made hereunder shall be due on a day other than a Business Day, such payment
or deposit shall be made on the next succeeding Business Day.
ARTICLE 7 TERM AND TERMINATION
Section 7.01. Term. This Services Agreement may be terminated
by either party at any time by giving the other party thirty (30) days' prior
written notice of the effective date of termination.
Section 7.02. Rights on Termination. On termination of this
Services Agreement:
(a) All rights and obligations of the parties shall cease
and terminate except that the obligations of both parties under this Services
Agreement otherwise shall continue in effect after the date of termination with
respect to all Assigned Obligations owned by IM, Inc. on the date of termination
or previously acquired by IM, Inc. (including obligations of accounting and
rights of indemnification provided for herein).
(b) The Servicer shall turn over to IM, Inc. records and
documents in the Servicer's files relating to Assigned Receivables (including
without limitation computer tapes or disks with respect to each Assigned
Receivable). All such records and information shall be treated as confidential
and shall not be disclosed by the Servicer to any other Person either during or
after the term of this Services Agreement without the prior written consent of
IM, Inc.
ARTICLE 8 MISCELLANEOUS
Section 8.01. Notices. All notices and other communications
provided for hereunder shall, unless otherwise expressly stated herein, be in
writing (which shall include facsimile communication) and shall be personally
delivered or sent by certified mail, postage prepaid, or by facsimile, to the
intended party at the address or facsimile number of such party set forth under
its name below or at such other address or facsimile number as shall be
designated by such party in a written notice to the other party hereto. All such
notices and communications shall be effective, (a) if personally delivered, when
received, (b) if sent by certified mail, three (3) Business Days after having
been deposited in the mail, postage prepaid, (c) if sent by overnight courier,
one (1) Business Day after having been given to such courier,
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and (d) if transmitted by facsimile, when sent, receipt confirmed by telephone
or electronic means.
The Servicer: Xxxxxx Yale Industries Inc.
000 Xxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xx. Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
IM, Inc.: Indian-Xxxxxx, Inc.
0000-X Xxxxxxxxxxx Xxxxx, Xxxxx 00
Xxx Xxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Section 8.02. Force Majeure. If the performance of any part of
this Services Agreement by either party, or of any obligation under this
Services Agreement, is prevented, restricted, interfered with, or delayed by
reason of any cause beyond the reasonable control of the party liable to
perform, unless conclusive evidence to the contrary is provided, the party so
affected shall, on giving written notice to the other party, be excused from
such performance to the extent of such prevention, restriction, interference or
delay, provided that the affected party shall use its reasonable best efforts to
avoid or remove such causes of nonperformance and shall continue performance
with the utmost dispatch whenever such causes are removed. When such
circumstances arise, the parties shall discuss in good faith what, if any,
modification of the terms of this Services Agreement may be required in order to
arrive at an equitable solution.
Section 8.03. Successors and Assigns. This Services Agreement
shall be binding on and shall inure to the benefit of the parties, Affiliates,
their respective successors, successors in title, and assigns, and each party
agrees, on behalf of it, its Affiliates, successors, successors in title, and
assigns, to execute any instruments that may be necessary or appropriate to
carry out and execute the purposes and intentions of this Services Agreement and
hereby authorizes and directs its Affiliates, successors, successors in title,
and assigns to execute any and all such instruments. Each and every successor in
interest to any party or Affiliate, whether such successor acquires such
interest by way of gift, devise, assignment, purchase, conveyance, pledge,
hypothecation, foreclosure, or by any other method, shall hold such interest
subject to all of the terms and provisions of this Services Agreement. The
rights of the parties, Affiliates, and their successors in interest, as among
themselves and shall be governed by the terms of this Services Agreement, and
the right of any party, Affiliate or successor in interest to assign, sell or
otherwise transfer or deal with its interests under this Services Agreement
shall be subject to the limitations and restrictions of this Services Agreement.
Section 8.04. Amendment. No change, modification, or amendment
of this Services Agreement shall be valid or binding on the parties unless such
change or modification shall be in writing signed by the party or parties
against whom the same is sought to be enforced
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and any lender of IM, Inc. to which IM, Inc. shall have granted a Lien in, or
assigned to, any of the Assigned Receivables.
Section 8.05. Remedies Cumulative. The remedies of the parties
under this Services Agreement are cumulative and shall not exclude any other
remedies to which either party may be lawfully entitled.
Section 8.06. Further Assurances. Each party hereby covenants
and agrees that it shall execute and deliver such further documents and take
such further actions as may be required to implement any of the provisions of
this Services Agreement.
Section 8.07. No Waiver. The failure of either party to insist
on strict performance of a covenant hereunder or of any obligation hereunder
shall not be a waiver of such party's right to demand strict compliance
therewith in the future, nor shall the same be construed as a novation of this
Services Agreement.
Section 8.08. Entire Agreement. This Services Agreement
embodies the entire agreement and understandings of the parties hereto, and
supersedes all prior or contemporaneous agreements and understandings of such
Person, verbal or written, relating to the subject matter hereof and thereof.
The Annexes to this Services Agreement shall be deemed incorporated by reference
into this Services Agreement as if set forth herein.
Section 8.09. Headings. The captions and heading of this
Services Agreement and in any Annex hereto are for convenience of reference and
shall not affect the interpretation hereof or thereof.
Section 8.10. Counterparts. This Services Agreement may be
executed in any number of counterparts each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
one and the same agreement.
Section 8.11. Applicable Law. This Services Agreement shall be
governed by, and construed in accordance with, the substantive laws of the State
of Indiana without reference to the conflicts of laws rules or principles of any
jurisdiction.
Section 8.12. Severability. In the event any provision,
clause, sentence, phrase, or word hereof, or the application thereof in any
circumstances, is held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder hereof, or of the application of any such provision, sentence, clause,
phrase, or word in any other circumstances.
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IN WITNESS WHEREOF, the parties have caused this Services
Agreement to be executed and delivered by their respective duly authorized
officers, as of the date first above written.
XXXXXX YALE INDUSTRIES INC.
By: _______________________________________
___________________________________________
(Printed Name and Title)
INDIAN - XXXXXX, INC., a Nevada corporation
By: _______________________________________
___________________________________________
(Printed Name and Title)
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ANNEX 1
DEFINITION OF OPERATING COSTS
Operating Costs shall include the following categories:
A. Direct costs ("Direct Costs") of the Servicing Activities:
- Costs or deductions for compensation, bonuses, and travel
expenses attributable to employees directly engaged in performing the
servicing
- Materials and supplies directly consumed in rendering the
servicing
- Other costs in connection with the servicing
B. Indirect costs that relate to the Direct Costs ("Indirect Costs")
attributable to the Servicing Activities:
- Including utilities, occupancy, supervisory and clerical
compensation, and other overhead burden of the department incurring the
Direct Costs. Indirect Costs also include an appropriate share of the
costs relating to supporting department and other applicable general
and administrative expense to the extent reasonably allocable to the
Servicing Activities.
- Excluded costs include interest expense and expenses of
compliance with regulations or policies imposed upon the Servicer that
are not directly related to the Servicing Activities.
Annex 2
REPORT OF SERVICING ACTIVITIES PROVIDED BY
SERVICER TO IM, INC. PURSUANT TO SERVICES AGREEMENT
To: [Name and Address]
From: [Name and Address]
Date: [Date]
You are receiving this Report pursuant to Section 2 of the
Services Agreement (the "Services Agreement"), dated as of September 5, 2003,
between Indian-Xxxxxx, Inc. and ________________ (the "Servicer"). Unless
defined herein, capitalized terms that are used throughout this Report are
defined in the Services Agreement.
During the period from [Date] to [Date] (the "Period"), the
Servicer performed to following described Servicing Activities: ________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.
During the Period, the Servicer incurred Operating Costs in the following
categories:
[List of Operating Categories]
[Total of Operating Costs]
Pursuant to the Services Agreement, the compensation due the
Servicer for the Period is the total of Operating Costs and the Percentage Fee.
Accordingly, the compensation due for this Period is $_______________ [Total of
Operating Costs + Percentage Fee].
All supporting information with respect to the Operating Costs
is in the Servicer's files. Please advise if you have any questions or comments
about these matters.
