**Exhibit 10.1**

**BUSINESS LOAN AGREEMENT**

 

This Agreement dated as of May 15, 2003, isbetween Bank of America, N.A. (the “Bank”) and TRM Corporation (the“Borrower”).

 

1.                                       FACILITYNO. 1:  LINE OF CREDIT AMOUNT AND TERMS

 

1.1                                 Lineof Credit Amount.

 

(a)                                  Duringthe availability period described below, the Bank will provide a line of creditto the Borrower.  The amount of the lineof credit (the “Facility No. 1 Commitment”) is Four Million Dollars($4,000,000.00).

 

(b)                                 Thisis a revolving line of credit.  During theavailability period, the Borrower may repay principal amounts and reborrowthem.

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### (c)                                  TheBorrower agrees not to permit the principal balance outstanding to exceed theFacility No. 1 Commitment.  If theBorrower exceeds this limit, the Borrower will immediately pay the excess tothe Bank upon the Bank’s demand.

 

1.2                                 AvailabilityPeriod.  The line of credit isavailable between the date of this Agreement and April 30, 2004, or suchearlier date as the availability may terminate as provided in this Agreement(the “Facility No. 1 Expiration Date”).

 

1.3                                 RepaymentTerms.

 

(a)                                  TheBorrower will pay interest on May 31, 2003 and then on the last day of eachmonth  thereafter until payment in fullof any principal outstanding under this line of credit.

 

(b)                                 TheBorrower will repay in full all principal and any unpaid interest or othercharges outstanding under this line of credit no later than the Facility No. 1Expiration Date.

 

1.4                                 InterestRate.

 

(a)                                  Theinterest rate is a rate per year equal to the Bank’s Prime Rate.

 

(b)                                 ThePrime Rate is the rate of interest publicly announced from time to time by theBank as its Prime Rate.  The Prime Rateis set by the Bank based on various factors, including the Bank’s costs anddesired return, general economic conditions and other factors, and is used as areference point for pricing some loans. The Bank may price loans to its customers at, above, or below the PrimeRate.  Any change in the Prime Rateshall take effect at the opening of business on the day specified in the publicannouncement of a change in the Bank’s Prime Rate.

 

1.5                                 Lettersof Credit.

 

(a)                                  Duringthe availability period, at the request of the Borrower, the Bank will issue:

 

(i)                                     Commercialletters of credit with a maximum maturity not to extend more than 365 daysbeyond the Facility No. 1 Expiration Date.

 

(ii)                                  Standbyletters of credit with a maximum maturity not to extend more than 365 daysbeyond the Facility No. 1 Expiration Date.

 

(b)                                 Theamount of the letters of credit outstanding at any one time (including thedrawn and unreimbursed amounts of the letters of credit) may not exceed ThreeMillion Dollars ($3,000,000.00).

 

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(c)                                  Incalculating the principal amount outstanding under the Facility No. 1 Commitment,the calculation shall include the amount of****any letters of credit outstanding,including amounts drawn on any letters of credit and not yet reimbursed.

 

(d)                                 TheBorrower agrees:

 

(i)                                     Anysum drawn under a letter of credit may, at the option of the Bank, be added tothe principal amount outstanding under this Agreement.  The amount will bear interest and be due asdescribed elsewhere in this Agreement.

 

(ii)                                  Ifthere is a default under this Agreement, to immediately prepay and make theBank whole for any outstanding letters of credit.

 

(iii)                               Theissuance of any letter of credit and any amendment to a letter of credit issubject to the Bank’s written approval and must be in form and contentsatisfactory to the Bank and in favor of a beneficiary acceptable to the Bank.

 

(iv)                              Tosign the Bank’s form Application and Agreement for Commercial Letter of Creditor Application and Agreement for Standby Letter of Credit, as applicable.

 

(v)                                 Topay any issuance and/or other fees that the Bank notifies the Borrower will becharged for issuing and processing letters of credit for the Borrower.

 

(vi)                              Toallow the Bank to automatically charge its checking account for applicablefees, discounts, and other charges.

 

(vii)                           Borroweragrees to pay the Bank a non-refundable fee equal to the Applicable Margin forLIBOR/IBOR Rate described in Section 2.9 less 50 basis points per annum appliedto the outstanding undrawn amount of each standby letter of credit.  Such fee shall be calculated and payable onthe date each letter of credit is issued, and on the anniversary date of theletter of credit, if any, calculated on the basis of the face amountoutstanding on the day the fee is calculated, and utilizing the ApplicableMargin in effect on such date.

 

2.                                       FACILITYNO. 2:  TERM LOAN AMOUNT AND TERMS

 

2.1                                 LoanAmount.  The Bank agrees to providea term loan to the Borrower in the amount of Fifteen Million Dollars($15,000,000.00) (the “Facility No. 2 Commitment”).

 

2.2                                 AvailabilityPeriod.  The loan is available inone disbursement from the Bank as soon as reasonably practical after theexecution of this Agreement and satisfaction of the Conditions described inSection 6.

 

2.3                                 RepaymentTerms.

 

(a)                                  TheBorrower will pay all accrued but unpaid interest on May 31, 2003 and then onthe last day of each month thereafter and upon payment in full of the principalof the loan.

 

(b)                                 TheBorrower will repay principal in 10 successive quarterly installments of SevenHundred Fifty Thousand Dollars ($750,000.00) starting September 30,2003.  On March 31, 2006, theBorrower will repay the remaining principal balance plus any interest then due.

 

(c)                                  TheBorrower may prepay the loan in full or in part at any time in an amount notless than One Hundred Thousand Dollars ($100,000.00).  The prepayment will be applied to the most remote payment ofprincipal due under this Agreement.  Aprepayment may result in a prepayment fee under Section 2.7 or Section 2.8.

 

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2.4                                 InterestRate.

 

(a)**                                 **Theinterest rate is a rate per year equal to the Bank’s Prime Rate, plus theApplicable Margin as defined below.

 

2.5**                                **OptionalInterest Rates.  Instead of theinterest rate based on the rate stated in the paragraph entitled “InterestRate” above, the Borrower may elect the optional interest rates listed belowfor this Facility No. 2 during interest periods agreed to by the Bank and theBorrower.  The optional interest ratesshall be subject to the terms and conditions described later in thisAgreement.  Any principal amount bearinginterest at an optional rate under this Agreement is referred to as a“Portion.”  The following optionalinterest rates are available:

 

(a)                                  TheLIBOR Rate plus the Applicable Margin as defined below.

 

(b)                                 TheIBOR Rate plus the Applicable Margin as defined below.

 

2.6                                 OptionalRates.  Each optional interest rateis a rate per year.  Interest will bepaid on the last day of each month during the interest period.  At the end of any interest period, theinterest rate will revert to the Bank’s Prime Rate plus the Applicable Marginas defined below, unless the Borrower has designated another optional interestrate for the Portion.  No Portion willbe converted to a different interest rate during the applicable interestperiod.  Upon the occurrence of an eventof default under this Agreement, the Bank may terminate the availability ofoptional interest rates for interest periods commencing after the defaultoccurs.

 

2.7                                 LIBORRate.  The election of LIBOR Ratesshall be subject to the following terms and requirements:

 

(a)                                  Theinterest period during which the LIBOR Rate will be in effect will be one, two,or three months.  The first day of theinterest period must be a day other than a Saturday or a Sunday on which theBank is open for business in New York and London and dealing in offshoredollars (a “LIBOR Banking Day”).  Thelast day of the interest period and the actual number of days during theinterest period will be determined by the Bank using the practices of theLondon inter-bank market.

 

(b)                                 EachLIBOR Rate Portion will be for an amount not less than One Million Dollars($1,000,000.00).

 

(c)                                  The“LIBOR Rate” means the interest rate determined by the following formula,rounded upward to the nearest 1/100 of one percent.  (All amounts in the calculation will be determined by the Bank asof the first day of the interest period.)

 

| LIBOR Rate = |   | London Inter-Bank Offered Rate |                        |
|--------------|--------|--------------------------------|-----------------------------|
|         |   |                           | (1.00 - Reserve Percentage) |
|              |        |                                |                             |  |

 

Where,

 

(i)                                     “LondonInter-Bank Offered Rate” means the interest rate at which the Bank’s LondonBanking Center, London, Great Britain, would offer U.S. dollar deposits for theapplicable interest period to other major banks in the London inter-bank marketat approximately 11:00 a.m. London time two (2) London Banking Days before thecommencement of the interest period.  A“London Banking Day” is a day on which the Bank’s London Banking Center is openfor business and dealing in offshore dollars.

 

(ii)                                  “ReservePercentage” means the total of the maximum reserve percentages for determiningthe reserves to be maintained by member banks of the Federal Reserve System forEurocurrency Liabilities, as defined in Federal Reserve Board Regulation D,rounded upward to the nearest 1/100 of one percent.  The percentage will be expressed as a decimal, and will include,but not be limited to, marginal, emergency, supplemental, special, and otherreserve percentages.

 

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(d)                                 TheBorrower shall irrevocably request a LIBOR Rate Portion no later than 12:00noon Portland time on the LIBOR Banking Day preceding the day on which theLondon Inter-Bank Offered Rate will be set, as specified above.  For example, if there are no interveningholidays or weekend days in any of the relevant locations, the request must bemade at least three days before the LIBOR Rate takes effect.

 

(e)                                  TheBank will have no obligation to accept an election for a LIBOR Rate Portion ifany of the following described events has occurred and is continuing:

 

(i)                                     Dollardeposits in the principal amount, and for periods equal to the interest period,of a LIBOR Rate Portion are not available in the London inter-bank market; or

 

(ii)                                  theLIBOR Rate does not accurately reflect the cost of a LIBOR Rate Portion.

 

(f)                                    Eachprepayment of a LIBOR Rate Portion, whether voluntary, by reason ofacceleration or otherwise, will be accompanied by the amount of accruedinterest on the amount prepaid and a prepayment fee as described below.  A “prepayment” is a payment of an amount ona date earlier than the scheduled payment date for such amount as required bythis Agreement.

 

(g)                                 Theprepayment fee shall be in an amount sufficient to compensate the Bank for anyloss, cost or expense incurred by it as a result of the prepayment, includingany loss of anticipated profits and any loss or expense arising from theliquidation or reemployment of funds obtained by it to maintain such Portion orfrom fees payable to terminate the deposits from which such funds wereobtained.  The Borrower shall also payany customary administrative fees charged by the Bank in connection with theforegoing.  For purposes of thisparagraph, the Bank shall be deemed to have funded each Portion by a matchingdeposit or other borrowing in the applicable interbank market, whether or notsuch Portion was in fact so funded.

 

2.8                                 IBORRate.  The election of IBOR Ratesshall be subject to the following terms and requirements:

 

(a)                                  Theinterest period during which the IBOR Rate will be in effect will be no shorterthan 7 days and no longer than 90 days. The last day of the interest period will be determined by the Bank usingthe practices of the offshore dollar inter-bank market.

 

(b)                                 EachIBOR Rate Portion will be for an amount not less than One Million Dollars($1,000,000.00).

 

(c)                                  The“IBOR Rate” means the interest rate determined by the following formula,rounded upward to the nearest 1/100 of one percent.  (All amounts in the calculation will be determined by the Bank asof the first day of the interest period.)

 

| IBOR Rate = |   | IBOR Base Rate |                        |
|-------------|--------|----------------|-----------------------------|
|        |   |           | (1.00 - Reserve Percentage) |
|             |        |                |                             |  |

 

Where,

 

(i)                                     “IBORBase Rate” means the interest rate at which the Bank’s Grand Cayman BankingCenter, Grand Cayman, British West Indies, would offer U.S. dollar deposits forthe applicable interest period to other major banks in the offshore dollarinter-bank market.

 

(ii)                                  “ReservePercentage” means the total of the maximum reserve percentages for determiningthe reserves to be maintained by member banks of the Federal Reserve System forEurocurrency Liabilities, as defined in Federal Reserve Board Regulation D,rounded upward to the nearest 1/100 of one percent.  The percentage will be expressed as a decimal, and will include,but not be limited to, marginal, emergency, supplemental, special, and otherreserve percentages.

 

(d)                                 TheBank will have no obligation to accept an election for an IBOR Rate Portion ifany of the following described events has occurred and is continuing:

 

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(i)                                     Dollardeposits in the principal amount, and for periods equal to the interest period,of an IBOR Rate Portion are not available in the offshore dollar inter-bankmarket; or

 

(ii)                                  theIBOR Rate does not accurately reflect the cost of an IBOR Rate Portion.

 

(e)                                  Eachprepayment of an IBOR Rate Portion, whether voluntary, by reason ofacceleration or otherwise, will be accompanied by the amount of accruedinterest on the amount prepaid, and a prepayment fee as described below.  A “prepayment” is a payment of an amount ona date earlier than the scheduled payment date for such amount as required bythis Agreement.

 

(f)                                    Theprepayment fee shall be in an amount sufficient to compensate the Bank for anyloss, cost or expense incurred by it as a result of the prepayment, includingany loss of anticipated profits and any loss or expense arising from theliquidation or reemployment of funds obtained by it to maintain such Portion orfrom fees payable to terminate the deposits from which such funds wereobtained.  The Borrower shall also payany customary administrative fees charged by the Bank in connection with theforegoing.  For purposes of thisparagraph, the Bank shall be deemed to have funded each Portion by a matchingdeposit or other borrowing in the applicable interbank market, whether or notsuch Portion was in fact so funded.

 

2.9                                 ApplicableMargin.  The Applicable Margin shallbe the following amounts per annum, based upon the Leverage Ratio (as definedin the “Covenants” section of this Agreement) on a rolling four quarter basis,as set forth in the most recent compliance certificate received by the Bank asrequired in the Covenants section:

 
|               |   |                    |   | **Applicable  Margin  (in basis points per annum)** |   |
|--------------------|--------|-------------------------|--------|-----------------------------------------------------|--------|
| **Pricing  Level** |   | **Leverage  Ratio**     |   | **Offshore  Applicable Margin**                     |   | **Prime Rate  Applicable Margin** |   |
| 1                  |   | >2.00x               |   | 325 bps                                             |   | 50 bps |   |
| 2                  |   | >1.50x but <2.00x |   | 295 bps                                             |   | 25 bps |   |
| 3                  |   | >1.00x but <1.50x |   | 265 bps                                             |   | 0 bps |   |
| 4                  |   | <1.00x               |   | 235 bps                                             |   | 0 bps |   |

 

The Applicable Margin shall be in effect from the date the most recentcompliance certificate is received by the Bank until the date the nextcompliance certificate is received; provided, however, that if the Borrowerfails to timely deliver the next compliance certificate, the Applicable Marginfrom the date such compliance certificate was due until the date suchcompliance certificate is received by the Bank shall be the highest pricinglevel set forth above.

 

Notwithstanding the foregoing, until the Bank receives the compliancecertificate as of June 30, 2003, the Applicable Margin shall be asindicated for pricing level 1. Thereafter, until the Bank receives the compliance certificate as ofSeptember 30, 2003, the Applicable Margin shall be as specified for theLeverage Ratio actually achieved or for pricing level 3, whichever resultsin the greatest Applicable Margin. Thereafter, the Applicable Margin shall reflect the Leverage Ratioactually achieved.

 

3.                                       FEESAND EXPENSES

 

3.1                                 Fees.

 

(a)                                  LoanFee.

 

(i)                                     TheBorrower agrees to pay a loan fee on Facility No. 1 in the amount of TenThousand Dollars ($10,000.00).  This feeis due on the date of this Agreement.

 

(ii)                                  TheBorrower agrees to pay a loan fee on Facility No. 2 in the amount of FiftySix Thousand Two-Hundred Fifty Dollars ($56,250.00).  This fee is due on the date of this Agreement.

 

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(b)                                 WaiverFee.  If the Bank, at itsdiscretion, agrees to waive or amend any terms of this Agreement, the Borrowerwill, at the Bank’s option, pay the Bank a fee for each waiver or amendment inan amount advised by the Bank at the time the Borrower requests the waiver oramendment.  Nothing in this paragraphshall imply that the Bank is obligated to agree to any waiver or amendmentrequested by the Borrower.  The Bank mayimpose additional requirements as a condition to any waiver or amendment.

 

(c)                                  LateFee.  To the extent permitted bylaw, the Borrower agrees to pay a late fee in an amount not to exceed fourpercent (4%) of any payment that is more than fifteen (15) days late.  The imposition and payment of a late feeshall not constitute a waiver of the Bank’s rights with respect to the default.

 

(d)                                 UnusedCommitment Fee.  The Borrower agreesto pay a fee on any difference between the Facility No. 1 Commitment and theamount of credit it actually uses, determined by the average of the dailyamount of credit outstanding during the specified period.  The fee will be calculated at 0.35% peryear.  The calculation of creditoutstanding shall include the undrawn amount of letters of credit.  This fee shall be paid quarterly in arrears.

 

3.2                                 Expenses.  The Borrower agrees to immediately repay theBank for expenses that include, but are not limited to, filing, recording andsearch fees, appraisal fees, title report fees, and documentation fees.

 

3.3                                 ReimbursementCosts.

 

(a)                                  TheBorrower agrees to reimburse the Bank for any expenses it incurs in thepreparation of this Agreement and any agreement or instrument required by thisAgreement.  Expenses include, but arenot limited to, reasonable attorneys’ fees, including any allocated costs ofthe Bank’s in-house counsel to the extent permitted by applicable law.

 

(b)                                 TheBorrower agrees to reimburse the Bank for the cost of periodic fieldexaminations of the Borrower’s books, records and collateral, and appraisals ofthe collateral, at such intervals as the Bank may reasonably require, not toexceed one per year while loan is not in default.  The actions described in this paragraph may be performed byemployees of the Bank or by independent appraisers.

 

4.                                       COLLATERAL

 

4.1                                 PersonalProperty.  The Borrower’s obligationsto the Bank under this Agreement will be secured by personal property theBorrower now owns or will own in the future as listed below.  The collateral is further defined insecurity agreement(s) executed by the Borrower.  In addition, all personal property collateral securing thisAgreement shall also secure all other present and future obligations of theBorrower (or, if there is more than one Borrower, any one of them) to the Bank(excluding any consumer credit covered by the federal Truth in Lending law,unless the Borrower has otherwise agreed in writing or received written noticethereof).  All personal propertycollateral securing any other present or future obligations of the Borrower(or, if there is more than one Borrower, any one of them) to the Bank shallalso secure this Agreement.

 

(a)                                  Machineryand Equipment.

 

(b)                                 Inventory.

 

(c)                                  Receivables.

 

(d)                                 Stockand other securities as follows:  100%of the shares of stock or other equity interests in TRM Copy Centers (USA)Corporation, 100% of the shares of stock or other equity interests in TRM ATMCorporation, and 65% of the shares or other equity interests of TRM (ATM) Ltd.

 

Regulation U of the Board of Governors of the FederalReserve System places certain restrictions on loans secured by margin stock (asdefined in the Regulation).  The Bankand the Borrower

 

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shall comply with Regulation U.  If any of the collateral is margin stock,the Borrower shall provide to the Bank a Form U-1 Purpose Statement.

 

(e)                                  Patents,trademarks and other general intangibles.

 

4.2                                 LentCollateral.  The Borrower’sobligation to the Bank under this agreement will be secured by personalproperty now owned or owned in the future by TRM Copy Centers (USA) Corporationand TRM ATM Corporation as listed below. The collateral is further defined in security agreements executed bysuch corporations.

 

(a)                                  Machineryand Equipment.

 

(b)                                 Inventory.

 

(c)                                  Receivables.

 

(d)                                 Patents,trademarks and other general intangibles.

 

(e)                                  Applicableto TRM Copy Centers (USA) Corporation only, 65% of the shares of stock or otherequity interests in TRM Copy Centres (Canada) Ltd. and TRM Copy Centres (U.K.)Ltd. The foregoing are called “Material Foreign Subsidiaries.”

 

4.3                                 SubsidiaryGuaranties.  The Borrower’sobligations to the Bank under this Agreement will be guaranteed by TRM CopyCenters (USA) Corporation and TRM ATM Corporation.

The foregoing are called “Guarantors.”

 

5.                                       DISBURSEMENTS,PAYMENTS AND COSTS

 

5.1                                 Disbursementsand Payments.

 

(a)                                  Eachpayment by the Borrower will be made in immediately available funds by directdebit to a deposit account as specified below or by mail to the address shownon the Borrower’s statement or at one of the Bank’s banking centers in theUnited States.

 

(b)                                 Eachdisbursement by the Bank and each payment by the Borrower will be evidenced byrecords kept by the Bank.  In addition,the Bank may, at its discretion, require the Borrower to sign one or morepromissory notes.

 

5.2                                 Telephoneand Telefax Authorization.

 

The Bank may honor telephone or telefax instructions for advances orrepayments or for the designation of optional interest rates and telefaxrequests for the issuance of letters of credit given, or purported to be given,by any one of the individuals authorized to sign loan agreements on behalf ofthe Borrower, or any other individual designated by any one of such authorizedsigners.

 

(a)                                  Advanceswill be deposited in and repayments will be withdrawn from account number28011-01047 owned by Borrower, or such other of the Borrower’s accounts withthe Bank as designated in writing by the Borrower.

 

(b)                                 TheBorrower will indemnify and hold the Bank harmless from all liability, loss,and costs in connection with any act resulting from telephone or telefax instructionsthe Bank reasonably believes are made by any individual authorized by theBorrower to give such instructions. This paragraph will survive this Agreement’s termination, and willbenefit the Bank and its officers, employees, and agents.

 

5.3                                 DirectDebit (Pre-Billing).

 

(a)                                  TheBorrower agrees that the Bank will debit deposit account number 28011-01047owned by Borrower, or such other of the Borrower’s accounts with the Bank asdesignated in writing by the

 

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Borrower (the “Designated Account”) on the date eachpayment of principal and interest and any fees from the Borrower becomes due(the “Due Date”).

 

(b)                                 Priorto each Due Date, the Bank will mail to the Borrower a statement of the amountsthat will be due on that Due Date (the “Billed Amount”).  The bill will be mailed a specified numberof calendar days prior to the Due Date, which number of days will be mutuallyagreed from time to time by the Bank and the Borrower.  The calculations in the bill will be made onthe assumption that no new extensions of credit or payments will be madebetween the date of the billing statement and the Due Date, and that there willbe no changes in the applicable interest rate.

 

(c)                                  TheBank will debit the Designated Account for the Billed Amount, regardless of theactual amount due on that date (the “Accrued Amount”).  If the Billed Amount debited to theDesignated Account differs from the Accrued Amount, the discrepancy will betreated as follows:

 

(i)                                     Ifthe Billed Amount is less than the Accrued Amount, the Billed Amount for thefollowing Due Date will be increased by the amount of the discrepancy.  The Borrower will not be in default byreason of any such discrepancy.

 

(ii)                                  Ifthe Billed Amount is more than the Accrued Amount, the Billed Amount for thefollowing Due Date will be decreased by the amount of the discrepancy.

 

Regardless of any such discrepancy, interest willcontinue to accrue based on the actual amount of principal outstanding withoutcompounding.  The Bank will not pay theBorrower interest on any overpayment.

 

(d)                                 TheBorrower will maintain sufficient funds in the Designated Account to cover eachdebit.  If there are insufficient fundsin the Designated Account on the date the Bank enters any debit authorized bythis Agreement, the Bank may reverse the debit.

 

5.4                                 BankingDays.  Unless otherwise provided inthis Agreement, a banking day is a day other than a Saturday, Sunday or otherday on which commercial banks are authorized to close, or are in fact closed,in the state where the Bank’s lending office is located, and, if such dayrelates to amounts bearing interest at an offshore rate (if any), means anysuch day on which dealings in dollar deposits are conducted among banks in theoffshore dollar interbank market.  Allpayments and disbursements which would be due on a day which is not a bankingday will be due on the next banking day. All payments received on a day which is not a banking day will beapplied to the credit on the next banking day.

 

5.5                                 InterestCalculation.  Except as otherwisestated in this Agreement, all interest and fees, if any, will be computed onthe basis of a 360-day year and the actual number of days elapsed.  This results in more interest or a higherfee than if a 365-day year is used. Installments of principal which are not paid when due under thisAgreement shall continue to bear interest until paid.

 

5.6                                 DefaultRate.  Upon the occurrence of anydefault under this Agreement, all amounts outstanding under this Agreement,including any interest, fees, or costs which are not paid when due, will at theoption of the Bank bear interest at a rate which is 4.0 percentage point(s)higher than the rate of interest otherwise provided under this Agreement.  This may result in compounding ofinterest.  This will not constitute awaiver of any default.

 

6.                                       CONDITIONS

 

The Bank must receive the following items, in form and contentacceptable to the Bank, before it is required to extend any credit to theBorrower under this Agreement:

 

6.1                                 Conditionsto First Extension of Credit. Before the first extension of credit:

 

(a)                                  Authorizations.  If any Borrower or any guarantor is anythingother than a natural person, evidence that the execution, delivery andperformance by such Borrower and/or such guarantor of this Agreement and anyinstrument or agreement required under this Agreement have been dulyauthorized.

 

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(b)                                 GoverningDocuments.  A copy of the Borrower’sorganizational documents.

 

(c)                                  Guaranties.  Guaranties signed by TRM Copy Centers (USA)Corporation and TRM ATM Corporation.

 

(d)                                 SecurityAgreements.  (i) Original securityagreements signed by Borrower, TRM ATM Corporation and by TRM Copy Centers(USA) Corporation, (ii) original pledge agreements signed by Borrower and TRMCopy Centers (USA) Corporation covering all of the equity securities of theGuarantors, (iii) original pledge agreements signed by TRM Copy Centers (USA)Corporation covering sixty-five percent (65%) of the equity securities of theMaterial Foreign Subsidiaries, and (iv) such assignments, financing statements,fixture filings and delivery of pledged securities indorsed in blank, which theBank requires in connection with such security agreements and pledge agreement,all in form and substance satisfactory to Bank.

 

(e)                                  Perfectionand Evidence of Priority. Financing statements and fixture filings (and anycollateral in which the Bank requires a possessory security interest), togetherwith evidence that the security interests and liens in favor of the Bank arevalid, enforceable, and prior to all others’ rights and interests, except thosethe Bank consents to in writing.

 

(f)                                    Paymentof Fees.  Payment of all accrued andunpaid expenses incurred by the Bank as required by the paragraph entitled“Reimbursement Costs.”

 

(g)                                 Insurance.  Evidence of insurance coverage, as requiredin the “Covenants” section of this Agreement.

 

(h)                                 LegalOpinion.  Written opinions from theBorrower’s legal counsel, covering such matters as the Bank may require.  The legal counsel and the terms of theopinion must be acceptable to the Bank.

 

(i)                                     GoodStanding.  Certificates of goodstanding or existence for the Borrower and each Guarantor from its state orcountry of formation.

 

(j)                                     OtherItems.  Any other items that theBank reasonably requires.

 

7.                                       REPRESENTATIONSAND WARRANTIES

 

When the Borrower signs this Agreement, and until the Bank is repaid infull, the Borrower makes the following representations and warranties.  Each request for an extension of creditconstitutes a renewal of these representations and warranties as of the date ofthe request:

 

7.1                                 Formation.  If any Borrower is anything other than anatural person, it is duly formed and existing under the laws of the statewhere organized.

 

7.2                                 Authorization.  This Agreement, and any instrument oragreement required hereunder, are within the Borrower’s powers, have been dulyauthorized, and do not conflict with any of its organizational papers.

 

7.3                                 EnforceableAgreement.  This Agreement is alegal, valid and binding agreement of the Borrower, enforceable against theBorrower in accordance with its terms, and any instrument or agreement requiredhereunder, when executed and delivered, will be similarly legal, valid, bindingand enforceable.

 

7.4                                 GoodStanding.  In each state in whichthe Borrower does business, it is properly licensed, in good standing, and,where required, in compliance with fictitious name statutes, except wherefailure to do any of the foregoing is not reasonably likely to result in amaterial adverse impact to the Borrower or the collateral.

 

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7.5                                 NoConflicts.  This Agreement does notconflict with any law, agreement, or obligation by which the Borrower is bound,except where such conflict would not result in a material adverse impact to theBorrower or the collateral.

 

7.6                                 FinancialInformation.  All financial andother information that has been or will be supplied to the Bank is sufficientlycomplete to fairly present in all material respects the Borrower’s (and anyguarantor’s) financial condition, including all material contingentliabilities.  Since the date of the mostrecent financial statement provided to the Bank, there has been no materialadverse change in the business condition (financial or otherwise), operations,properties or prospects of the Borrower (or any guarantor).  If any Borrower is comprised of the trusteesof a trust, the foregoing representations shall also pertain to the trustor(s)of the trust.

 

7.7                                 Lawsuits.  There is no lawsuit, tax claim or otherdispute pending or, to Borrower’s knowledge, threatened against the Borrowerwhich, if lost, would impair the Borrower’s financial condition or ability torepay the loan, except as have been disclosed in writing to the Bank.

 

7.8                                 Collateral.  All collateral required in this Agreement isowned by the grantor of the security interest free of any title defects or anyliens or interests of others, except those disclosed on Schedule 7.8attached.

 

7.9                                 Permits,Franchises.  The Borrower possessesall permits, memberships, franchises, contracts and licenses required and alltrademark rights, trade name rights, patent rights and fictitious name rightsnecessary to enable it to conduct the business in which it is now engaged,except where such failure would not result in a material adverse impact to theBorrower or the collateral.

 

7.10                           OtherObligations.  The Borrower is not indefault on any material obligation for borrowed money, any material purchasemoney obligation or any other material lease, commitment, contract, instrumentor obligation, except as have been disclosed in writing to the Bank.

 

7.11                           TaxMatters.  The Borrower has noknowledge of any pending material assessments or material adjustments of itsincome tax for any year and all taxes due have been paid, except as have beendisclosed in writing to the Bank.

 

7.12                           NoEvent of Default.  There is no eventwhich is, or with notice or lapse of time or both would be, a default underthis Agreement.

 

7.13                           Insurance.  The Borrower has obtained, and maintained ineffect, the insurance coverage required in the “Covenants” section of thisAgreement.

 

7.14                           Locationof Borrower.  Borrower’s place ofbusiness (or, if any Borrower has more than one place of business, its chiefexecutive office) is located at the address listed under the Borrower’ssignature on this Agreement. Borrower and each Guarantor is an Oregoncorporation.

 

7.15                           TaxShelter Regulations.  Borrower doesnot intend to treat the loans and/or letters of credit as being a “reportabletransaction” (within the meaning of Treasury RegulationSection 1.6011-4).  In the eventBorrower determines to take any action inconsistent with such intention, it willpromptly notify Bank.  If Borrower sonotifies the Bank, Borrower acknowledges that the Bank may treat the loansand/or letters of credit as part of a transaction that is subject to TreasuryRegulation Section 301.6112-1, and the Bank will maintain the lists andother records required by such Treasury Regulation.

 

8.                                       COVENANTS

 

The Borrower agrees, so long as credit is available under thisAgreement and until the Bank is repaid in full:

 

8.1                                 Useof Proceeds.

 

(a)                                  Touse the proceeds of Facility No. 1 as described in Section 10.11 and forgeneral business purposes.

 

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(b)                                 Touse the proceeds of Facility No. 2 as described in Section 10.11 and forgeneral business purposes.

 

8.2                                 FinancialInformation.  To provide thefollowing financial information and statements in form and scope reasonablyacceptable to the Bank, and such additional information as requested by theBank from time to time:

 

(a)                                  Within120 days of the fiscal year end, the annual financial statements of Borrower,certified and dated by an authorized financial officer.  These financial statements must be audited(with an opinion satisfactory to the Bank) by a Certified Public Accountantacceptable to the Bank.  The statementsshall be prepared on a consolidated basis.

 

(b)                                 Copiesof the Form 10-K Annual Report for Borrower within 120 days of Borrower’sfiscal year end.

 

(c)                                  Within30 days of the period’s end, monthly financial statements of Borrower,certified and dated by an authorized financial officer.  The statements shall be prepared on aconsolidated basis and will also include consolidating and/or divisionalfinancial statements.

 

(d)                                 Copiesof the Form 10-Q Quarterly Report for Borrower within 45 days of quarter end.

 

(e)                                  Financialprojections for the subsequent two fiscal years, specifying the assumptionsused in creating the projections.  Theprojections shall be provided to the Bank no less often than 60 days after theend of each fiscal year.

 

(f)                                    Withinthe period(s) provided in (a) and (d) above, a compliance certificate of the Borrowersigned by an authorized financial officer of the Borrower setting forth (i) theinformation and computations (in sufficient detail) to establish that theBorrower is in compliance with all financial covenants at the end of the periodcovered by the financial statements then being furnished and (ii) whether thereexisted as of the date of such financial statements and whether there exists asof the date of the certificate, any default under this Agreement and, if anysuch default exists, specifying the nature thereof and the action the Borroweris taking and proposes to take with respect thereto.

 

(g)                                 IfBorrower notifies the Bank of any intention to treat loans and/or letters ofcredit as being a “reportable transaction” (within the meaning of TreasuryRegulation Section 1.6011-4), a duly completed copy of IRS Form 8886 orany successor form.

 

8.3**                                **MinimumTangible Net Worth.  To maintain ona consolidated basis Tangible Net Worth equal to at least the sum of thefollowing:

 

(a)                                  FortyMillion Dollars ($40,000,000.00); plus

 

(b)                                 thesum of 50% of net income after income taxes (without subtracting losses) earnedin each quarterly accounting period commencing after March 31, 2003; plus

 

(c)                                  75%of net proceeds from any equity securities issued after the date of thisAgreement; plus

 

(d)                                 anyincrease in stockholders’ equity resulting from the conversion of debtsecurities to equity securities after the date of this Agreement.

 

“Tangible Net Worth” means the value of total assets (includingleaseholds and leasehold improvements and reserves against assets but excludinggoodwill, patents, trademarks, trade names, organization expense, unamortizeddebt discount and expense, capitalized or deferred research and developmentcosts, deferred marketing expenses, and other like intangibles, and monies duefrom affiliates, officers, directors, employees, shareholders, members ormanagers) less total liabilities, including but not limited to accrued anddeferred income taxes.

 

Compliance with this covenant will be determined at the end of eachquarter.

 

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8.4                                 MinimumFixed Charge Coverage Ratio.  Tomaintain on a consolidated basis a Fixed Charge Coverage Ratio of at least1.50:1.00.

 

“Fixed Charge Coverage Ratio” means the ratio of (a) the sum of EBITDA,less taxes, dividends, and unfunded capital expenditures to (b) the sum ofcurrent portion of long-term debt, plus interest expense. In computing EBITDAfor the purpose of this and the following covenant, commercial paper/cashsecuritization expense will be treated as an operating expense and not treatedas interest.  The following one-timeadditions to EBITDA relating to non-cash charges taken in the fourth quarter of2002 shall be made in calculating EBITDA for any period in which such additionsare applicable:

 

(a)                                  Mitainventory adjustment, $1,930,258;

 

(b)                                 Redundancyaccrual, $686,211;

 

(c)                                  Litigationsettlement reserve, $1,788,000;

 

(d)                                 Vehiclelease provision, $400,000.

 

This ratio will be calculated at the end of each fiscal quarter, usingthe results of that quarter and the 3 immediately preceding fiscal quarters.

 

8.5                                 MaximumLeverage Ratio.  To maintain on aconsolidated basis a Leverage Ratio of less than 2.25:1.0 from the date of thisAgreement through September 30, 2003 and less than 2.00:1.0 thereafter.

 

“Leverage Ratio” means the ratio of Funded Debt to EBITDA.

 

“Funded Debt” means all outstanding indebtedness for borrowed money andother interest-bearing indebtedness, including current and long term indebtedness.

 

This ratio will be calculated at the end of each fiscal quarter, usingthe results of that quarter and the 3 immediately preceding fiscal quarters.

 

8.6                                 AccountsPayable Days.  To maintain at theend of each quarter, on a consolidated basis, Accounts Payable Days at or below50 days.  “Accounts Payable Days” is thenumber calculated by dividing trade accounts payable outstanding at the end ofany quarter by the cost of goods sold for the 12 month period ended at the endof such quarter multiplied by 365. Depreciation shall not be included in cost of goods sold for purposes ofthis calculation.

 

8.7                                 Outof Facility No. 1 Period.  To reducethe amount of advances outstanding under Facility No. 1 to 0 for a period of atleast 30 consecutive days in each Line-Year. “Line-Year” means the periodbetween the date of this Agreement and the date one year thereafter and eachsubsequent one-year period (if any). For purposes of this Section, “Advances” does not include undrawn amountof outstanding letters of credit.

 

8.8                                 OtherDebts.  Not to have outstanding orincur any direct or contingent liabilities or lease obligations (other thanthose to the Bank), or become liable for the liabilities of others (or topermit any subsidiary of Borrower  to doso) without the Bank’s written consent. This does not prohibit:

 

(a)                                  Acquiringgoods, supplies, or merchandise on normal trade credit.

 

(b)                                 Endorsingnegotiable instruments received in the usual course of business.

 

(c)                                  Obtainingsurety bonds in the usual course of business.

 

(d)                                 Liabilities,lines of credit and leases in existence on the date of this Agreement disclosedin writing to the Bank.

 

(e)                                  Liabilitiesfor the purchase or lease of equipment if such purchase or lease is notrestricted by the restriction on capital expenditures set forth below.

 

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(f)                                    Unsecuredliabilities not exceeding $2,500,000 in any fiscal year.

 

8.9                                 OtherLiens.  Not to create, assume, allowor permit any security interest or lien (including judicial liens) on propertyit now or later owns, or permit any subsidiary of Borrower to do so except:

 

(a)                                  Liensand security interests in favor of the Bank.

 

(b)                                 Liensfor taxes not yet due.

 

(c)                                  Liensoutstanding on the date of this Agreement disclosed in writing to the Bank.

 

(d)                                 Carrier’s,warehousemen’s, mechanics’, materialmen’s or other like liens arising in theordinary course of business, which are not overdue for a period of more than 60days, or which are being contested in good faith and by appropriateproceedings, if adequate reserves with respect thereto are maintained on thebooks of the applicable person.

 

(e)                                  Attachment,judgment or similar liens arising in connection with litigation or other legalproceedings (and not otherwise an Event of Default hereunder) in the ordinarycourse of business that are currently being contested in good faith byappropriate proceedings, and for which adequate reserves have been set aside.

 

(f)                                    Purchasemoney liens or security interest in connection with the purchase or lease ofequipment not restricted by the restriction on capital expenditures set forthbelow.

 

8.10                           Maintenanceof Assets.

 

(a)                                  Notto sell, assign, lease, transfer or otherwise dispose of any part of theBorrower’s business or the Borrower’s assets except in the ordinary course ofthe Borrower’s business, as in a sale of copiers that are obsolete and havebeen fully depreciated, nor permit any of its subsidiaries to do so.

 

(b)                                 Notto sell, assign, lease, transfer or otherwise dispose of any assets for lessthan fair market value, or enter into any agreement to do so nor permit any ofits subsidiaries to do so.

 

(c)                                  Notto enter into any sale and leaseback agreement covering any of its fixed assetsnor permit any of its subsidiaries to do so, unless proceeds from suchtransaction are used to reduce the outstanding balance of Facility No. 2.

 

(d)                                 Tomaintain and preserve all rights, privileges, and franchises the Borrower nowhas and cause its subsidiaries to do so.

 

(e)                                  Tomake any repairs, renewals, or replacements to keep the Borrower’s propertiesin good working condition and cause its subsidiaries to do so.

 

8.11                           Investments.  Not to have any existing, or make anynew,  investments in any individual orentity, or make any capital contributions or other transfers of assets to anyindividual or entity, or permit any of its subsidiaries to do so, without theBank’s permission, which permission shall not be unreasonably withheld, exceptfor:

 

(a)                                  Existinginvestments disclosed to the Bank in writing.

 

(b)                                 Investmentsin the Borrower’s current subsidiaries.

 

(c)                                  Investmentsin any of the following:

 

(i)                                     certificatesof deposit;

 

(ii)                                  U.S.treasury bills and other obligations of the federal government;

 

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8.12                           Loans.  Not to make any loans, advances or otherextensions of credit to any individual or entity, or permit any of itssubsidiaries to do so except for:

 

(a)                                  Existingextensions of credit disclosed to the Bank in writing.

 

(b)                                 Extensionsof credit to the Borrower’s current subsidiaries.

 

(c)                                  Extensionsof credit in the nature of accounts receivable or notes receivable arising fromthe sale or lease of goods or services in the ordinary course of business tonon-affiliated entities.

 

8.13                           Dividends-StockRepurchases.  Not to declare or payany dividends on any of its capital stock except dividends payable in capitalstock of Borrower, and not to purchase or redeem any of its capital stock inexcess of $1,500,000 in any fiscal year.

 

8.14                           AdditionalNegative Covenants.  Not to, withoutthe Bank’s written consent, do any of the following things or permit any ofBorrower’s subsidiaries to do such things:

 

(a)                                  engagein any material business activities substantially different from theBorrower’s, Guarantor’s or Material Foreign Subsidiary’s present business.

 

(b)                                 liquidateor dissolve the Borrower’s, Guarantor’s or Material Foreign Subsidiary’sbusiness, except that a Guarantor or Material Foreign Subsidiary may liquidateif its assets are transferred to Borrower or another Guarantor or MaterialForeign Subsidiary.

 

(c)                                  enterinto any consolidation, merger, or other combination, or become a partner in apartnership, a member of a joint venture, or a member of a limited liabilitycompany without written consent of Bank.

 

(d)                                 sell,assign, lease, transfer or otherwise dispose of any material part of theBorrower’s or any Guarantor’s or Material Foreign Subsidiary’s business or theBorrower’s or any Guarantor’s or Material Foreign Subsidiary’s assets except inthe ordinary course of the Borrower’s or Guarantor’s or Material ForeignSubsidiary’s business, and except that Borrower, Guarantors and MaterialForeign Subsidiaries may dispose of their presently owned Savin liquid tonercopy machines.

 

(e)                                  acquireor purchase a business or its assets.

 

(f)                                    voluntarilysuspend its business for more than 7 days in any 30-day period.

 

(g)                                 pledgeor mortgage of assets of Borrower or any Guarantor or Material ForeignSubsidiary, except as permitted above.

 

(h)                                 exceptfor loans or capital contributions specifically permitted herein, transfermoney or assets to TRM ATM Corporation or any other affiliate whose business isutilizing ATM machines.

 

(i)                                     toexpend or become obligated to expend for capital expenditures more than the sumof $2,500,000 in fiscal year 2003 or more than $5,000,000 in any fiscal yearthereafter.

 

8.15                           Noticesto Bank.  To promptly notify theBank in writing of:

 

(a)                                  Anylawsuit over One Million Dollars ($1,000,000.00) against the Borrower (or anyguarantor or, if any Borrower is comprised of the trustees of a trust, anytrustor).

 

(b)                                 Anysubstantial dispute between any governmental authority and the Borrower (or anyguarantor or, if any Borrower is comprised of the trustees of a trust, anytrustor).

 

(c)                                  Anyevent of default under this Agreement, or any event which, with notice or lapseof time or both, would constitute an event of default.

 

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(d)                                 Anymaterial adverse change in the Borrower’s (or any guarantor’s, or, if anyBorrower is comprised of the trustees of a trust, any trustor’s) businesscondition (financial or otherwise), operations, properties or prospects, orability to repay the credit.

 

(e)                                  Anychange in the Borrower’s name, legal structure, place of business, or chiefexecutive office if the Borrower has more than one place of business.

 

(f)                                    Anyactual material contingent liabilities of any Borrower (or any guarantor or, ifany Borrower is comprised of the trustees of a trust, any trustor), and anysuch material contingent liabilities which are reasonably foreseeable.

 

8.16                           Insurance.

 

(a)                                  GeneralBusiness Insurance.  To maintaininsurance as is usual for the business it is in.

 

(b)                                 InsuranceCovering Collateral.  To maintainall risk property damage insurance policies covering the tangible propertycomprising the collateral.  Eachinsurance policy must be in an amount reasonably acceptable to the Bank.  The insurance must be issued by an insurancecompany reasonably acceptable to the Bank and must include a lender’s losspayable endorsement in favor of the Bank in a form reasonably acceptable to theBank.

 

(c)                                  BusinessInterruption Insurance.  To maintaina business interruption insurance policy in an amount, and with an insureracceptable to the Bank, and with the Bank named as an additional loss payee.

 

(d)                                 FloodInsurance.  If any improved realproperty collateral is located in a designated flood hazard area, or becomeslocated in a designated flood hazard area after the date of this Agreement as aresult of any re-mapping of flood insurance maps by the Federal EmergencyManagement Agency, the Borrower will be required to maintain flood insurance onthe real property and on any tangible personal property collateral located onthe real property.

 

(e)                                  Evidenceof Insurance.  Upon the request ofthe Bank, to deliver to the Bank a copy of each insurance policy, or, ifpermitted by the Bank, a certificate of insurance listing all insurance inforce.

 

8.17                           Compliancewith Laws.  To comply in all materialrespects with the laws (including any fictitious name statute), regulations,and orders of any government body with authority over the Borrower’s business.

 

8.18                           ERISAPlans.  Promptly during each year,to pay and cause any subsidiaries to pay contributions adequate to meet atleast the minimum funding standards under ERISA with respect to each and everyPlan; file each annual report required to be filed pursuant to ERISA inconnection with each Plan for each year; and notify the Bank within ten (10) daysof the occurrence of any Reportable Event that might constitute grounds fortermination of any capital Plan by the Pension Benefit Guaranty Corporation orfor the appointment by the appropriate United States District Court of atrustee to administer any Plan.  “ERISA”means the Employee Retirement Income Security Act of 1974, as amended from timeto time.  Capitalized terms in thisparagraph shall have the meanings defined within ERISA.

 

8.19                           Booksand Records.  To maintain adequatebooks and records.

 

8.20                           Audits.  To allow the Bank and its agents to inspectthe Borrower’s properties and examine, audit, and make copies of books andrecords at any reasonable time.  If anyof the Borrower’s properties, books or records are in the possession of a thirdparty, the Borrower authorizes that third party to permit the Bank or itsagents to have access to perform inspections or audits and to respond to theBank’s requests for information concerning such properties, books and records.

 

8.21                           Perfectionof Liens.  To help the Bank perfectand protect its security interests and liens, and reimburse it for relatedcosts it incurs to protect its security interests and liens.

 

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8.22                           Cooperation.  To take any action reasonably requested bythe Bank to carry out the intent of this Agreement.

 

9.                                       DEFAULTAND REMEDIES

 

If any of the following events of default occurs, the Bank may do oneor more of the following: declare the Borrower in default, stop making anyadditional credit available to the Borrower, and require the Borrower to repayits entire debt immediately and without prior notice.  In addition, if any event of default occurs, the Bank shall haveall rights, powers and remedies available under any instruments and agreementsrequired by or executed in connection with this Agreement, as well as allrights and remedies available at law or in equity.  If an event of default occurs under the paragraph entitled  “Bankruptcy,” below, with respect to anyBorrower, then the entire debt outstanding under this Agreement willautomatically be due immediately.

 

9.1                                 Failureto Pay.  The Borrower fails to makea payment under this Agreement when due other than an interest payment or apayment of fees or expenses.

 

9.2                                 Failureto Pay Interest.  The Borrower failsto make an interest payment or a payment of fees or expenses under thisAgreement within three calendar days of the date when due.

 

9.3                                 OtherBank Agreements.  The Borrower (orany Obligor) or any of the Borrower’s subsidiaries fails to meet the conditionsof, or fails to perform any obligation under any other agreement the Borrower(or any Obligor) or any of the Borrower’s subsidiaries has with the Bank or anyaffiliate of the Bank.  If in the Bank’sopinion the breach is capable of being remedied, the breach will not beconsidered an Event of Default under this Agreement for a period of 30 days;provided however, the Bank will not be obligated to extend any additionalcredit to the Borrower during such 30-day period.  For purposes of this Agreement, “Obligor” shall mean anyGuarantor, any party pledging collateral to the Bank.

 

9.4                                 Cross-default.  Any default occurs under any agreement inconnection with any credit greater than One Million Dollars ($1,000,000.00)that the Borrower (or any Obligor) or any of the Borrower’s subsidiaries hasobtained from anyone other than Bank else or which the Borrower (or anyObligor) or any of the Borrower’s subsidiaries has guaranteed, if the defaultis not cured within 30 days; provided however, the Bank will not be obligatedto extend any additional credit to the Borrower during such 30-day period.

 

9.5                                 FalseInformation.  The Borrower or anyObligor has given the Bank false or misleading information or representations.

 

9.6                                 Bankruptcy.  The Borrower, any Obligor, or any generalpartner of the Borrower or of any Obligor files a bankruptcy petition, abankruptcy petition is filed against any of the foregoing parties, or theBorrower, any Obligor, or any general partner of the Borrower or of any Obligormakes a general assignment for the benefit of creditors.

 

9.7                                 Receivers.  A receiver or similar official is appointedfor a substantial portion of the Borrower’s or any Obligor’s business, or thebusiness is terminated, or, if any Obligor is anything other than a naturalperson, such Obligor is liquidated or dissolved.

 

9.8                                 LienPriority.  The Bank fails to have anenforceable first lien (except for any prior liens to which the Bank hasconsented in writing) on or security interest in any property given as securityfor this Agreement (or any guaranty).

 

9.9                                 Judgments.  Any judgments or arbitration awards areentered against the Borrower or any Obligor, or the Borrower or any Obligorenters into any settlement agreements with respect to any litigation orarbitration, in an aggregate amount of One Million Dollars ($1,000,000.00) ormore in excess of any insurance coverage, and such award or settlement is notsatisfied within 30 days after such settlement or the entry of such judgment oraward; provided, however, the Bank will not be obligated to extend anyadditional credit to the Borrower during such 30-day period.

 

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9.10                           MaterialAdverse Change.  A material adversechange occurs, or is reasonably likely to occur, in the Borrower’s (or anyObligor’s) business condition (financial or otherwise), operations, propertiesor prospects, or ability to repay the credit of the Borrower and itssubsidiaries as a whole.

 

9.11                           GovernmentAction.  Any government authoritytakes action that the Bank believes materially adversely affects the Borrower’sor any Obligor’s financial condition or ability to repay.

 

9.12                           Defaultunder Related Documents, Revocation of Guaranty.  Any default occurs under any guaranty, subordination agreement,security agreement, deed of trust, mortgage, or other document required by ordelivered in connection with this Agreement or any such document is no longerin effect, or any Guarantor revokes or disavows its Guaranty or purports to doso.

 

9.13                           ERISAPlans.  Any one or more of thefollowing events occurs with respect to a Plan of the Borrower subject to TitleIV of ERISA, provided such event or events could reasonably be expected, in thejudgment of the Bank, to subject the Borrower to any tax, penalty or liability(or any combination of the foregoing) which, in the aggregate, could have a material adverse effect on thefinancial condition of the Borrower:

 

(a)                                  Areportable event shall occur under Section 4043(c) of ERISA with respect to aPlan.

 

(b)                                 AnyPlan termination (or commencement of proceedings to terminate a Plan) or thefull or partial withdrawal from a Plan by the Borrower or any ERISA Affiliate.

 

9.14                           OtherBreach Under Agreement.  TheBorrower fails to meet the conditions of, or fails to perform any obligationunder, any term of this Agreement not specifically referred to in thisArticle.  This includes any failure oranticipated failure by the Borrower to comply with any financial covenants setforth in this Agreement, whether such failure is evidenced by financialstatements delivered to the Bank or is otherwise known to the Borrower or theBank.  If in the Bank’s opinion thebreach is capable of being remedied, the breach will not be considered an Eventof Default under this Agreement for a period of 30 days; provided however, theBank will not be obligated to extend any additional credit to the Borrowerduring such 30-day period.

 

9.15                           Lossof Access to Cash.  For a period ofmore than two consecutive days the Borrower does not have access to cash toservice its ATM machines at the present level, regardless of what causes suchloss of access to cash.

 

10.                                 ENFORCINGTHIS AGREEMENT; MISCELLANEOUS

 

10.1                           GAAP.  Except as otherwise stated in thisAgreement, all financial information provided to the Bank and all financialcovenants will be made under generally accepted accounting principles,consistently applied.

 

10.2                           OregonLaw.  This Agreement is governed byOregon law.

 

10.3                           Successorsand Assigns.  This Agreement isbinding on the Borrower’s and the Bank’s successors and assignees.  The Borrower agrees that it may not assignthis Agreement without the Bank’s prior consent.  The Bank may sell participations in or assign this loan, and mayexchange financial information about the Borrower with actual or potentialparticipants or assignees.  If aparticipation is sold or the loan is assigned, the purchaser will have theright of set-off against the Borrower.

 

10.4                           Arbitrationand Waiver of Jury Trial.

 

(a)                                  Thisparagraph concerns the resolution of any controversies or claims between theparties, whether arising in contract, tort or by statute, including but notlimited to controversies or claims that arise out of or relate to: (i) thisagreement (including any renewals, extensions or modifications); or (ii) anydocument related to this agreement (collectively a “Claim”).  For the purposes of this arbitrationprovision only, the term “parties” shall include any parent corporation,subsidiary or affiliate of the Bank involved in the servicing, management oradministration of any obligation described or evidenced by this agreement.

 

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(b)                                 Atthe request of any party to this agreement, any Claim shall be resolved bybinding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the “Act”).  The Act willapply even though this agreement provides that it is governed by the law of aspecified state.

 

(c)                                  Arbitrationproceedings will be determined in accordance with the Act, the applicable rulesand procedures for the arbitration of disputes of JAMS or any successor thereof(“JAMS”), and the terms of this paragraph. In the event of any inconsistency, the terms of this paragraph shallcontrol.

 

(d)                                 Thearbitration shall be administered by JAMS and conducted, unless otherwiserequired by law, in any U. S. state where real or tangible personal propertycollateral for this credit is located or if there is no such collateral, in thestate specified in the governing law section of this agreement.  All Claims shall be determined by onearbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), uponthe request of any party, the Claims shall be decided by three arbitrators.  All arbitration hearings shall commence withinninety (90) days of the demand for arbitration and close within ninety (90)days of commencement and the award of the arbitrator(s) shall be issued withinthirty (30) days of the close of the hearing. However, the arbitrator(s), upon a showing of good cause, may extend thecommencement of the hearing for up to an additional sixty (60) days.  The arbitrator(s) shall provide a concisewritten statement of reasons for the award. The arbitration award may be submitted to any court having jurisdictionto be confirmed and enforced.

 

(e)                                  Thearbitrator(s) will have the authority to decide whether any Claim is barred bythe statute of limitations and, if so, to dismiss the arbitration on thatbasis. For purposes of the application of the statute of limitations, theservice on JAMS under applicable JAMS rules of a notice of Claim is theequivalent of the filing of a lawsuit. Any dispute concerning this arbitration provision or whether a Claim isarbitrable shall be determined by the arbitrator(s).  The arbitrator(s) shall have the power to award legal feespursuant to the terms of this agreement.

 

(f)                                    Thisparagraph does not limit the right of any party to: (i) exercise self-helpremedies, such as but not limited to, setoff; (ii) initiate judicial ornon-judicial foreclosure against any real or personal property collateral;(iii) exercise any judicial or power of sale rights, or (iv) act in a court oflaw to obtain an interim remedy, such as but not limited to, injunctive relief,writ of possession or appointment of a receiver, or additional or supplementaryremedies.

 

(g)                                 Thefiling of a court action is not intended to constitute a waiver of the right ofany party, including the suing party, thereafter to require submittal of theClaim to arbitration.

 

(h)                                 **BY AGREEINGTO BINDING ARBITRATION, THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHTTHEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM.  FURTHERMORE, WITHOUT INTENDING IN ANY WAY TOLIMIT THIS AGREEMENT TO ARBITRATE, TO THE EXTENT ANY CLAIM IS NOT ARBITRATED,THE PARTIES IRREVOCABLY AND VOLUNTARILY WAIVE ANY RIGHT THEY MAY HAVE TO ATRIAL BY JURY IN RESPECT OF SUCH CLAIM. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTOTHIS AGREEMENT.**

 

10.5                           Severability;Waivers.  If any part of thisAgreement is not enforceable, the rest of the Agreement may be enforced.  The Bank retains all rights, even if itmakes a loan after default.  If the Bankwaives a default, it may enforce a later default.  Any consent or waiver under this Agreement must be in writing.

 

10.6                           Attorneys’Fees.  The Borrower shall reimbursethe Bank for any reasonable costs and attorneys’ fees incurred by the Bank inconnection with the enforcement or preservation of any rights or remedies underthis Agreement and any other documents executed in connection with thisAgreement, and in connection with any amendment, waiver, “workout” orrestructuring under this Agreement.  Inthe event of a lawsuit or arbitration proceeding, the prevailing party isentitled to recover costs and reasonable attorneys’ fees incurred in connectionwith the lawsuit or arbitration proceeding, as determined by the court orarbitrator.  In the event that any caseis commenced by or against the Borrower under the Bankruptcy Code (Title 11,United States Code) or any similar or successor statute, the Bank is entitledto recover costs and reasonable attorneys’ fees incurred by the Bank related tothe preservation, protection,

 

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or enforcement of any rights of the Bank in such a case.  As used in this paragraph, “attorneys’ fees”includes the allocated costs of the Bank’s in-house counsel.

 

10.7                           Confidentiality.  Bank shall use any confidential non-publicinformation concerning Borrower and its subsidiaries that is furnished to it byor on behalf of Borrower and its subsidiaries in connection with this Agreement(collectively, “Confidential Information”) solely for the purpose of evaluatingand providing products and services to them, and administering and enforcingthis Agreement and related documents, and it will hold the ConfidentialInformation in confidence. Notwithstanding the foregoing, Bank may disclose ConfidentialInformation to (i) any governmental agency or regulatory body having or claimingto have authority to regulate or oversee any aspect of the Bank’s business inconnection with the exercise of such authority or claimed authority; (ii) theextent necessary or appropriate to effect or preserve Bank’s security or toenforce any right or remedy in connection with any claims asserted by oragainst Bank; (iii) representatives whom it determines need to know suchinformation for the purposes set forth in this Section; and (iv) any bank orfinancial institution or other entity to which Bank has assigned or desires toassign an interest or participation in this Agreement or the advances, providedthat any such recipient of Confidential Information agrees to keep suchConfidential Information confidential as specified herein.  For purposes hereof, the term “ConfidentialInformation” shall not include information that is in Bank’s possession priorto its being provided by or on behalf of Borrower, and shall not includeinformation which is or becomes publicly available other than through a breach hereofby the Bank, or information that becomes available to the Bank on anon-confidential basis.  Notwithstandinganything herein to the contrary, “Confidential Information” shall not include,and the Bank may disclose to any and all persons, without limitation of anykind, any information with respect to the “tax treatment” and “tax structure”(in each case, within the meaning of Treasury Regulation Section 1.6011-4)of the transactions contemplated hereby and all materials of any kind(including opinions or other tax analyses) that are provided to the Bankrelating to such tax treatment and tax structure; provided that with respect toany document or similar item that in either case contains informationconcerning the tax treatment of tax structure of the transaction as well asother information, this sentence shall only apply to such portions of thedocument or similar item that relate to the tax treatment or tax structure ofthe loans, letters of credit and transactions contemplated hereby.

 

10.8                           OneAgreement.  This Agreement and anyrelated security or other agreements required by this Agreement, collectively:

 

(a)                                  representthe sum of the understandings and agreements between the Bank and the Borrowerconcerning this credit;

 

(b)                                 replaceany prior oral or written agreements between the Bank and the Borrowerconcerning this credit; and

 

(c)                                  areintended by the Bank and the Borrower as the final, complete and exclusivestatement of the terms agreed to by them.

 

In the event of any conflict between this Agreement and any otheragreements required by this Agreement, this Agreement will prevail.  Any reference in any related document to a“promissory note” or a “note” executed by the Borrower and dated as of the dateof this Agreement shall be deemed to refer to this Agreement, as now in effector as hereafter amended, renewed, or restated.

 

10.9                           Indemnification.  The Borrower will indemnify and hold theBank harmless from any loss, liability, damages, judgments, and costs of anykind relating to or arising directly or indirectly out of (a) this Agreement orany document required hereunder, (b) any credit extended or committed by theBank to the Borrower hereunder, and (c) any litigation or proceeding related toor arising out of this Agreement, any such document, or any such credit.  This indemnity includes but is not limitedto attorneys’ fees (including the allocated cost of in-house counsel).  This indemnity extends to the Bank, itsparent, subsidiaries and all of their directors, officers, employees, agents,successors, attorneys, and assigns. This indemnity will survive repayment of the Borrower’s obligations tothe Bank.  All sums due to the Bankhereunder shall be obligations of the Borrower, due and payable immediatelywithout demand.  The foregoing indemnityshall not, as to any indemnitee, be available to the extent that such loss,liability, damages, judgments or costs are determined by court of competentjurisdiction by final and non-appealable judgment to have resulted from thegross negligence or willful misconduct of such indemnitee.

 

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10.10                     Notices.  Unless otherwise provided in this Agreementor in another agreement between the Bank and the Borrower, all notices requiredunder this Agreement shall be personally delivered or sent by first class mail,postage prepaid, or by overnight courier, to the addresses on the signaturepage of this Agreement, or sent by facsimile to the fax numbers listed on thesignature page, or to such other addresses as the Bank and the Borrower mayspecify from time to time in writing. Notices and other communications shall be effective (i) if mailed, uponthe earlier of receipt or five (5) days after deposit in the U.S. mail, firstclass, postage prepaid, (ii) if telecopied, when transmitted, or (iii) ifhand-delivered, by courier or otherwise (including telegram, lettergram ormailgram), when delivered.

 

10.11                     ExistingAgreement.  This Agreementsupersedes the Third Amended and Restated Business Loan Agreement dated as ofJuly 21, 2000, as amended, and the proceeds of the Facilities described inthis Agreement shall be used to pay off all obligations under such ThirdAmended and Restated Business Loan Agreement, except that any letters of creditissued pursuant thereto shall be deemed issued pursuant to this Agreement andshall be controlled hereby.

 

10.12                     Headings.  Article and paragraph headings are forreference only and shall not affect the interpretation or meaning of anyprovisions of this Agreement.

 

10.13                     Counterparts.  This Agreement may be executed in as manycounterparts as necessary or convenient, and by the different parties onseparate counterparts each of which, when so executed, shall be deemed anoriginal but all such counterparts shall constitute but one and the sameagreement.

 

 

**10.14**                 **OralAgreements.  UNDER OREGONLAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE BANK AFTER OCTOBER3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FORPERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’SRESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY US TO BEENFORCEABLE.**

 

This Agreement is executed as of the date stated at the top of thefirst page.

 
| Bank of America, N.A.                              | TRM Corporation                                        |
|----------------------------------------------------|--------------------------------------------------------|
|                                               |                                                   |
|                                               |                                                   |
| By                                                 | /s/ Eric Eidler                                        |   | By | /s/ Kenneth  Lewis Tepper |   |
|                                               |                                                   |
| Typed Name                                         | Eric Eidler                                            |   | Typed Name | Kenneth Lewis  Tepper |   |
|                                               |                                                   |
| Title                                              | Senior Vice  President                                 |   | Title | President and  Chief Executive Officer |   |
|                                               |                                                   |
| Address where notices to  the Bank are to be sent: | Address where notices to  the Borrower are to be sent: |
|                                               |                                                   |
|                                               |                                                   |
| Oregon Commercial Banking #04614                   | 5208 N.E. 122nd Avenue                                 |
| 121 S.W. Morrison Street, Suite 1700               | Portland, OR 97230                                     |
| Portland, OR 97204                                 |                                                   |
|                                               |                                                   |
| Facsimile: (503) 275-1391                          | Telephone: (503) 257-8766                              |
|                                               | Facsimile: (800) 219-7805                              |
|                                                    |                                                        |  |  |  |  |  |  |  |  |

 

 

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