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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________________ TO ____________________
COMMISSION FILE NUMBER 0-19657
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TRM COPY CENTERS CORPORATION
(Exact name of registrant as specified in its charter)
OREGON 93-0809419
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
5208 N.E. 122ND AVENUE
PORTLAND, OREGON 97230-1074
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (503) 257-8766
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock
(Title of each class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities and
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [ X ] No
[ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
As of July 31, 1996 the aggregate market value of the Registrant's
Common Stock held by non affiliates of the Registrant was $58.3 million.
Solely for purposes of this calculation, the Registrant has treated its
Board of Directors and Executive Officers as affiliates.
As of July 31, 1996, the number of shares of the Registrant's Common
Stock outstanding was 6,486,291.
DOCUMENTS INCORPORATED BY REFERENCE:
Parts of Registrant's 1996 Annual Report to Shareholders are
incorporated by reference into Part II of this Report, and parts of
Registrant's Proxy Statement for the annual meeting of shareholders on
October 22, 1996 are incorporated by reference into Part III of this
Report.
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PART I
ITEM 1. BUSINESS
GENERAL
As of August 1996, TRM Copy Centers Corporation owned and maintained
over 32,000 self-service photocopiers in retail establishments such as
pharmacies, stationery stores, hardware stores and gift shops in 66
metropolitan areas: 46 in the U.S., five in Canada, 14 in the U.K., and one
in France. TRM installs, maintains and supplies its photocopiers and
regularly monitors their usage. Each retail business collects payment from
its customers, shares in the revenue generated by the Copy Center and
benefits from any increase in walk-in traffic. The Company invoices and
collects payment from each retailer monthly.
TRM has had in place about 400 full-color copiers since 1992. While
the Company does not intend to substantially expand the number of Color
Copy Centers during fiscal 1997, it is likely that the color program will
be expanded at some point further in the future.
Each Copy Center consists of a photocopier, a machine stand and
advertising signs. Copy Centers are identified by the Company's trapezoidal
yellow and black "TRM Copies" signs.
TRM became the leading provider in self-service photocopying in many
of the metropolitan areas it serves by focusing on service and convenience.
The Company strives to conveniently locate high numbers of TRM Centers
throughout its service areas. Operations by geographic area are presented
in Note 10 to the Consolidated Financial Statements included in the Annual
Report to Shareholders.
The Company services its TRM Centers and provides all necessary
supplies. The retail business supplies space and electrical power for the
TRM Center and supervises its use. Consumers report the number of uses of
the TRM Center to the retail business cashier, who collects payment. Each
month, the retail business pays TRM a percentage of the TRM Center revenue,
which generally is based on a sliding scale related to usage, as recorded
by the TRM Center's tamper-proof internal counter.
All training, purchasing, billing and collection functions, as well as
coordination of customer service, are centralized in the Company's offices
in Portland, Oregon. Generally, the only personnel outside the Portland
offices are service and sales personnel. TRM minimizes costs by buying
large quantities of new and used photocopiers, by rebuilding used
photocopiers and by centrally purchasing large quantities of parts, paper
and toner. The Company believes that its centralized operating systems and
standardized operating procedures enable it to efficiently open new
geographies and to install and service thousands of TRM Centers.
The Company began business in 1981. From the end of fiscal 1991
through June 30, 1996, TRM opened operations in 20 U.S., five Canadian, 14
U.K., and one French metropolitan areas.
As used in this Annual Report, the terms "the Company" and "TRM" refer
to TRM Copy Centers Corporation and its subsidiaries, unless the context
requires otherwise.
LOCATIONS
TRM has focused its sales efforts on a large number of small retail
businesses so that no retail business accounts for a significant portion of
revenues or profits. Further, TRM has diversified geographically to avoid
dependence on one or more market areas. The Company does not believe that
the presence of significant competition in any single geographic market
would have a material adverse effect on the Company.
The Company has established a local Service Center in all its 48 major
metropolitan areas. Each of these Service Centers consists of leased
premises generally staffed by a service manager and one or more service
technicians and salespeople. TRM locates its Service Centers in sites
convenient to the TRM Centers. Service Centers include a small warehouse
for the storage of photocopiers, other components, spare parts, paper and
toner. The Company also has four small Service Centers where the service
manager is the only technician. These small Service Centers are based in
the managers' homes. Further, 13 of the most recently opened metropolitan
areas (called "satellites") were opened with resources from existing
Service Centers nearby and do not have stand-alone facilities.
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EXPANSION
TRM installed 12,127 additional TRM Centers, net of replacements and
removals, from July 1, 1993 to June 30, 1996. In addition to installing
2,724 net TRM Centers in fiscal 1996, the Company focused on improving the
profit performance of the installed base of machines. During fiscal 1997,
the Company plans to add between 3,000 and 4,000 additional TRM Centers in
existing market areas and in new areas, and to continue to actively manage
its installed base.
The Company's planned expansion will require an increase in the number
of installed photocopiers, Service Centers, service technicians,
salespeople and customers. TRM uses both new and used photocopiers, and as
of July 31, 1996, had over 5,000 uninstalled photocopiers in its system
(see "Photocopiers"). The Company will open a new Service Center in each
new geographic market as it is justified. The service technicians needed
for the planned expansion will be trained at TRM's Technology Center in
Portland. TRM sells the TRM Center concept to retail businesses through
sales lead generation programs and local door-to-door solicitation using
independent and Company sales representatives, and, beginning in 1996,
service technicians.
In January 1996, the Company began a program called "service selling"
in selected North American cities. The program trains and rewards service
technicians to sell the TRM program in their service areas. Coincident with
the rollout of service selling, effective July 1, 1996, the Company
streamlined field operations. Field sales responsibilities were moved into
the field operations group under the Chief Operating Officer. This allows
for the sharing of management teams across the expanse of North America and
for a coordinated effort to grow our market share in established cities,
particularly in North America.
In actively managing the profit performance of the installed base,
under-performing machines are removed and put back into stock to be
redeployed at better sites. Machines under-priced for the supporting copy
volume are repriced to higher levels. During fiscal 1996, machines were
relocated and copy prices were raised at thousands of locations.
The Company intends to continue to focus on its core photocopy
business with controlled growth from new and existing U.S. market areas,
from international expansion and from new products and services which can
be delivered to the core customer base and similar customers.
NEW PRODUCTS AND SERVICES UNDER DEVELOPMENT
The Company is positioned to add other products or services to further
optimize the use of its in-place network of sales, service, distribution
and support as well as its growing installed customer base. Although sales
generated from additional products currently represent less than 5% of the
total sales, the Company is actively testing multiple new products and
services.
During 1996, investments were made in designing an add-on electronic
and receipt printing module for the Company's photocopiers, which allows
for stepped volume pricing (e.g., the first copy for 10(cent), copies 2-5
for 7(cent), etc.). This will be market tested in fiscal 1997. The Company
is also testing retailer-serviced coin-operated convenience copying with
large format chain stores, where TRM's service quality and worldwide
infrastructure is a key advantage, but where host cashiering is not a
desired benefit. Also in 1996, the Company expanded its initial trial for
marketing prepaid telephone cards (to our base of retailers). Another
example is the design-your-own instant business cards product, which is
discussed under the caption "BisCard Corporation." TRM's intent is to
invest in developing and market testing these and other new products and
services to identify those that clearly deserve to become country or
system-wide offerings. TRM has had in place about 400 full-color copiers
since 1992. While the Company does not intend to substantially expand the
number of Color Copy Centers during fiscal 1997, it is likely that the
color program will be expanded at some point further in the future.
COMPETITION
A person seeking photocopy services has a variety of alternatives to a
TRM Center. These alternatives include specialty full-service business
centers and copy and print shops, coin-operated photocopiers and other
photocopiers located within retail shops. Each of these alternatives may to
some extent compete with the Company. The Company does not attempt to
compete directly with most alternative suppliers of photocopy services.
Instead, the Company seeks to distinguish itself by blanketing its service
areas with large numbers of convenient photocopiers and by providing high
quality service to those locations.
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Full-service business centers and copy and print shops generally serve
a market more interested in high volume and sophisticated copying than in
convenience of location.
Coin-operated photocopiers are sometimes located in smaller retail
establishments similar to TRM's locations. While these coin-operated
photocopiers provide an alternative to Copy Centers, the Company believes
that they are less convenient to operate and do not pose a significant
competitive threat to the majority of TRM's retailers. As indicated under
the caption "New Products and Services Under Development," the Company is
testing coin-operated copying with major large format chains and retail
stores, which have not been targeted by TRM up to the present time.
The Company is aware of several self-service non-coin-operated
photocopier businesses using the retail business concept. To the Company's
knowledge, each is limited to a relatively small geographic market and a
relatively small number of photocopiers. Because of barriers to entry in
the Company's business, such as developing operating systems, establishing
sources of supply and achieving economies of scale, the Company does not
believe any of these competitors currently represents a significant threat.
Personal copiers provide a substitute for Copy Centers. While these
photocopiers have been on the market for a number of years, the Company
does not believe that they have had a significant adverse effect on its
business. The Company is unable to predict whether a technological or price
breakthrough might increase sales of personal copiers and reduce demand for
the Company's copy services.
Computers with printers allow convenient production of multiple
copies. The Company does not believe that computer printing will have a
significant adverse effect on its Copy Center business. At present,
computer duplicating is primarily used only for a document which is
electronically resident on that particular computer and not for other paper
originals. Both computer printers and personal copiers currently have per
copy costs to the user which are similar to or higher than TRM's retail
copy prices so they are not, in general, a lower cost alternative.
QUARTERLY SEASONALITY
Historically, the Company has experienced slightly higher than average
production per TRM Center in its third and fourth fiscal quarters and
slightly lower than average production per TRM Center in its first fiscal
quarter.
PHOTOCOPIERS
As of August 1996, TRM owned more than 37,000 new and used
photocopiers. Over 32,000 were revenue-producing Copy Centers in the field,
and over 5,000 were in the logistics pipeline, available for future
installation or waiting to be rebuilt. The Company continues to investigate
new and used photocopiers available for its use. Generally, new
photocopiers are shipped direct from the manufacturer to a TRM Service
Center. Used photocopiers are generally rebuilt at the Company's rebuilding
facility in Portland, Oregon. The Company expects to continue to use both
new and used photocopiers to expand its black and white copying business.
Supply
To date in North America, the Company has primarily used two similar
discontinued models of used photocopiers originally manufactured by Ricoh
Company, Ltd. and its affiliates. TRM bought these photocopiers from
photocopier brokers and dealers. These two models of black and white
photocopiers have not been manufactured since 1979 and 1982. During fiscal
1993, TRM developed a supply relationship with Mita Copystar America, Inc.
(Mita), for black and white photocopiers and related products in North
America. The resulting arrangement, as updated, contains no commitment to
purchase any specific number of photocopiers. The Company continues to
monitor and evaluate supplies and feature/functionality of new and used
photocopiers available for its use.
During fiscal 1992, the Company developed a supply relationship with
Ricoh Corporation (Ricoh) for full-color photocopiers and related products.
TRM is not currently adding to its inventory of full-color copiers. Ricoh
ships related products directly to the appropriate TRM Service Center as
directed by the Company. The Company will continue to monitor and evaluate
models of full-color photocopiers available for its use.
Also during fiscal 1992, a supply arrangement was entered into
with Mita Europe B.V. for black and white photocopiers and related products
in Europe. Under this arrangement, photocopiers and related products are
shipped from Mita directly to the Company's European Service Centers. The
Company continues to monitor and evaluate supplies of new and used
photocopiers in Europe available for its use.
4
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Few of TRM's photocopiers have ever become mechanically obsolete.
Because of their simplicity, the Company believes that its photocopiers are
more dependable than many other models.
During fiscal 1997, the Company expects to buy and rebuild additional
copiers. However, it also expects to satisfy a portion of its expansion
plans with photocopiers on hand but not yet installed. Accordingly, the
number of photocopiers not yet installed is expected to decrease during
fiscal 1997.
Parts
The Company acquires a majority of the parts for its used photocopiers
directly from various parts fabricators. Many parts are built to TRM's
specifications. While TRM's strategy is to use multiple sources for its
parts to reduce dependence on single sources, some parts are purchased from
single sources. Temporary shortages, increased costs and quality control
problems could result if parts from a single or limited source became
unavailable. Currently, parts for the Mita photocopiers and the Ricoh
full-color photocopiers are being supplied primarily by the photocopier
manufacturers. The Company will continue to evaluate available sources of
supply for parts.
PAPER
Photocopy paper is purchased centrally by the Company's corporate
offices and then shipped directly from the mills to the Service Centers. A
number of paper companies are capable of producing the paper usable by the
Company. The Company believes that sufficient paper should be available to
supply the Company's expanding business. As explained in Management's
Discussion and Analysis in the Annual Report to Shareholders, the cost of
paper rose significantly during fiscal 1996 compared to fiscal 1995, but,
as of year end, costs were below the peak of the fall of 1995.
TONER
The Company currently purchases liquid toner for its North American
black and white rebuilt photocopiers directly from one manufacturer. The
Company believes that if another source of toner were needed, it could
obtain suitable toner on reasonable terms from other manufacturers,
although some start-up delays could occur. Currently, toner for the Mita
photocopiers and the Ricoh full-color photocopiers is being supplied
primarily by the photocopier manufacturers. The Company will continue to
evaluate available sources of supply for toner.
EMPLOYEES
As of June 30, 1996, the Company had approximately 650 employees, most
of which were full-time. Approximately 405 are in field service, 215 are in
sales, marketing, customer service, purchasing, billing and administration,
and 30 are in training, production and warehouse functions. None of the
Company's employees are represented by unions. The Company believes it has
good relations with its employees. The Company currently engages about 30
independent contractors to sell TRM Centers.
SERVICE MARKS
Most Copy Centers are identified by distinctive yellow and black
trapezoidal signs bearing "TRM Copies" and "TRM Color Copies" and the
program price. Most of TRM's signs are registered service marks.
COPY CENTERS INVESTMENT GROUP, LTD.
The Company serves as general partner of Copy Centers Investment
Group, Ltd., an Oregon limited partnership. The partnership was formed in
1983 to acquire certain Copy Centers from the Company. The partnership owns
79 Copy Centers in the states of Oregon and Washington. The Company
receives a management fee of 25% of the gross revenue from these 79 Copy
Centers, plus $20 per month for each of the 79 locations for accounting and
administrative functions. The Company also owns a 1% interest in the
profits and losses of the partnership. The partnership will terminate
December 31, 1998 according to the partnership agreement. The partnership's
operations do not constitute a material part of the business of the
Company.
5
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BISCARD CORPORATION
Biscard Corporation, which was formed in 1992, has developed a
self-service, design-your-own, instant business card kiosk product. Until
July 1996, BisCard was 80% owned by the Company and 20% owned by a minority
shareholder. At that time, the Company purchased the 20% minority interest
for $50,000 cash. Currently, the Company is in phase one of a two phase
test market which calls for the placement of 500 business card kiosks in
selected metropolitan areas. As of June 30, 1996, about 350 of the units
had been placed. It is expected that this test market will continue through
at least December 31, 1996. Research and development costs have not been
significant to date.
GOVERNMENTAL REGULATION
The Company is not subject to significant governmental regulation.
Local zoning and sign regulations occasionally prohibit a retail business
from displaying the "TRM Copies" sign on an exterior wall or window. Local
zoning and use restrictions may not allow opening a Copy Center in an
otherwise desirable retail business. The Company does not expect such
restrictions to have a material adverse effect on the Company's expansion
plans.
FORWARD-LOOKING STATEMENTS
This Form 10-K includes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 relating to the Company's plans or
expectations as to: future performance; growth opportunities; expansion;
improvements in efficiencies and cost controls; new products and services;
repricing machines; competition; paper costs and capital expenditures. The
following factors are among the factors that could cause actual results to
differ materially from the forward-looking statements: business conditions
in the market areas in which the Company operates; competitive factors;
customer demand for the Company's services; the Company's ability to
execute its plans successfully and the volatility of paper costs. Any
forward-looking statements, including other written or oral forward-looking
statements made by the Company or persons acting on its behalf, should be
considered in light of these factors and other factors referred to from
time to time in the Company's press releases, periodic reports or
communications with shareholders.
ITEM 2. PROPERTIES
The Company leases approximately 25,750 square feet of office space
for its corporate offices in Portland, Oregon. The lease expires in 2010,
with an option to renew for an additional five years. The Company leases
31,500 square feet for training, rebuilding, warehousing, the Portland
Service Center and other office space under a lease that also expires in
2010. This facility is located next to the corporate offices.
The Company leases warehouse space for 47 Service Centers outside
Portland, Oregon. A Service Center typically consists of approximately
2,000 to 7,000 square feet of non-custom warehouse space. The leases
typically run for three to twelve years, some with extensions available
upon exercise of renewal options. The Company does not anticipate any
difficulty in locating or, if necessary, relocating Service Centers.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to various claims and legal proceedings from
time to time in the ordinary course of its business. There are no pending
or threatened matters which in the Company's opinion could have a material
effect on the Company's operations or its financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
The information required by Part II is incorporated herein by
reference from the TRM Copy Centers Corporation 1996 Annual Report to
Shareholders as indicated below. Except for such information, the 1996
Annual Report to Shareholders is not to be deemed filed as part of this
Report.
Annual Report
Page No.
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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND Inside back
RELATED STOCKHOLDER MATTERS cover
ITEM 6. SELECTED FINANCIAL DATA 1
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 4-5
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA 1, 6-15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
The information required by Part III is incorporated herein by
reference from the indicated pages of the Company's definitive Proxy
Statement dated September 16, 1996 for its 1996 annual meeting of
shareholders.
Proxy
Statement
Page No.
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 3-5
ITEM 11. EXECUTIVE COMPENSATION 6-10
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 1-2
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. FINANCIAL STATEMENTS (INCORPORATED BY REFERENCE Annual Report
FROM THE COMPANY'S 1996 ANNUAL REPORT TO Page No.
SHAREHOLDERS): --------
Consolidated Balance Sheets as of June 30, 1996
and 1995 6
Consolidated Statements of Operations for each of
the three years in the period ended June 30, 1996 7
Consolidated Statements of Stockholders' Equity
for each of the three years in the period ended
June 30, 1996 8
Consolidated Statements of Cash Flows for each of
the three years in the period ended June 30, 1996 9
Notes to Consolidated Financial Statements 10-15
Independent Auditors' Report 15
Form 10-K
Page No.
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2. FINANCIAL STATEMENT SCHEDULES:
Consent and Independent Auditors' Report on
Financial Statement Schedule S-1
VIII -- Valuation and Qualifying Accounts S-2
All other schedules are omitted because they are
not applicable or the required information is
shown in the financial statements or notes thereto.
3. EXHIBITS:
The exhibits listed in the Index to Exhibits,
which appears on page 10 herein, are filed as
part of this Annual Report.
(b) NO REPORTS ON FORM 8-K WERE FILED BY THE COMPANY
DURING THE LAST QUARTER OF FISCAL 1996.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized, in
Portland, Oregon, on September 17, 1996.
TRM COPY CENTERS CORPORATION
By: ROBERT A. BRUCE
--------------------------------
Robert A. Bruce
Vice President, Finance and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael D. Simon and Robert A.
Bruce, jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to
this Report, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on September 17,
1996 on behalf of the Registrant and in the capacities indicated:
Signature Title
- ---------------------------------- -----------------------------------
MICHAEL D. SIMON President, Chief Executive Officer
- ---------------------------------- and Director
Michael D. Simon
ROBERT A. BRUCE Chief Financial Officer
- ---------------------------------- Vice President, Finance
Robert A. Bruce Corporate Secretary
FREDERICK O. PAULSELL Chairman of the Board and Director
- ----------------------------------
Frederick O. Paulsell
EDWIN S. CHAN Vice-Chairman of the Board and
- ---------------------------------- Director
Edwin S. Chan
SHERMAN M. COE Director
- ----------------------------------
Sherman M. Coe
RALPH R. SHAW Director
- ----------------------------------
Ralph R. Shaw
DONALD L. VAN MAREN Director
- ----------------------------------
Donald L. Van Maren
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EXHIBIT INDEX
Exhibit
Exhibits Page No.
- -------- --------
3.1 Restated Articles of Incorporation (Incorporated herein by
reference to Exhibit 3.1 of Form 10-K for the fiscal year
ended June 30, 1992)
3.2 Restated Bylaws
4.1 Articles V, VI and VII of the Restated Articles of
Incorporation (See Exhibit 3.1)
4.2 Articles I, II, V, VII and X of the Restated Bylaws, as
amended (See Exhibit 3.2)
10.1 Indemnity Agreements with Registrant's directors and
executive officers (those dated November 4, 1991
Incorporated herein by reference to Exhibit 10.2 of Form
S-1 dated November 8, 1991 [No. 33-43829] and those
executed in fiscal 1995 Incorporated herein by reference
to Exhibit 10.1 of Form 10-K for the fiscal year ended
June 30, 1995)
10.2 Loan Agreement with West One Bank, Oregon, dated February
7, 1996
10.3 Loan Agreement with West One Bank, Idaho, dated February
7, 1996
10.4 a) Lease dated October 14, 1991 between Pacific Realty
Associates, L.P. and Registrant (for Registrant's
training facility in Portland, Oregon)
(Incorporated herein by reference to Exhibit 10.7
of Form S-1 dated November 8, 1991 [No. 33-43829])
b) Lease amendment dated February 7, 1994, between
Pacific Realty Associates, L.P. and Registrant
(Incorporated herein by reference to Exhibit 10.7
of Form 10-K for the fiscal year ended June 30,
1994)
c) Lease amendment dated August 10, 1994, between
Pacific Realty Associates, L.P. and Registrant
(Incorporated herein by reference to Exhibit 10.5
of Form 10-K for the fiscal year ended June 30,
1995)
d) Lease dated August 10, 1994 between Pacific Realty
Associates, L.P. and Registrant (for the
Registrant's corporate headquarters in Portland,
Oregon) (Incorporated herein by reference to
Exhibit 10.4 of Form 10-K for the fiscal year ended
June 30, 1995)
10.6 Restated 1986 Stock Incentive Plan (Incorporated herein by
reference to Exhibit 10.8 of Form 10-K for the fiscal year
ended June 30, 1994)
10.7 Employee Stock Purchase Plan (Incorporated herein by
reference to Exhibit 28.1 of Form S-8 dated December 7,
1992 [No. 33-55370])
10.8 Form of Stock Option Agreements:
a) For option grants before fiscal 1994 (Incorporated
herein by reference to Exhibit 10.9 of Form S-1
dated November 8, 1991 [No. 33-43829])
b) For option grants during fiscal 1994 (Incorporated
herein by reference to Exhibit 10.10 of Form 10-K
for the fiscal year ended June 30, 1994)
c) For option grants during fiscal 1995 (Incorporated
herein by reference to Exhibit 10.8 of Form 10-K
for the fiscal year ended June 30, 1995)
10.9 Employment Agreements:
a) Employment Agreement dated January 17, 1995 with
Michael D. Simon (Incorporated herein by reference
to Exhibit 10.9 of Form 10-K for the fiscal year
ended June 30, 1995)
b) Employment Agreement dated April 25, 1996 with
Michael D. Simon
10.10 Executive Supplemental Retirement Agreement with Edwin S.
Chan dated January 9, 1995 (Incorporated herein by
reference to Exhibit 10.9 of Form 10-K for the fiscal year
ended June 30, 1995)
13.1 Portions of the 1996 Annual Report to Shareholders
21.1 Subsidiaries of the Registrant
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors
(see Page S-1)
24.1 Power of Attorney (see Signature page)
27.1 Financial Data Schedule
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Consent and Independent Auditors' Report
on Financial Statement Schedule
-------------------------------
The Board of Directors
TRM Copy Centers Corporation:
The audits referred to in our report dated August 13, 1996 included the
related financial statement schedule as of June 30, 1996 and for each year
in the three-year period ended June 30, 1996, as listed in Item 14(a)(2) of
Form 10-K of TRM Copy Centers Corporation. This financial statement
schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement
schedule based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
We consent to the incorporation by reference on Form S-8 (Nos. 33-55370 and
33-74354) of TRM Copy Centers Corporation of our reports dated August 13,
1996, relating to the consolidated balance sheets of TRM Copy Centers
Corporation and subsidiaries as of June 30, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity, cash flows,
and related schedule for each of the years in the three-year period ended
June 30, 1996, which reports appear in the June 30, 1996 annual report
incorporated by reference in Form 10-K of TRM Copy Centers Corporation.
KPMG PEAT MARWICK LLP
Portland, Oregon
September 10, 1996
S-1
<PAGE>
<TABLE>
<CAPTION>
TRM COPY CENTERS CORPORATION AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
Years ended June 30, 1994, 1995, and 1996
(In thousands)
Balance at Charged to Charged to Balance at
Beginning of costs and other End of
Period expenses accounts Deductions Period
------ -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
Year ended June 30, 1994 ---
Allowance for doubtful accounts..... $ 193 $ 192 $ -- $ (202) $ 183
======= ======= ====== ======= ======
Year ended June 30, 1995 ---
Allowance for doubtful accounts..... $ 183 $ 344 $ -- $ (261) $ 266
======= ======= ====== ======= ======
Year ended June 30, 1996 ---
Allowance for doubtful accounts..... $ 266 $ 700 $ -- $ (679) $ 287
======= ======= ====== ======= ======
</TABLE>
S-2
BYLAWS OF
TRM COPY CENTERS CORPORATION
ARTICLE I
SHAREHOLDERS: MEETINGS AND VOTING
Section 1. PLACE OF MEETINGS
Meetings of the shareholders of TRM COPY CENTERS CORPORATION, an
Oregon corporation (the "Corporation") will be held at the principal office
of the Corporation, or any other place, either within or without the state
of Oregon, selected by the Board of Directors.
Section 2. ANNUAL MEETINGS
(a) The annual meeting of the shareholders will be held on the
fourth Tuesday of October of each year, if not a legal holiday, and if a
legal holiday then on the next succeeding business day, at such time as may
be prescribed by the Board of Directors and specified in the notice of the
meeting. At the annual meeting, the shareholders will elect by vote a Board
of Directors from the persons nominated pursuant to paragraph (c) below,
provided that if pursuant to the Articles of Incorporation staggered terms
for directors are in effect, then only such members whose terms expire at
such meeting shall be elected. The shareholders shall also consider reports
of the affairs of the Corporation and transact such other business as may
properly be brought before the meeting.
(b) At the annual meeting of the shareholders, only such matters
as shall have been properly brought before the meeting shall be considered
and acted upon. To be properly brought before an annual meeting, a matter
must be (i) specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors, (ii) otherwise
brought before the meeting by or at the direction of the Board of
Directors, or (iii) properly brought before the meeting by a shareholder.
For any matter to be properly brought before the annual meeting by a
shareholder, the shareholder must have given prior written notice to the
Secretary of the Corporation which must be received at the principal
executive offices of the Corporation not less than 30 days nor more than 60
days prior to the meeting. In the event that less than 30 days' notice of
the date of the meeting is given or made to shareholders, notice by a
shareholder shall be timely received if received not later than the close
of business on the tenth day following the date on which such notice of the
date of the annual meeting was mailed. A shareholder's notice to the
Secretary in order to be valid must set forth as to each matter the
shareholder proposes to bring before the annual meeting (i) a brief
description of the matter proposed to be brought before the annual meeting,
(ii) the name and address, as they appear on the Corporation's books, of
the shareholder proposing such business, (iii) the class and number of
shares of the Corporation which are beneficially owned by the shareholder,
and (iv) any material interest of the shareholder in the matter. No matter
shall be considered or acted upon at an annual meeting except in accordance
<PAGE>
with the procedures set forth in this Section 2. The presiding officer at
any annual meeting shall determine whether any matter was properly brought
before the meeting in accordance with the provisions of this section. If he
shall determine that any matter has not been properly brought before the
meeting, he shall so declare at the meeting and any such matter shall not
be considered or acted upon.
(c) At the annual meeting of shareholders, only those persons
properly nominated shall be considered in the election for directors. To be
properly nominated, a person must be (i) nominated by the Board of
Directors or (ii) properly nominated by a shareholder. To be properly
nominated by a shareholder, the shareholder must have given prior written
notice of the nomination to the Secretary of the Corporation which must be
received at the principal executive offices of the Corporation not less
than 30 days nor more than 60 days prior to the meeting. In the event that
less than 30 days' notice of the date of the meeting is given or made to
shareholders, notice of the nomination by a shareholder shall be timely
received if received not later than the close of business on the tenth day
following the date on which such notice of the date of the annual meeting
was mailed. A shareholder's notice of nomination to the Secretary in order
to be valid must set forth as to each person the shareholder proposes to
nominate to the Board of Directors (i) the information described by Items
401(a), (e) and (f) and Item 403(b) of Regulation S-K under the Securities
Act of 1933, as amended, or successor provisions, (ii) the class and number
of shares of the Corporation which are beneficially owned by the nominating
shareholder, and (iii) any material interest of the shareholder or of the
nominee in the Corporation. No nominee shall be considered for election as
a director at an annual meeting except in accordance with the procedures
set forth in this Section 2. The presiding officer at any annual meeting
shall determine whether any nomination was properly brought before the
meeting in accordance with the provisions of this section. If he shall
determine that any person has not been properly nominated, he shall so
declare at the meeting and any such nominee shall not be considered in the
election.
Section 3. SPECIAL MEETINGS
(a) The Corporation will hold a special meeting of shareholders
upon the call of the President or the Board of Directors, or if the holders
of at least 10 percent of all votes entitled to be cast on any issue
proposed to be considered at the proposed special meeting sign, date and
deliver to the Secretary of the Corporation one or more written demands for
the meeting describing the purpose or purposes for which it is to be held.
(b) The circuit court of the county where the Corporation's
principal office is located, or, if the principal office is not in Oregon,
where the registered office of the Corporation is or was last located, may
summarily order a special meeting to be held upon the application of a
shareholder of the Corporation who signed a valid demand for a special
meeting if notice of the special meeting was not given within 30 days after
the date the demand was delivered to the Corporation's Secretary or if the
special meeting was not held in accordance with the notice.
<PAGE>
Section 4. NOTICE OF MEETINGS
(a) The Corporation will notify shareholders in writing of the
date, time and place of each annual and special shareholders meeting not
earlier than 60 days nor less than ten days before the meeting date. Unless
Oregon law or the Articles of Incorporation require otherwise, the
Corporation is required to give notice only to shareholders entitled to
vote at the meeting. Such notice is effective when mailed if it is mailed
postage prepaid and is correctly addressed to the shareholder's address
shown in the Corporation's current record of shareholders. Unless required
by law or by the Articles of Incorporation, notice of an annual meeting
need not include a description of the purpose or purposes for which the
meeting is called. However, notice of a special meeting will include a
description of the purpose or purposes for which the meeting is called.
(b) If an annual or special shareholders meeting is adjourned to a
different date, time or place, notice need not be given of the new date,
time or place if the new date, time or place is announced at the meeting
before adjournment. However, if a new record date for the adjourned meeting
is fixed, or is required by law to be fixed, notice of the adjourned
meeting shall be given to persons who are shareholders as of the new record
date. A determination of shareholders entitled to notice of or to vote at a
shareholders meeting is effective for any adjournment of the meeting unless
the Board of Directors fixes a new record date, which it must do if the
meeting is adjourned to a date more than 120 days after the date fixed for
the original meeting.
(c) A shareholder's attendance at a meeting waives objection to
(i) lack of notice or defective notice of the meeting, unless the
shareholder at the beginning of the meeting objects to holding the meeting
or transacting business at the meeting; and (ii) consideration of a
particular matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.
Section 5. QUORUM AND VOTING REQUIREMENTS FOR VOTING GROUPS
(a) Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists
with respect to that matter. Unless otherwise required by law or by the
Articles of Incorporation, a majority of the votes entitled to be cast on
the matter by the voting group constitutes a quorum of that voting group
for action on that matter. Once a share is represented for any purpose at a
meeting, it is deemed present for quorum purposes for the remainder of the
meeting and for any adjournment of that meeting unless a new record date is
or must be set for that adjourned meeting.
(b) In the absence of a quorum, a majority of those present in
person or represented by proxy may adjourn the meeting from time to time
until a quorum exists. Any business that might have been transacted at the
original meeting may be transacted at the adjourned meeting if a quorum
exists.
<PAGE>
Section 6. VOTING RIGHTS
(a) The persons entitled to receive notice of and to vote at any
shareholders meeting will be determined from the records of the Corporation
on the close of business on the day before the mailing of the notice or on
such other date not more than 70 nor less than 10 days before such meeting,
as will be fixed in advance by the Board of Directors.
(b) Except as otherwise provided in the Articles of Incorporation
or by law, each outstanding share, regardless of class, is entitled to one
vote on each matter voted on at a shareholders meeting. Only issued and
outstanding shares are entitled to vote.
(c) Unless otherwise provided in the Articles of Incorporation or
by law, if a quorum exists, action on a matter, other than the election of
directors, by a voting group is approved if the votes cast within the
voting group favoring the action exceed the votes cast within the voting
group opposing the action.
(d) Unless otherwise provided in the Articles of Incorporation,
directors are elected by a plurality of the votes cast by holders of the
shares entitled to vote in the election at a meeting at which a quorum is
present.
Section 7. VOTING OF SHARES BY CERTAIN HOLDERS
(a) If the name signed on a vote, consent, waiver or proxy
appointment corresponds to the name of a shareholder, the Corporation, if
acting in good faith, is entitled to accept the vote, consent, waiver or
proxy appointment and give it effect as the act of the shareholder. If the
name signed on a vote, consent, waiver or proxy appointment does not
correspond to the name of its shareholder, the Corporation, if acting in
good faith, is nevertheless entitled to accept the vote, consent, waiver or
proxy appointment and give it effect as the act of the shareholder if:
(i) The shareholder is an entity and the name signed purports
to be that of an officer or agent of the entity;
(ii) The name signed purports to be that of an administrator,
executor, guardian or conservator representing the shareholder and, if the
Corporation requests, evidence of fiduciary status acceptable to the
Corporation has been presented with respect to the vote, consent, waiver or
proxy appointment;
(iii) The name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the Corporation requests,
evidence of this status acceptable to the Corporation has been presented
with respect to the vote, consent, waiver or proxy appointment;
<PAGE>
(iv) The name signed purports to be that of a pledgee,
beneficial owner or attorney-in-fact of the shareholder and, if the
Corporation requests, evidence acceptable to the Corporation of the
signatory's authority to sign for the share-holder has been presented with
respect to the vote, consent, waiver or proxy appointment; or
(v) Two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of
the co-owners and the person signing appears to be acting on behalf of all
co-owners.
(b) Shares of the Corporation are not entitled to be voted if (i)
they are owned, directly or indirectly, by another domestic or foreign
corporation, and (ii) the Corporation owns, directly or indirectly, a
majority of the shares entitled to be voted for directors of such other
corporation. This paragraph does not limit the power of a corporation to
vote any shares, including its own shares, held by it in a fiduciary
capacity.
(c) Redeemable shares are not entitled to be voted after notice of
redemption is mailed to the holders and a sum sufficient to redeem the
shares has been deposited with a bank, trust company or other financial
institution under an irrevocable obligation to pay the holders the
redemption price on surrender of the shares.
Section 8. PROXIES
A shareholder may vote shares either in person or by proxy. A
shareholder may appoint a proxy to vote or otherwise act for the
shareholder by signing an appointment form, either personally or by the
shareholder's attorney-in-fact. An appointment of a proxy is effective when
received by the Secretary or other officer or agent of the Corporation
authorized to tabulate votes. An appointment is valid for 11 months unless
a longer period is expressly provided in the appointment form. An
appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest.
Section 9. SHAREHOLDER LISTS
(a) After fixing a record date for a meeting, the Corporation will
prepare an alphabetical list of the names of all of its shareholders who
are entitled to notice of the meeting. The list must be arranged by voting
group, and within each voting group, by class or series of shares and show
the address of and the number of shares held by each shareholder.
(b) The shareholder list must be available for inspection by any
shareholder, beginning two business days after notice of the meeting for
which the list was prepared is given and continuing through the meeting.
Such list will be kept on file at the Corporation's principal office or at
a place identified in the meeting notice in the city where the meeting will
be held. A shareholder, or the shareholder's agent or attorney, is entitled
on written demand to inspect and,
<PAGE>
subject to the requirements of law, to copy the list during regular
business hours and at the shareholder's expense during the period it is
available for inspection.
(c) The Corporation will make the shareholder list available at
the meeting, and any shareholder, or the shareholder's agent or attorney,
is entitled to inspect the list at any time during the meeting or any
adjournment.
(d) Refusal or failure to prepare or make available the
shareholder list does not affect the validity of action taken at the
meeting.
ARTICLE II
DIRECTORS: MANAGEMENT
Section 1. POWERS
The Corporation will have a Board of Directors. All corporate
powers will be exercised by or under the authority of, and the business and
affairs of the Corporation managed under the direction of, the Board of
Directors, subject to any limitation set forth in the Articles of
Incorporation.
Section 2. NUMBER AND QUALIFICATIONS
The Board of Directors will consist of six members, until the
number has been changed by the Board of Directors by amendment of these
Bylaws. In no event shall the number of directors be less than three. A
decrease in the number of directors does not shorten an incumbent
director's term. In the event the Board of Directors is divided into
classes as set forth in Section 5 below, any increase in the number of
directors shall be allocated by the Board of Directors among the three
classes of directors so as to maintain equal classes to the extent
possible. Without the unanimous consent of the existing Board of Directors,
no more than two additional directors shall be added to the Board of
Directors within any 12-month period. Without the unanimous consent of the
Board of Directors, no person who is affiliated as an owner, director,
officer or employee of a company or business deemed by the Board of
Directors to be competitive with that of the Corporation shall be eligible
to serve on the Board of Directors of the Corporation. Directors need not
be residents of the state of Oregon or shareholders of the Corporation,
unless required by the Articles of Incorporation.
Section 3. ELECTION OF DIRECTORS
The directors will be elected by ballot at the annual meeting of
the shareholders.
Section 4. TENURE OF OFFICE WITHOUT CLASSES
<PAGE>
If the Board of Directors consists of five or fewer members, the
terms of all directors shall expire at the next annual shareholders meeting
following their election. The term of a director elected to fill a vacancy
expires at the next shareholders meeting at which directors are elected.
Despite the expiration of a director's term, the director continues to
serve until the director's successor is elected and qualifies or until
there is a decrease in the number of directors. Subject to paragraph (c) of
Section 6 of Article II, a director's term of office will begin immediately
after election.
SECTION 5. TENURE OF OFFICE WITH CLASSES
1. At any time when the Board of Directors shall consist of six or
more members, in lieu of electing the entire number of directors annually,
the Board of Directors of the Corporation shall be divided into three
classes. The three classes shall consist of an equal number of directors to
the extent possible. The initial designation of which current directors
shall serve in which classes shall be made by the director then serving as
Chairman of the Board. The classes shall be Class 1, Class 2 and Class 3.
The term of office of directors of Class 1 shall expire at the first annual
meeting of shareholders after their election, that of Class 2 shall expire
at the second annual meeting after their election, and that of Class 3
shall expire at the third annual meeting after their election. When
classification of directors is in effect, at each annual meeting of
shareholders the number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office
until the third succeeding annual meeting. No classification of directors
shall be effective in the event the authorized number of members of the
Board is reduced to fewer than six.
2. If the Board of Directors is divided into classes and in the
event of any increase or decrease in the authorized number of directors,
then (i) each director then serving as such shall nevertheless continue as
a director of the class of which he is a member until the expiration of his
current term, or upon his earlier resignation, removal from office or
death; (ii) the newly created or eliminated directorships resulting from
such increase or decrease shall be allocated by the Board of Directors
among the three classes of directors so as to maintain equal classes to the
extent possible; and (iii) in the event such decrease in the authorized
number of directors makes the total number of directors less than six, then
the Board of Directors shall become declassified and the directors
remaining in office shall continue their terms until the next annual
meeting of shareholders, at which time all of said remaining directors
shall be re-elected to one-year terms or until their successors are duly
elected and qualified.
Section 6. VACANCIES
(a) A vacancy in the Board of Directors will exist upon the death,
resignation or removal of any director or upon an increase in the number of
directors.
(b) Unless the Articles of Incorporation provide otherwise, if a
vacancy occurs on the Board of Directors:
<PAGE>
(i) The shareholders may fill the vacancy, provided that the
Board of Directors has not already done so; or
(ii) The Board of Directors may fill the vacancy, provided
the shareholders have not already done so. If the directors remaining in
office constitute fewer than a quorum of the Board, they may fill the
vacancy by the affirmative vote of a majority of all the directors
remaining in office.
(c) A vacancy that will occur at a specific later date, by reason
of a resignation effective at the later date or otherwise, may be filled
before the vacancy occurs, but the new director may not take office until
the vacancy occurs.
Section 7. RESIGNATION OF DIRECTORS
A director may resign at any time by delivering written notice to
the Board of Directors, its chairperson or the Corporation. Unless the
notice specifies a later effective date, a resignation is effective at the
earliest of the following: (a) when received; (b) five days after its
deposit in the United States mail, as evidenced by the postmark, if mailed
postage prepaid and correctly addressed; or (c) on the date shown on the
return receipt, if sent by registered or certified mail, return receipt
requested and the receipt is signed by or on behalf of the addressee. Once
delivered, a notice of resignation is irrevocable unless revocation is
permitted by the Board of Directors.
Section 8. REMOVAL OF DIRECTORS
A director may be removed only for cause by the affirmative vote
of the holders of not less than 75 percent of the outstanding shares of
Common Stock. A director may be removed by the shareholders only at a
meeting called for the purpose of removing the director and the meeting
notice must state that the purpose, or one of the purposes, of the meeting
is removal of the director.
Section 9. MEETINGS
(a) The Board of Directors may hold regular or special meetings in
or out of the state of Oregon.
(b) Annual meetings of the Board of Directors will be held without
notice immediately following the adjournment of the annual meetings of the
shareholders.
(c) Unless the Articles of Incorporation provide otherwise,
regular meetings of the Board of Directors may be held without notice of
the
<PAGE>
date, time, place or purpose of the meeting. The Board of Directors may
fix, by resolution, the time and place for the holding of regular meetings.
(d) Special meetings of the Board of Directors for any purpose or
purposes may be called at any time by the President or any director. The
person or persons who call a special meeting of the Board of Directors may
fix the time and place of the special meeting.
Section 10. NOTICE OF SPECIAL MEETINGS
(a) Unless the Articles of Incorporation provide for a longer or
shorter period, special meetings of the Board of Directors must be preceded
by at least two days' notice of the date, time and place of the meeting.
The notice need not describe the purpose of the special meeting unless
required by the Articles of Incorporation. The notice will be given orally,
in person or by telephone, or delivered in writing either personally, by
mail or by private carrier or by telegram. If in writing, such notice is
effective at the earliest of the following: (a) when received; (b) five
days after its deposit in the United States mail, as evidenced by the
postmark, if it is mailed postage prepaid and is correctly addressed to the
director's address shown in the Corporation's records; or (c) on the date
shown on the return receipt, if sent by registered or certified mail,
return receipt requested, and the receipt is signed by or on behalf of the
addressee. If given orally, such notice is effective when communicated.
(b) A director's attendance at or participation in a meeting
waives any required notice to the director of the meeting unless the
director at the beginning of the meeting, or promptly upon the director's
arrival, objects to holding the meeting or transacting business at the
meeting and does not thereafter vote for or assent to action taken at the
meeting.
(c) Notice of the time and place of holding an adjourned meeting
need not be given if such time and place are fixed at the meeting
adjourned.
Section 11. QUORUM AND VOTE
(a) Unless the Articles of Incorporation provide otherwise, a
majority of the directors in office will constitute a quorum for the
transaction of business. A majority of the directors, in the absence of a
quorum, may adjourn from time to time but may not transact any business.
(b) If a quorum is present when a vote is taken, the affirmative
vote of a majority of directors present is the act of the Board of
Directors unless the Articles of Incorporation require the vote of a
greater number of directors.
(c) A director of the Corporation who is present at a meeting of
the Board of Directors, or is present at a meeting of a committee of the
Board of Directors, when corporate action is taken, is deemed to have
assented to the action taken unless (i) the director objects at the
<PAGE>
beginning of the meeting, or promptly upon the director's arrival, to
holding the meeting or transacting business at the meeting, (ii) the
director's dissent or abstention from the action taken is entered in the
minutes of the meeting, or (iii) the director delivers written notice of
dissent or abstention to the presiding officer of the meeting before its
adjournment or to the Corporation immediately after adjournment of the
meeting. The right of dissent or abstention is not available to a director
who votes in favor of the action taken.
Section 12. COMPENSATION
The Board of Directors may, by resolution, provide that the
directors be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and provide that directors be paid a fixed sum for
attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment will preclude any director from serving the
Corporation in any other capacity and receiving compensation for that
service.
ARTICLE III
COMMITTEES
(a) Subject to law, the provisions of the Articles of
Incorporation and these Bylaws, the Board of Directors may appoint such
committees as may be necessary from time to time, consisting of such number
of its members and having such powers as it may designate. Each such
committee will have two or more members, who serve at the pleasure of the
Board of Directors.
(b) All actions of a committee will be reflected in minutes to be
kept of such meetings and reported to the Board of Directors at the next
succeeding meeting thereof. The provisions of Article II of these Bylaws
governing meetings, notice and waiver of notice, and quorum and voting
requirements of the Board of Directors apply to committees and their
members as well.
(c) An executive committee may be appointed by the Board of
Directors pursuant to the foregoing paragraphs. When appointed, the
executive committee will have the power to exercise all authority of the
Board of Directors except as may be expressly limited by law.
(d) An audit committee shall be appointed by the Board of
Directors. The audit committee shall have such members, duties and powers
as may be necessary or appropriate to qualify such committee as an audit
committee within the rules of the NASDAQ National Market System.
ARTICLE IV
OFFICERS
Section 1. DESIGNATION; ELECTION; QUALIFICATION
<PAGE>
(a) The officers of the Corporation will be a President, a
Secretary and such other officers and assistant officers as the Board of
Directors will from time to time appoint, none of whom need be members of
the Board of Directors. The officers will be elected by, and hold office at
the pleasure of, the Board of Directors. A duly appointed officer may
appoint one or more officers or assistant officers if such appointment is
authorized by the Board of Directors. The same individual may
simultaneously hold more than one office in the Corporation.
(b) A vacancy in any office because of death, resignation, removal
or any other cause will be filled in the manner prescribed in these Bylaws
for regular appointments to such office.
<PAGE>
Section 2. COMPENSATION AND TERM OF OFFICE
(a) The compensation and term of office of all the officers of the
Corporation will be fixed by the Board of Directors.
(b) The Board of Directors may remove any officer at any time,
either with or without cause.
(c) Any officer may resign at any time by giving written notice to
the Board of Directors, the President or the Secretary of the Corporation.
Unless the notice specifies a later effective date, a resignation is
effective at the earliest of the following: (a) when received; (b) five
days after its deposit in the United States mail, as evidenced by the
postmark, if mailed postage prepaid and correctly addressed; or (c) on the
date shown on the return receipt, if sent by registered or certified mail,
return receipt requested and the receipt is signed by or on behalf of the
addressee. Once delivered, a notice of resignation is irrevocable unless
revocation is permitted by the Board of Directors. If a resignation is made
effective at a later date and the Corporation accepts the future effective
date, the Board of Directors may fill the pending vacancy before the
effective date, if the Board of Directors provides that the successor will
not take office until the effective date.
(d) This section will not affect the rights of the Corporation or
any officer under any express contract of employment.
Section 3. CHAIRMAN OF THE BOARD
If the Corporation elects a Chairman of the Board, he or she will
preside at all meetings of the Board of Directors and, if requested by the
President, at meetings of the shareholders. The Chairman of the Board shall
perform such other duties as may be prescribed by the Board of Directors
from time to time.
Section 4. PRESIDENT
The President will be the chief executive officer and chief
operating officer of the Corporation. The President will have general
supervision, direction and control of the business and affairs of the
Corporation. In the absence of the Chairman of the Board, the President
will perform the duties and responsibilities of the Chairman of the Board.
The President will be ex officio a member of all the standing committees
(including the executive committee, if any), will have the general powers
and duties of management usually vested in the office of president of a
corporation and will have such other powers and duties as may be prescribed
by the Board of Directors or these Bylaws.
Section 5. VICE PRESIDENTS
<PAGE>
The Vice Presidents, if any, will perform such duties as the Board
of Directors prescribes. In the absence or disability of the President, the
President's duties and powers will be performed and exercised by a senior
Vice President, as designated by the Board of Directors.
Section 6. SECRETARY
(a) The Secretary will keep or cause to be kept at the principal
office, or such other place as the Board of Directors may order, a book of
minutes of all meetings of directors and shareholders showing the time and
place of the meeting, whether it was regular or special and, if special,
how authorized, the notice given, the names of those present at directors'
meetings, the number of shares present or represented at shareholders
meetings and the proceedings thereof.
(b) The Secretary will keep or cause to be kept, at the principal
office or at the office of the Corporation's transfer agent, a share
register, or a duplicate share register, showing the names of the
shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates issued for such shares and the
number and date of cancellation of certificates surrendered for
cancellation.
(c) The Secretary will give or cause to be given such notice of
the meetings of the shareholders and of the Board of Directors as is
required by these Bylaws. The Secretary will keep the seal of the
Corporation, if any, and affix it to all documents requiring a seal, and
will have such other powers and perform such other duties as may be
prescribed by the Board of Directors or these Bylaws.
Section 7. TREASURER
The Treasurer, if any, will be responsible for the funds of the
Corporation, and pay them out only on the checks of the Corporation signed
in the manner authorized by the Board of Directors.
Section 8. ASSISTANTS
The Board of Directors may appoint or authorize the appointment of
assistants to the Secretary or Treasurer, or both. Such assistants may
exercise the powers of the Secretary or Treasurer, as the case may be, and
will perform such duties as are prescribed by the Board of Directors.
ARTICLE V
CORPORATE RECORDS AND REPORTS - INSPECTION
Section 1. RECORDS
<PAGE>
The Corporation will maintain all records required by law. All
such records will be kept at its principal office, registered office or at
any other place designated by the President of the Corporation, or as
otherwise provided by law.
<PAGE>
Section 2. INSPECTION OF RECORDS
All records of the Corporation will be open to inspection by the
shareholders or the shareholders' agents or attorneys in the manner and to
the extent required by law.
Section 3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for payment of money, notes or
other evidences of indebtedness, issued in the name of or payable to the
Corporation, will be signed or endorsed by such person or persons and in
such manner as will be determined from time to time by resolution of the
Board of Directors.
Section 4. EXECUTION OF DOCUMENTS
The Board of Directors may, except as otherwise provided in these
Bylaws, authorize any officer or agent of the Corporation to enter into any
contract or execute any instrument in the name of and on behalf of the
Corporation. Such authority may be general or confined to specific
instances. Unless so authorized by the Board of Directors, no officer,
agent or employee of the Corporation will have any power or authority to
bind the Corporation by any contract or engagement outside of the ordinary
course of business.
ARTICLE VI
CERTIFICATES AND TRANSFER OF SHARES
Section 1. CERTIFICATES FOR SHARES
(a) Certificates for shares will be in such form as the Board of
Directors may designate, will designate the name of the Corporation and the
state law under which the Corporation is organized, will state the name of
the person to whom the shares represented by the certificate are issued,
and will state the number and class of shares and the designation of the
series, if any, the certificate represents. If the Corporation is
authorized to issue different classes of shares or different series within
a class, the designations, relative rights, preferences and limitations
applicable to each class, the variations and rights, preferences and
limitations determined for each series and the authority of the Board of
Directors to determine variations for future series will be summarized on
the front or back of each certificate, or each certificate may state
conspicuously on its front or back that the Corporation will furnish
shareholders with this information on request in writing and without
charge.
(b) Each certificate for shares must be signed, either manually or
in facsimile, by the President or a Vice President and the Secretary or an
Assistant Secretary of the Corporation. The certificates may bear the
corporate seal or its facsimile.
<PAGE>
(c) If any officer who has signed a share certificate, either
manually or in facsimile, no longer holds office when the certificate is
issued, the certificate is nevertheless valid.
(d) The Corporation will not issue certificates for fractional
shares.
Section 2. TRANSFER ON THE BOOKS
Upon surrender to the Corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, the Corporation will issue a new certificate to the
person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 3. LOST, STOLEN OR DESTROYED CERTIFICATES
In the event a certificate is represented to be lost, stolen or
destroyed, a new certificate will be issued in place thereof upon such
proof of the loss, theft or destruction and upon the giving of such bond or
other security as may be required by the Board of Directors.
Section 4. TRANSFER AGENTS AND REGISTRARS
The Board of Directors may from time to time appoint one or more
transfer agents and one or more registrars for the shares of the
Corporation who will have such powers and duties as the Board of Directors
will specify.
Section 5. CLOSING STOCK TRANSFER BOOKS
The Board of Directors may close the transfer books for a period
not exceeding 70 days nor less than 10 days preceding any annual or special
meeting of the shareholders or the day appointed for the payment of a
dividend.
ARTICLE VII
GENERAL PROVISIONS
Section 1. SEAL
If the Corporation elects to have a corporate seal, such corporate
seal will be circular in form and will have inscribed thereon the name of
the Corporation and the state of its incorporation.
Section 2. AMENDMENT OF BYLAWS
(a) Except as otherwise provided by law or by the Articles of
Incorporation, the Board of Directors may amend or repeal these Bylaws
unless:
<PAGE>
(i) The Articles of Incorporation or Oregon law reserve this
power exclusively to the shareholders in whole or in part; or
(ii) The shareholders in amending or repealing a particular
Bylaw provide expressly that the Board of Directors may not amend or repeal
that Bylaw.
(b) The Corporation's shareholders may amend or repeal these
Bylaws even though these Bylaws may also be amended or repealed by the
Board of Directors.
(c) Whenever an amendment or new Bylaw is adopted, it will be
copied in the minute book with the original Bylaws in the appropriate
place. If any Bylaw is repealed, the fact of repeal and the date on which
the repeal occurred will be stated in such book and place.
Section 3. WAIVER OF NOTICE
(a) A shareholder may at any time waive any notice required by
law, the Articles of Incorporation or these Bylaws. Except as otherwise
provided in paragraph (c) of Section 4 of Article I of these Bylaws, the
waiver must be in writing, be signed by the shareholder entitled to the
notice, and be delivered to the Corporation for inclusion in the minutes or
filing with the corporate records.
(b) A director may at any time waive any notice required by law,
the Articles of Incorporation or these Bylaws. Except as otherwise provided
in paragraph (b) of Section 8 of Article II of these Bylaws, the waiver
must be in writing, must be signed by the director entitled to the notice,
must specify the meeting for which notice is waived and must be filed with
the minutes or appropriate records.
Section 4. ACTION WITHOUT A MEETING
(a) Action required or permitted by law to be taken at a
shareholders meeting may be taken without a meeting if the action is taken
by all the shareholders entitled to vote on the action. The action must be
evidenced by one or more written consents describing the action taken,
signed by all the shareholders entitled to vote on the action and delivered
to the Corporation for inclusion in the minutes or filing with the
corporate records. Action taken under this Section 4 is effective when the
last shareholder signs the consent, unless the consent specifies an earlier
or later effective date. If not otherwise determined by law, the record
date for determining shareholders entitled to take action without a meeting
is the date the first shareholder signs the consent. A consent signed under
this Section 4 has the effect of a meeting vote and may be described as
such in any document.
(b) Unless the Articles of Incorporation or Bylaws provide
otherwise, action required or permitted by law to be taken at a meeting of
the Board of Directors, or at a meeting of a committee of the Board of
Directors, may be taken without a meeting if the action is taken by all
members of the Board. The action must be evidenced by one or more written
consents describing
<PAGE>
the action taken, signed by each director and included in the minutes or
filed with the corporate records reflecting the action taken. Action taken
under this section is effective when the last director signs the consent,
unless the consent specifies an earlier or later effective date. A consent
signed under this section has the effect of a meeting vote and may be
described as such in any document.
<PAGE>
Section 5. TELEPHONIC MEETINGS
Unless the Articles of Incorporation provide otherwise, the Board
of Directors may permit any or all directors to participate in a regular or
special meeting by, or conduct the meeting through, use of any means of
communication by which all directors participating may simultaneously hear
each other during the meeting. A director participating in a meeting by
this means is deemed to be present in person at the meeting.
ARTICLE VIII
INDEMNIFICATION
(a) The Corporation will indemnify to the fullest extent permitted
by law, any person who is made, or threatened to be made, a party to or
witness in, or is otherwise involved in, any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, investigative, or otherwise (including any action, suit or
proceeding by or in the right of the Corporation) by reason of the fact
that:
(i) the person is or was a director or officer of the
Corporation or any of its subsidiaries;
(ii) the person is or was serving as a fiduciary within the
meaning of the Employee Retirement Income Security Act of 1974 with respect
to any employee benefit plan of the Corporation or any of its subsidiaries;
or
(iii) the person is or was serving, at the request of the
Corporation or any of its subsidiaries, as a director or officer, or as a
fiduciary of an employee benefit plan, of another corporation, partnership,
joint venture, trust or other enterprise.
(b) The Corporation may indemnify its employees and other agents
to the fullest extent permitted by law.
(c) The expenses incurred by a director or officer in connection
with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, investigative, or otherwise, which
the director or officer is made or threatened to be made a party to or
witness in, or is otherwise involved in, will be paid by the Corporation in
advance at the written request of the director or officer, if the director
or officer:
(i) furnishes the Corporation a written affirmation of his or
her good faith belief that he or she is entitled to be indemnified by the
Corporation; and
(ii) furnishes the Corporation a written under-taking to
repay such advance to the extent that it is ultimately determined by a
court that he or she is not entitled to be indemnified by the Corporation.
Such advances will be made without regard to the person's ability
<PAGE>
to repay such expenses and without regard to the person's ultimate
entitlement to indemnification under this Article or otherwise.
(d) The rights of indemnification provided in this Article VIII
will be in addition to any rights to which a person may otherwise be
entitled under any articles of incorporation, bylaw, agreement, statute,
policy of insurance, vote of shareholders or Board of Directors, or
otherwise; will continue as to a person who has ceased to be a director,
officer, employee or agent of the Corporation; and will inure to the
benefit of the heirs, executors and administrators of such person.
(e) Any repeal of this Article VIII will be prospective only and
no repeal or modification of this Article VIII will adversely affect any
right or protection that is based upon this Article VIII and pertains to an
act or omission that occurred prior to the time of such repeal or
modification.
ARTICLE IX
TRANSACTIONS BETWEEN
CORPORATION AND INTERESTED DIRECTORS
(a) No transaction will be voidable by the Corporation solely
because of a director's interest in the transaction if any one of the
following is true:
(i) The material facts of the transaction and the director's
interest were disclosed or known to the Board of Directors or a committee
of the Board of Directors, and the Board of Directors or committee
authorized, approved or ratified the transaction;
(ii) The material facts of the transaction and the director's
interest were disclosed or known to the shareholders entitled to vote and
the shareholders authorized, approved or ratified the transaction; or
(iii) The transaction was fair to the Corporation.
(b) For purposes of this Article IX, a director of the Corporation
has an indirect interest in a transaction if:
(i) Another entity in which the director has a material
financial interest or in which the director is a general partner is a party
to the transaction; or
(ii) Another entity of which the director is a director,
officer or trustee is a party to the transaction and the transaction is or
should be considered by the Board of Directors.
(c) For purposes of paragraph (a)(i) of this Article IX, a
conflict of interest transaction is authorized, approved or ratified if it
receives the affirmative vote of a majority of the
<PAGE>
directors on the Board of Directors, or on the committee, who have no
direct or indirect interest in the transaction. A transaction may not be
authorized, approved or ratified under this Article IX by a single
director. If a majority of the directors who have no direct or indirect
interest in the transaction vote to authorize, approve or ratify the
transaction, a quorum is present for the purpose of taking action under
this Article IX. The presence of, or a vote cast by, a director with a
direct or indirect interest in the transaction does not affect the validity
of any action taken under paragraph (a)(i) of this Article IX if the
transaction is otherwise authorized, approved or ratified as provided in
paragraph (a) of this Article IX.
(d) For purposes of paragraph (a)(ii) of this Article IX, a
conflict of interest transaction is authorized, approved or ratified if it
receives the vote of a majority of the shares entitled to be counted under
this Article IX, voting as a single voting group. Shares owned by or voted
under the control of a director who has a direct or indirect interest in
the transaction, and shares owned by or voted under the control of an
entity described in paragraph (b)(i) of this Article IX may be counted in a
vote of shareholders to determine whether to authorize, approve or ratify a
conflict of interest transaction under paragraph (a)(ii) of this Article
IX. A majority of the shares, whether or not present, that are entitled to
be counted in a vote on the transaction under this Article IX constitutes a
quorum for the purpose of taking action under this Article IX.
ARTICLE X
LIMITATION OF DIRECTOR LIABILITY
To the fullest extent permitted by law, no director of the
Corporation will be personally liable to the Corporation or its
shareholders for monetary damages for conduct as a director. For example,
without limiting the generality of the foregoing, if the Oregon Revised
Statutes are amended, after this Article X becomes effective, to authorize
corporate action further eliminating or limiting the personal liability of
directors of the Corporation, then the liability of directors of the
Corporation will be eliminated or limited to the fullest extent permitted
by the Oregon Revised Statutes, as so amended. No amendment or repeal of
this Article X, nor the adoption of any provision of these Bylaws
inconsistent with this Article X, nor a change in the law, will adversely
affect any right or protection that is based upon this Article X and
pertains to conduct that occurred prior to the time of such amendment,
repeal, adoption or change. No change in the law will reduce or eliminate
the rights and protections set forth in this Article X unless the change in
the law specifically requires such reduction or elimination.
As amended November 1995.
WEST ONE BANK
BUSINESS LOAN AGREEMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<S> <C> <C> <C> <C> <C> <C> <C>
$4,000,000.00 02-07-1996 12-31-1997 0001 30 0001 8933637 PC
- ------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item.
- ------------------------------------------------------------------------------------------------------
</TABLE>
BORROWER: TRM COPY CENTERS LENDER: WEST ONE BANK, OREGON
CORPORATION EAST METRO COMMERCIAL
5208 N.E. 122ND AVENUE BANKING CENTER
PORTLAND, OR 97230 COMMERCIAL LOAN OPS/#ORW-504
234 S.W. BROADWAY - P.O. BOX 2882
PORTLAND, OR 97208
================================================================================
THIS BUSINESS LOAN AGREEMENT BETWEEN TRM COPY CENTERS CORPORATION
("BORROWER") AND WEST ONE BANK, OREGON ("LENDER") IS MADE AND EXECUTED ON
THE FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED PRIOR COMMERCIAL
LOANS FROM LENDER OR HAS APPLIED TO LENDER FOR A COMMERCIAL LOAN OR LOANS
AND OTHER FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE DESCRIBED
ON ANY EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT. ALL SUCH LOANS AND
FINANCIAL ACCOMMODATIONS, TOGETHER WITH ALL FUTURE LOANS AND FINANCIAL
ACCOMMODATIONS FROM LENDER TO BORROWER, ARE REFERRED TO IN THIS AGREEMENT
INDIVIDUALLY AS THE "LOAN" AND COLLECTIVELY AS THE "LOANS." BORROWER
UNDERSTANDS AND AGREES THAT: (A) IN GRANTING, RENEWING, OR EXTENDING ANY
LOAN, LENDER IS RELYING UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND
AGREEMENTS, AS SET FORTH IN THIS AGREEMENT; (B) THE GRANTING, RENEWING, OR
EXTENDING OF ANY LOAN BY LENDER AT ALL TIMES SHALL BE SUBJECT TO LENDER'S
SOLE JUDGMENT AND DISCRETION; AND (C) ALL SUCH LOANS SHALL BE AND SHALL
REMAIN SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS OF THIS AGREEMENT.
TERM. This Agreement shall be effective as of FEBRUARY 7, 1996, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when
used in this Agreement. Terms not otherwise defined in this Agreement shall
have the meanings attributed to such terms in the Uniform Commercial Code.
All references to dollar amounts shall mean amounts in lawful money of the
United States of America.
AGREEMENT. The word "Agreement" means this Business Loan Agreement, as
this Business Loan Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Business
Loan Agreement from time to time.
BORROWER. The word "Borrower" means TRM COPY CENTERS CORPORATION. The
word "Borrower" also includes, as applicable, all subsidiaries and
affiliates of Borrower as provided below in the paragraph titled
"Subsidiaries and Affiliates."
CERCLA. The word "CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
COLLATERAL. The word "Collateral" means and includes without limitation
all property and assets granted as collateral security for a Loan,
whether real or personal property, whether granted directly or
indirectly, whether granted now or in the future, and whether granted in
the form of a security interest, mortgage, deed of trust, assignment,
pledge, chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention
contract, lease or consignment intended as a security device, or any
other security or lien interest whatsoever, whether created by law,
contract, or otherwise.
ERISA. The word "ERISA" means the Employment Retirement Income Security
Act of 1974, as amended.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "EVENTS OF DEFAULT."
GRANTOR. The word "Grantor" means and includes without limitation each
and all of the persons or entities granting a Security Interest in any
Collateral for the Indebtedness, including without limitation all
Borrowers granting such a Security Interest.
GUARANTOR. The word "Guarantor" means and includes without limitation
each and all of the guarantors, sureties, and accommodation parties in
connection with any Indebtedness.
INDEBTEDNESS. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts and
liabilities of Borrower to Lender, or any one or more of them, as well
as all claims by Lender against Borrower, or any one or more of them;
whether now or hereafter existing, voluntary or involuntary, due or not
due, absolute or contingent, liquidated or unliquidated; whether
Borrower may be liable individually or jointly with others; whether
Borrower may be obligated as a guarantor, surety, or otherwise; whether
recovery upon such Indebtedness may be or hereafter may become barred by
any statute of limitations; and whether such Indebtedness may be or
hereafter may become otherwise unenforceable.
LENDER. The word "Lender" means WEST ONE BANK, OREGON, its successors
and assigns.
LOAN. The word "Loan" or "Loans" means and includes without limitation
any and all commercial loans and financial accommodations from Lender to
Borrower, whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations
described herein or described on any exhibit or schedule attached to
this Agreement from time to time.
NOTE. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations
in favor of Lender, as well as any substitute, replacement or
refinancing note or notes therefor.
PERMITTED LIENS. The words "Permitted Liens" mean: (a) liens and
security interests securing indebtedness owed by Borrower to Lender; (b)
liens for taxes, assessments, or similar charges either not yet due or
being contested in good faith; (c) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary
course of business and securing obligations which are not yet
delinquent; (d) purchase money liens or purchase money security
interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the
date of this Agreement or permitted to be incurred under the paragraph
of this Agreement titled "Indebtedness and Liens"; (e) liens and
security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (f) those liens
and security interests which in the aggregate constitute an immaterial
and insignificant monetary amount with respect to the net value of
Borrower's assets.
RELATED DOCUMENTS. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Indebtedness.
SECURITY AGREEMENT. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
SECURITY INTEREST. The words "Security Interest" mean and include
without limitation any type of collateral security, whether in the form
of a lien, charge, mortgage, deed of trust, assignment, pledge, chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional
sale, trust receipt, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the
initial Loan Advance and each subsequent Loan Advance under this Agreement
shall be subject to the fulfillment to Lender's satisfaction of all of the
conditions set forth in this Agreement and in the Related Documents.
LOAN DOCUMENTS. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral, (c)
Financing Statements perfecting Lender's Security Interests; (d)
evidence of insurance as required below; and (e) any other documents
required under this Agreement or by Lender or its counsel.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and
the Related Documents, and such other authorizations and other documents
and instruments as Lender or its counsel, in their sole discretion, may
require.
PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all
fees, charges, and other expenses which are then due and payable as
specified in this Agreement or any Related Document.
REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document
or certificate delivered to Lender under this Agreement are true and
correct.
<PAGE>
02-07-1996 BUSINESS LOAN AGREEMENT PAGE 2
LOAN NO 0001 (CONTINUED)
================================================================================
NO EVENT OF DEFAULT. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this
Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender,
as of the date of this Agreement, as of the date of each disbursement of
Loan proceeds, as of the date of any renewal, extension or modification of
any Loan, and at all times any Indebtedness exists:
ORGANIZATION. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Oregon and
is validly existing and in good standing in all states in which the
Borrower is doing business. Borrower has the full power and authority to
own its properties and to transact the businesses in which it is
presently engaged or presently proposes to engage. Borrower also is duly
qualified as a foreign corporation and is in good standing in all states
in which the failure to so qualify would have a material adverse effect
on its businesses or financial condition.
AUTHORIZATION. The execution, delivery, and performance of this
Agreement and all Related Documents by Borrower, to the extent to be
executed, delivered or performed by Borrower, have been duly authorized
by all necessary action by Borrower; do not require the consent or
approval of any other person, regulatory authority or governmental body;
and do not conflict with, result in a violation of, or constitute a
default under (a) any provision of its articles of incorporation or
organization, or bylaws, or any agreement or other instrument binding
upon Borrower or (b) any law, governmental regulation, court decree, or
order applicable to Borrower.
FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as
of the date of the statement, and there has been no material adverse
change in Borrower's financial condition subsequent to the date of the
most recent financial statement supplied to Lender. Borrower has no
material contingent obligations except as disclosed in such financial
statements.
LEGAL EFFECT. This Agreement constitutes, and any instrument or
agreement required hereunder to be given by Borrower when delivered will
constitute, legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and
as accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has
not executed any security documents or financing statements relating to
such properties. All of Borrower's properties are titled in Borrower's
legal name, and Borrower has not used, or filed a financial statement
under, any other name for at least the last five (5) years.
HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous
substance," "disposal," "release," and "threatened release," as used in
this Agreement, shall have the same meanings as set forth in the
"CERCLA," "SARA," the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., or other applicable state or Federal laws,
rules, or regulations adopted pursuant to any of the foregoing or
intended to protect human health or the environment ("Environmental
Laws"). Except as disclosed to and acknowledged by Lender in writing,
Borrower represents and warrants that: (a) During the period of
Borrower's ownership of the properties, there has been no use,
generation, manufacture, storage, treatment, disposal, release or
threatened release of any hazardous waste or substance by any person on,
under, about or from any of the properties. (b) Borrower has no
knowledge of, or reason to believe that there has been (i) any use,
generation, manufacture, storage, treatment, disposal, release, or
threatened release of any hazardous waste or substance on, under, about
or from the properties by any prior owners or occupants of any of the
properties, or (ii) any actual or threatened litigation or claims of any
kind by any person relating to such matters. (c) Neither Borrower nor
any tenant, contractor, agent or other authorized user of any of the
properties shall use, generate, manufacture, store, treat, dispose of,
or release any hazardous waste or substance on, under, about or from any
of the properties; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws,
regulations, and ordinances, including without limitation Environmental
Laws. Borrower authorizes Lender and its agents to enter upon the
properties to make such inspections and tests as Lender may deem
appropriate to determine compliance of the properties with this section
of the Agreement. Any inspections or tests made by Lender shall be at
Borrower's expense and for Lender's purposes only and shall not be
construed to create any responsibility or liability on the part of
Lender to Borrower or to any other person. The representations and
warranties contained herein are based on Borrowers' due diligence in
investigating the properties for hazardous waste and hazardous
substances. Borrower hereby (a) releases and waives any future claims
against Lender for indemnity or contribution in the event Borrower
becomes liable for cleanup or other costs under any such laws, and (b)
agrees to indemnify and hold harmless Lender against any and all claims,
losses, liabilities, damages, penalties, and expenses which Lender may
directly or indirectly sustain or suffer resulting from a breach of this
section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release occurring
prior to Borrower's ownership or interest in the properties, whether or
not the same was or should have been known to Borrower, or as a result
of a violation of any Environmental Laws. The provisions of this section
of the Agreement, including the obligation to indemnify, shall survive
the payment of the Indebtedness and the termination or expiration of
this Agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or threatened, and no other event has
occurred which may materially adversely affect Borrower's financial
condition or properties, other than litigation, claims, or other events,
if any, that have been disclosed to and acknowledged by Lender in
writing.
TAXES. To the best of Borrower's knowledge, all tax returns and reports
of Borrower that are or were required to be filed, have been filed, and
all taxes, assessments and other governmental charges have been paid in
full, except those presently being or to be contested by Borrower in
good faith in the ordinary course of business and for which adequate
reserves have been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or indirectly
securing repayment of Borrower's Loan and Note, that would be prior or
that may in any way be superior to Lender's Security Interests and
rights in and to such Collateral.
BINDING EFFECT. This Agreement, the Note, all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note
and all of the Related Documents are binding upon Borrower as well as
upon Borrower's successors, representatives and assigns, and are legally
enforceable in accordance with their respective terms.
COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely
for business or commercial related purposes.
EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower
may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable
Event nor Prohibited Transaction (as defined in ERISA) has occurred with
respect to any such plan (ii) Borrower has not withdrawn from any such
plan or initiated steps to do so, (iii) no steps have been taken to
terminate any such plan, and (iv) there are no unfunded liabilities
other than those previously disclosed to Lender in writing.
LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrower's place of
business, or Borrower's Chief executive office, if Borrower has more
than one place of business, is located at 5208 N.E. 122nd AVENUE,
PORTLAND, OR 97230. Unless Borrower has designated otherwise in writing
this location is also the office or offices where Borrower keeps its
records concerning the Collateral.
INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender
will be, true and accurate in every material respect on the date as of
which such information is dated or certified; and none of such
information is or will be incomplete by omitting to state any material
fact necessary to make such information not misleading.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
agrees that Lender, without independent investigation, is relying upon
the above representations and warranties in extending Loan Advances to
Borrower. Borrower further agrees that the foregoing representations and
warranties shall be continuing in nature and shall remain in full force
and effect until such time as Borrower's Indebtedness shall be paid in
full, or until this Agreement shall be terminated in the manner provided
above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that,
while this Agreement is in effect, Borrower will:
LITIGATION. Promptly inform Lender in writing of (a) all material
adverse changes in Borrower's financial condition, and (b) all existing
and all threatened litigation, claims, investigations, administrative
proceedings or similar actions affecting Borrower or any Guarantor which
could materially affect the financial condition of Borrower or the
financial condition of any Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at
all reasonable times.
FINANCIAL STATEMENTS. Furnish Lender with, as soon as available, but in
no event later than ninety (90) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended,
audited by a certified public accountant satisfactory to Lender, and, as
soon as available, but in no event later than forty five (45) days after
the end of each fiscal quarter, Borrower's balance sheet and profit and
loss statement for the period ended, prepared by Borrower's chief
financial officer or other officer or person acceptable to Lender. All
financial reports required to be provided under this Agreement shall be
prepared in accordance with generally accepted accounting principles,
applied on a consistent basis.
ADDITIONAL INFORMATION. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and
other reports with respect to Borrower's financial condition and
business operations as
<PAGE>
02-07-1996 BUSINESS LOAN AGREEMENT PAGE 3
LOAN NO 0001 (CONTINUED)
================================================================================
Lender may request from time to time.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages and
with insurance companies reasonably acceptable to Lender. Borrower, upon
request of Lender, will deliver to Lender from time to time the policies
or certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without
at least ten (10) days' prior written notice to Lender. Each insurance
policy also shall include an endorsement providing that coverage in
favor of Lender will not be impaired in any way by any act, omission or
default of Borrower or any other person. In connection with all policies
covering assets in which Lender holds or is offered a security interest
for the Loans, Borrower will provide Lender with such loss payable or
other endorsements as Lender may require.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the
policy; (d) the properties insured; (e) the then current property values
on the basis of which insurance has been obtained, and the manner of
determining those values; and (f) the expiration date of the policy. In
addition, upon request of Lender (however not more often than annually),
Borrower will have an independent appraiser satisfactory to Lender
determine, as applicable, the actual cash value or replacement cost of
any Collateral. The cost of such appraisal shall be paid by Borrower.
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every
kind and nature, imposed upon Borrower or its properties, income, or
profits, prior to the date on which penalties would attach, and all
lawful claims that, if unpaid, might become a lien or charge upon any of
Borrower's properties, income, or profits. Provided however, Borrower
will not be required to pay and discharge any such assessment, tax,
charge, levy, lien or claim so long as (a) the legality of the same
shall be contested in good faith by appropriate proceedings, and (b)
Borrower shall have established on its books adequate reserves with
respect to such contested assessment, tax, charge, levy, lien, or claim
in accordance with generally accepted accounting practices. Borrower,
upon demand of Lender, will furnish to Lender evidence of payment of the
assessments, taxes, charges, levies, liens and claims and will authorize
the appropriate governmental official to deliver to Lender at any time a
written statement of any assessments, taxes, charges, levies, liens and
claims against Borrower's properties, income, or profits.
PERFORMANCE. Perform and comply with all terms, conditions, and
provisions set forth in this Agreement and in the Related Documents in a
timely manner, and promptly notify Lender if Borrower learns of the
occurrence of any event which constitutes an Event of Default under this
Agreement or under any of the Related Documents.
OPERATIONS. Maintain executive and management personnel with
substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender of
any change in executive and management personnel; conduct its business
affairs in a reasonable and prudent manner and in compliance with all
applicable federal, state and municipal laws, ordinances, rules and
regulations respecting its properties, charters, businesses and
operations, including without limitation, compliance with the Americans
With Disabilities Act and with all minimum funding standards and other
requirements of ERISA and other laws applicable to Borrower's employee
benefits plans.
INSPECTION. Permit employees or agents of Lender at any reasonable time
to inspect any and all Collateral for the Loan or Loans and Borrower's
other properties and to examine or audit Borrower's books, accounts, and
records and to make copies and memoranda of Borrower's books, accounts,
and records. If Borrower now or at any time hereafter maintains any
records (including without limitation computer generated records and
computer software programs for the generation of such records) in the
possession of a third party, Borrower, upon request of Lender, shall
notify such party to permit Lender free access to such records at all
reasonable times and to provide Lender with copies of any records it may
request, all at Borrower's expense.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all
respects with all environmental protection federal, state and local
laws, statutes, regulations and ordinances; not cause or permit to
exist, as a result of an intentional or unintentional action or omission
on its part or on the part of any third party, on property owned and/or
occupied by Borrower, any environmental activity where damage may result
to the environment, unless such environmental activity is pursuant to
and in compliance with the conditions of a permit issued by the
appropriate federal, state or local governmental authorities; shall
furnish to Lender promptly and in any event within thirty (30) days
after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or
omission on Borrower's part in connection with any environmental
activity whether or not there is damage to the environment and/or other
natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements,
financing statements, instruments, documents and other agreements as
Lender or its attorneys may reasonably request to evidence and secure
the Loans and to perfect all Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while
this Agreement is in effect, Borrower shall not, without the prior written
consent of Lender:
INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) except as allowed as a Permitted Lien,
sell, transfer, mortgage, assign, pledge, lease, grant a security
interest in, or encumber any of Borrower's assets, or (c) sell with
recourse any of Borrower's accounts, except to Lender.
CONTINUITY OF OPERATIONS. (a) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (b) cease operations, liquidate, merge, transfer, acquire or
consolidate with any other entity, change ownership, change its name,
dissolve or transfer or sell Collateral out of the ordinary course of
business, (c) pay any dividends on Borrower's stock (other than
dividends payable in its stock), provided, however that notwithstanding
the foregoing, but only so long as no Event of Default has occurred and
is continuing or would result from the payment of dividends, if Borrower
is a "Subchapter S Corporation" (as defined in the Internal Revenue Code
of 1986, as amended), Borrower may pay cash dividends on its stock to
its shareholders from time to time in amounts necessary to enable the
shareholders to pay income taxes and make estimated income tax payments
to satisfy their liabilities under federal and state law which arise
solely from their status as Shareholders of a Subchapter S Corporation
because of their ownership of shares of stock Borrower, or (d) purchase
or retire any of Borrower's outstanding shares or alter or amend
Borrower's capital structure.
LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money
or assets, (b) purchase, create or acquire any interest in any other
enterprise or entity, or (c) incur any obligation as surety or guarantor
other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan
to Borrower, whether under this Agreement or under any other agreement,
Lender shall have no obligation to make Loan Advances or to disburse Loan
proceeds if: (a) Borrower or any Guarantor is in default under the terms of
this Agreement or any of the Related Documents or any other agreement that
Borrower or any Guarantor has with Lender; (b) Borrower or any Guarantor
becomes insolvent, files a petition in bankruptcy or similar proceedings,
or is adjudged a bankrupt; (c) there occurs a material adverse change in
Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; (d) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such Guarantor's guaranty of the Loan or any other loan with Lender; or (e)
Lender in good faith deems itself insecure, even though no Event of Default
shall have occurred.
ADDENDUM TO EVENTS OF DEFAULT/EVENTS AFFECTING GUARANTOR. Any Guarantor
seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender.
FINANCIAL COVENANTS AND RATIOS.
(1) Borrower shall maintain a ratio of Total Liabilities to Tangible Net
Worth not to exceed 1.00 to 1.00
(2) Borrower shall maintain a Tangible net worth of not less than
$30,000,000.00 plus fifty percent (50%) of the cumulative net income
after taxes each fiscal year beginning after June 30, 1995.
(3) Borrower shall maintain a ratio of Current Assets to Current
Liabilities of at least 1.50 to 1.00
(4) Borrower shall maintain a minimum Debt Coverage Ratio of 1.25 to 1.00,
calculated on the basis of the most recent four quarters.
(5) All covenants to be measured quarterly.
ADDENDUM TO DEFINITIONS.
(1) Debt Coverage Ratio means net profit after taxes plus depreciation and
non-cash expenses divided by $5,250,000 for the fiscal quarters ending
September 30, 1995 and December 31, 1995 and $6,500,000 thereafter.
(2) Current Assets means the total assets of the Borrower that may
properly be classified as current assets in accordance with GAAP, but
excluding
<PAGE>
02-07-1996 BUSINESS LOAN AGREEMENT PAGE 4
LOAN NO 0001 (CONTINUED)
================================================================================
all loans to and notes and receivables from officers, employees,
directors, shareholders, partners and members of the Borrower.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory
security interest in, and hereby assigns, conveys, delivers, pledges, and
transfers to Lender all Borrower's right, title and interest in and to,
Borrower's accounts with Lender (whether checking, savings, or some other
account), including without limitation all accounts held jointly with
someone else and all accounts Borrower may open in the future, excluding
however all IRA and Keogh accounts, and all trust accounts for which the
grant of a security interest would be prohibited by law. Borrower
authorizes Lender, to the extent permitted by applicable law, to charge or
setoff all sums owing on the indebtedness against any and all such
accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when
due on the Loans.
OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or
failure of Borrower to comply with or to perform any other term,
obligation, covenant or condition contained in any other agreement
between Lender and Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor
default under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any
other creditor or person that may materially affect any of Borrower's
property or Borrower's or any Grantor's ability to repay the Loans or
perform their respective obligations under this Agreement or any of the
Related Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under
this Agreement or the Related Documents is false or misleading in any
material respect at the time made or furnished, or becomes false or
misleading at any time thereafter.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any Security Agreement to create a valid and perfected Security
Interest) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower's property, any assignment for the
benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against
Borrower.
CREDITOR OF FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor or Borrower, any
creditor of any Grantor against any collateral securing the
Indebtedness, or by any governmental agency. This includes a
garnishment, attachment, levy on or of any of Borrower's deposit
accounts with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by Borrower or Grantor, as the case may
be, as to the validity or reasonableness of the claim which is the basis
of the creditor or forfeiture proceeding, and if Borrower or Grantor
gives Lender written notice of the creditor or forfeiture proceeding and
furnishes reserves or a surety bond for the creditor or forfeiture
proceeding satisfactory to Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness. Lender, at its
option, may, but shall not be required to, permit the Guarantor's estate
to assume unconditionally the obligations arising under the guaranty in
a manner satisfactory to Lender, and, in doing so, cure the Event of
Default.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of
the Indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
RIGHT TO CURE. If any default, other than a Default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been
given a notice of a similar default within the preceding twelve (12)
months, it may be cured (and no Event of Default will have occurred) if
Borrower or Grantor, as the case may be, after receiving written notice
from Lender demanding cure of such default: (a) cures the default within
twenty (20) days; or (b) if the cure requires more than twenty (20)
days, immediately initiates steps which Lender deems in Lender's sole
discretion to be sufficient to cure the default and thereafter continues
and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's
option, all Indebtedness immediately will become due and payable, all
without notice of any kind to Borrower, except that in the case of an Event
of Default of the type described in the "Insolvency" subsection above, such
acceleration shall be automatic and not optional. In addition, Lender shall
have all the rights and remedies provided in the Related Documents or
available at law, in equity, or otherwise. Except as may be prohibited by
applicable law, all of Lender's rights and remedies shall be cumulative and
may be exercised singularly or concurrently. Election by Lender to pursue
any remedy shall not exclude pursuit of any other remedy, and an election
to make expenditures or to take action to perform an obligation of Borrower
or of any Grantor shall not affect Lender's right to declare a default and
to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment
to this Agreement shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration
or amendment.
APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED
BY LENDER IN THE STATE OF OREGON. IF THERE IS A LAWSUIT, BORROWER AGREES
UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF
MULTNOMAH COUNTY, THE STATE OF OREGON. LENDER AND BORROWER HEREBY WAIVE
THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE OTHER. SUBJECT TO THE
PROVISIONS ON ARBITRATION, THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON.
ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN
NATURE, ARISING FROM THIS AGREEMENT OR OTHERWISE, INCLUDING WITHOUT
LIMITATION CONTRACT AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO
THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION, UPON REQUEST OF
EITHER PARTY. No act to take or dispose of any Collateral shall
constitute a waiver of this arbitration agreement or be prohibited by
this arbitration agreement. This includes, without limitation, obtaining
injunctive relief or a temporary restraining order; foreclosing by
notice and sale under any deed of trust or mortgage; obtaining a writ of
attachment or imposition of a receiver; or exercising any rights
relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the
Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness of any act, or exercise of
any right, concerning any Collateral, including any claim to rescind,
reform, or otherwise modify any agreement relating to the Collateral,
shall also be arbitrated, provided however that no arbitrator shall have
the right or the power to enjoin or restrain any act of any party.
Judgment upon any award rendered by any arbitrator may be entered in any
court having jurisdiction. Nothing in this Agreement shall preclude any
party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches, and
similar doctrines which would otherwise be applicable in an action
brought by a party shall be applicable in any arbitration proceeding,
and the commencement of an arbitration proceeding shall be deemed the
commencement of an action for these purposes. The Federal Arbitration
Act shall apply to the construction, interpretation, and enforcement of
this arbitration provision.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the
provisions of this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any
other matter relating to the Loan, and Borrower hereby waives any rights
to privacy it may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of any
such participation interests will be considered as the absolute owners
of such interests in the Loans and will have all rights granted under
the participation agreement or agreements governing the sale of such
participation interests. Borrower further waives all rights of offset or
counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees
that either Lender or such purchaser may enforce Borrower's obligation
under the Loans irrespective of the failure or insolvency of any holder
of any interest in the Loans. Borrower further agrees that the purchaser
of any such participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrower's obligation under
the Loans irrespective of the failure or insolvency of any holder of any
interest in the Loans. Borrower further agrees that the purchaser of any
such participation interests may enforce its interests irrespective of
any personal claims or defenses that Borrower may have against Lender.
COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's
expenses, including without limitation attorneys' fees, incurred in
connection with the preparation, execution, enforcement, modification
and collection of this Agreement or in connection with the Loans made
pursuant to this Agreement. Lender may pay someone else to help collect
the Loans and to enforce this Agreement, and Borrower will pay that
amount. This includes, subject to any limits under applicable law,
Lender's attorneys' fees and Lender's legal expenses, whether or not
there is a
<PAGE>
02-07-1996 BUSINESS LOAN AGREEMENT PAGE 5
LOAN NO 0001 (CONTINUED)
================================================================================
lawsuit, including attorneys' fees or bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals,
and any anticipated post-judgment collection services. Borrower also
will pay any court costs, in addition to all other sums provided by law.
NOTICES. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile, and shall be effective
when actually delivered or when deposited with a nationally recognized
overnight courier or deposited in the United States mail, first class,
postage prepaid, addressed to the party to whom the notice is to be
given at the address shown above. Any party may change its address for
notices under this Agreement by giving formal written notice to the
other parties, specifying that the purpose of the notice is to change
the party's address. To the extent permitted by applicable law, if there
is more than one Borrower, notice to any Borrower will constitute notice
to all Borrowers. For notice purposes, Borrower will keep Lender
informed at all times of Borrower's current address(es).
SEVERABILITY. If a court of competent jurisdiction finds any provision
of this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending
provision cannot be so modified, it shall be stricken and all other
provisions of this Agreement in all other respects shall remain valid
and enforceable.
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of
any provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower"
as used herein shall include all subsidiaries and affiliates of
Borrower. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any subsidiary or affiliate of
Borrower.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure
to the benefit of Lender, its successors and assigns. Borrower shall
not, however, have the right to assign its rights under this Agreement
or any interest therein, without the prior written consent of Lender.
SURVIVAL. All warranties, representations, and covenants made by
Borrower in this Agreement or in any certificate or other instrument
delivered by Borrower to Lender under this Agreement shall be considered
to have been relied upon by Lender and will survive the making of the
Loan and delivery to lender of the Related Documents, regardless of any
investigation made by Lender or on Lender's behalf.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender.
No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or
between Lender and any Grantor, shall constitute a waiver of any of
Lender's rights or of any obligations of Borrower or of any Grantor as
to any future transactions. Whenever the consent of Lender is required
under this Agreement, the granting of such consent by Lender in any
instance shall not constitute continuing consent in subsequent instances
where such consent is required, and in all cases such consent may be
granted or withheld in the sole discretion of Lender.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US
(LENDER) AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS
WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY
BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND
BE SIGNED BY US TO BE ENFORCEABLE.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
FEBRUARY 7, 1996.
BORROWER:
TRM COPY CENTERS CORPORATION
BY: MICHAEL D. SIMON
-----------------------------------
MICHAEL D. SIMON, PRESIDENT
LENDER:
WEST ONE BANK, OREGON
BY: MALVERN F. HAWLEY
-----------------------------------
AUTHORIZED OFFICER
================================================================================
<PAGE>
WEST ONE BANK
PROMISSORY NOTE
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<CAPTION>
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PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<C> <C> <C> <C> <C> <C> <C> <C>
$4,000,000.00 02-07-1996 12-31-1997 0001 30 0001 8933637 PC
- ------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item.
- ------------------------------------------------------------------------------------------------------
</TABLE>
BORROWER: TRM COPY CENTERS LENDER: WEST ONE BANK, OREGON
CORPORATION EAST METRO COMMERCIAL
5208 N.E. 122ND AVENUE BANKING CENTER
PORTLAND, OR 97230 COMMERCIAL LOAN OPS/#ORW-504
234 S.W. BROADWAY - P.O. BOX 2882
PORTLAND, OR 97208
================================================================================
PRINCIPAL AMOUNT: INITIAL RATE: DATE OF NOTE:
$4,000,000.00 8.250% FEBRUARY 7, 1996
PROMISE TO PAY. TRM COPY CENTERS CORPORATION ("BORROWER") PROMISES TO PAY
TO WEST ONE BANK, OREGON ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE
UNITED STATES OF AMERICA, THE PRINCIPAL AMOUNT OF FOUR MILLION & 00/100
DOLLARS ($4,000,000.00) OR SO MUCH AS MAY BE OUTSTANDING, TOGETHER WITH
INTEREST ON THE UNPAID OUTSTANDING PRINCIPAL BALANCE OF EACH ADVANCE.
INTEREST SHALL BE CALCULATED FROM THE DATE OF EACH ADVANCE UNTIL REPAYMENT
OF EACH ADVANCE.
PAYMENT. BORROWER WILL PAY THIS LOAN ON DEMAND, OR IF NO DEMAND IS MADE, IN
ACCORDANCE WITH THE FOLLOWING PAYMENT SCHEDULE:
BORROWER WILL MAKE MONTHLY PAYMENTS OF INTEREST COMMENCING MARCH 1,
1996, AND ON THAT DAY FOR EACH MONTH THEREAFTER, WITH INTEREST
CALCULATED ON THE UNPAID PRINCIPAL BALANCE AT A VARIABLE RATE OF
INTEREST EQUAL TO THAT RATE THAT THE BANK SHALL ANNOUNCE AS THE WEST
ONE BANK, OREGON REFERENCE RATE (THE "REFERENCE RATE") AS IT MAY
CHANGE FROM TIME TO TIME, WHICH RATE SHALL BE CALCULATED ON THE BASIS
OF YEAR OF 365 OR 366 DAYS FOR THE ACTUAL NUMBER OF DAYS ELAPSED.
NOTWITHSTANDING THE ABOVE, BORROWER MAY REQUEST OF LENDER IN WRITING
TO APPLY AS TO ADVANCES OF NOT LESS THAN FIVE HUNDRED THOUSAND AND
00/100 DOLLARS ($500,000.00) UNDER THE TERMS OF THIS NOTE, A RATE OF
INTEREST BASED ON THE LONDON INTERBANK OFFERED RATE ("LIBOR") PLUS
ONE AND THREE-TENTHS PERCENT (1.3%) PER ANNUM, WHICH RATE SHALL APPLY
TO SUCH ADVANCES FOR TERMS OF SEVEN (7), THIRTY (30), SIXTY (60),
NINETY (90) OR ONE HUNDRED EIGHTY (180) DAYS AS TO EACH ADVANCE AS
REQUESTED BY BORROWER AT THE TIME THE ADVANCE IS MADE. LIBOR SHALL BE
BASED ON THE ASKING PRICE PER ANNUM FOR U.S. DOLLAR DEPOSITS IN THE
LONDON INTERBANK MARKET AS SUCH RATE OF INTEREST IS COMMUNICATED TO
THE BANK THROUGH TELERATE OR A SIMILAR QUOTE REPORTING SERVICE.
INTEREST UNDER THIS LIBOR RATE SHALL BE CALCULATED ON THE BASIS OF
YEAR OF 360 DAYS FOR THE ACTUAL NUMBER OF DAYS ELAPSED. THE BORROWER
SHALL BE ASSESSED A PREPAYMENT PENALTY FOR ANY AMOUNTS BORROWED UNDER
THE LIBOR OPTION THAT ARE PREPAID PRIOR TO THE MATURITY OF AN
INDIVIDUAL TERM. BORROWER'S FINAL PAYMENT DUE DECEMBER 31, 1997 WILL
BE FOR ALL PRINCIPAL, AND ALL ACCRUED INTEREST, TOGETHER WITH ANY
OTHER AMOUNTS DUE UNDER THIS NOTE.
Interest on this Note is computed on a 365/365 simple interest basis; that
is, by applying the ratio of the annual interest rate over the number of
days in a year (366 during leap years), multiplied by the outstanding
principal balance, multiplied by the actual number of days the principle
balance is outstanding. Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied
first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the WEST ONE BANK,
OREGON REFERENCE RATE (the "Index").* The Index is not necessarily the
lowest rate charged by Lender on its loans and is set by Lender in its sole
discretion. If the Index becomes unavailable during the term of this loan,
Lender may designate a substitute index after notifying Borrower. Lender
will tell Borrower the current Index rate upon Borrower's request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each DAY. THE INDEX
CURRENTLY IS 8.250% PER ANNUM. THE INTEREST RATE TO BE APPLIED TO THE
UNPAID PRINCIPAL BALANCE OF THIS NOTE WILL BE AT A RATE EQUAL TO THE INDEX,
RESULTING IN AN INITIAL RATE OF 8.250% PER ANNUM.
PREPAYMENT. Borrower may pay all or a portion of the amount owed earlier
than it is due. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower's obligation to continue to make
payments of accrued unpaid interest. Rather, they will reduce the principal
balance due.
LATE CHARGE. If a payment is 15 DAYS OR MORE LATE, Borrower will be charged
5.000% OF THE REGULARLY SCHEDULED PAYMENT OR $5.00, WHICHEVER IS GREATER.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any
promise Borrower has made to Lender, or Borrower fails to comply with or to
perform when due any other term, obligation, covenant, or condition
contained in this Note or any agreement related to this Note, or in any
other agreement or loan Borrower has with Lender. (c) Borrower defaults
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's ability
to repay this Note or perform Borrower's obligations under this Note or any
of the Related Documents. (d) Any representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf is false or
misleading in any material respect either now or at the time made or
furnished. (e) Borrower becomes insolvent, a receiver is appointed for any
part of Borrower's property, Borrower makes an assignment for the benefit
of creditors, or any proceeding is commenced either by Borrower or against
Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries to
take any of Borrower's property on or in which Lender has a lien or
security interest. This includes a garnishment of any of Borrower's
accounts with Lender. (g) Any guarantor dies or any of the other events
described in this default section occurs with respect to any guarantor of
this Note. (h) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
indebtedness is impaired. (i) Lender in good faith deems itself insecure.
If any default, other than a default in payment, is curable and if Borrower
has not been given a notice of a breach of the same provision of this Note
within the preceding twelve (12) months, it may be cured (and no event of
default will have occurred) if Borrower, after receiving written notice
from Lender demanding cure of such default: (a) cures the default within
twenty (20) days; or (b) if the cure requires more than twenty (20) days,
immediately initiates steps which Lender deems in Lender's sole discretion
to be sufficient to cure the default and thereafter continues and completes
all reasonable and necessary steps sufficient to produce compliance as soon
as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest immediately
due, without notice, and then Borrower will pay that amount. Upon default,
including failure to pay upon final maturity, Lender, at its option, may
also, if permitted under applicable law, increase the variable interest
rate on this Note to 5.000 percentage points over the Index. The interest
rate will not exceed the maximum rate permitted by applicable law. Lender
may hire or pay someone else to help collect this Note if Borrower does not
pay. Borrower also will pay Lender that amount. This includes, subject to
any limits under applicable law, Lender's attorneys' fees and Lender's
legal expenses whether or not there is a lawsuit, including attorneys' fees
and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all other sums
provided by law. THIS NOTE HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY
LENDER IN THE STATE OF OREGON. IF THERE IS A LAWSUIT, BORROWER AGREES UPON
LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF MULTNOMAH
COUNTY, THE STATE OF OREGON. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO
ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER
LENDER OR BORROWER AGAINST THE OTHER. SUBJECT TO THE PROVISIONS ON
ARBITRATION, THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF OREGON.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory
security interest in, and hereby assigns, conveys, delivers, pledges, and
transfers to Lender all Borrower's right, title and interest in and to,
Borrower's accounts with Lender (whether checking, savings, or some other
account), including without limitation all accounts held jointly with
someone else and all accounts Borrower may open in the future, excluding
however all IRA and Keogh accounts, and all trust accounts for which the
grant of a security interest would be prohibited by law. Borrower
authorizes Lender, to the extent permitted by applicable law, to charge or
setoff all sums owing on this Note against any and all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note may be requested orally by Borrower or by an authorized
person. All oral requests shall be confirmed in writing on the day of the
request. All communications, instructions, or directions by telephone or
otherwise to Lender are to be directed to Lender's office shown above. The
following party or parties are authorized to request advances under the
line of credit until Lender receives from Borrower at Lender's address
shown above written notice of revocation of their authority: MICHAEL D.
SIMON, PRESIDENT; ROBERT A. BRUCE, VICE PRESIDENT/CFO; ROSEMARY EVANS,
TREASURER; AND LINDA HAAS, CONTROLLER. Borrower agrees to be liable for all
sums either: (a) advanced in accordance with the instructions of an
authorized person or (b) credited to any of Borrower's accounts with
Lender, regardless of the fact that persons other than those authorized to
borrow have authority to draw against the accounts. The unpaid principal
balance owing on this Note at any time may be evidenced by endorsements on
this Note or by Lender's internal records, including daily computer
print-outs. Lender will have no obligation to advance funds under this Note
if: (a) Borrower or any guarantor is in default under the terms of this
Note or any agreement that Borrower or any guarantor has with Lender,
including any agreement made in connection with the signing of this Note;
(b) Borrower or any guarantor ceases doing business or is insolvent; (c)
any guarantor seeks, claims or otherwise attempts to limit, modify
* If applicable, LIBOR (collectively, the "Index")
<PAGE>
02-07-1996 PROMISSORY NOTE Page 2
Loan No 0001 (CONTINUED)
================================================================================
or revoke such guarantor's guarantee of this Note or any other loan with
Lender; (d) Borrower has applied funds provided pursuant to this Note for
purposes other than those authorized by Lender; or (e) Lender in good faith
deems itself insecure under this Note or any other agreement between Lender
and Borrower.
ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS NOTE OR OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT
AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE
AMERICAN ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to
take or dispose of any collateral securing this Note shall constitute a
waiver of this arbitration agreement or be prohibited by this arbitration
agreement. This includes, without limitation, obtaining injunctive relief
or a temporary restraining order; foreclosing by notice and sale under any
deed of trust or mortgage; obtaining a writ of attachment or imposition of
a receiver; or exercising any rights relating to personal property,
including taking or disposing of such property with or without judicial
process pursuant to Article 9 of the Uniform Commercial Code. Any disputes,
claims, or controversies concerning the lawfulness or reasonableness of any
act, or exercise of any right, concerning any collateral securing this
Note, including any claim to rescind, reform, or otherwise modify any
agreement relating to the collateral securing this Note, shall also be
arbitrated, provided however that no arbitrator shall have the right or the
power to enjoin or restrain any act of any party. Judgment upon any award
rendered by any arbitrator may be entered in any court having jurisdiction.
Nothing in this Note shall preclude any party from seeking equitable relief
from a court of competent jurisdiction. The statute of limitations,
estoppel, waiver, laches, and similar doctrines which would otherwise be
applicable in an action brought by a party shall be applicable in any
arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for these purposes. The
Federal Arbitration Act shall apply to the construction, interpretation,
and enforcement of this arbitration provision.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Promissory Note.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of
specific default provisions or rights of Lender shall not preclude Lender's
right to declare payment of this Note on its demand. Lender may delay or
forgo enforcing any of its rights or remedies under this Note without
losing them. Borrower and any other person who signs, guarantees or
endorses this Note, to the extent allowed by law, waive presentment, demand
for payment, protest and notice of dishonor. Upon any change in the terms
of this Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that
Lender may renew or extend (repeatedly and for any length of time) this
loan, or release any party or guarantor or collateral; or impair, fail to
realize upon or perfect Lender's security interest in the collateral; and
take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this
loan without the consent of or notice to anyone other than the party with
whom the modification is made.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US
(LENDER) AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS
WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY
BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND
BE SIGNED BY US TO BE ENFORCEABLE.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED
COPY OF THE NOTE.
BORROWER:
TRM COPY CENTERS CORPORATION
BY: MICHAEL D. SIMON
-----------------------------------
MICHAEL D. SIMON, PRESIDENT
LENDER:
WEST ONE BANK, OREGON
BY: MALVERN F. HAWLEY
-----------------------------------
AUTHORIZED OFFICER
================================================================================
<PAGE>
CORPORATE RESOLUTION TO BORROW
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<C> <C> <C> <C> <C> <C> <C> <C>
$4,000,000.00 02-07-1996 12-31-1997 0001 30 0001 8933637 PC
- ---------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
BORROWER: TRM COPY CENTERS LENDER: WEST ONE BANK, OREGON
CORPORATION EAST METRO COMMERCIAL
5208 N.E. 122ND AVENUE BANKING CENTER
PORTLAND, OR 97230 COMMERCIAL LOAN OPS/#ORW-504
234 S.W. BROADWAY - P.O. BOX 2882
PORTLAND, OR 97208
================================================================================
I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF TRM COPY CENTERS
CORPORATION (THE "CORPORATION"), HEREBY CERTIFY THAT the Corporation is
organized and existing under and by virtue of the laws of the State of
Oregon as a corporation for profit, with its principal office at 5208 N.E.
122nd AVENUE, PORTLAND, OR 97230, and is duly authorized to transact
business in the State of Oregon.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation,
duly called and held ON JUNE 17, 1994, at which a quorum was present and
voting, or by other duly authorized corporate action in lieu of a meeting,
the following resolutions were adopted:
BE IT RESOLVED, that ANY ONE (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
NAME POSITION ACTUAL SIGNATURE
---- -------- ----------------
MICHAEL D. SIMON PRESIDENT X MICHAEL D. SIMON
----------------------
acting for and on behalf of the Corporation and as its act and deed be, and
he or she hereby is, authorized and empowered:
BORROW MONEY. To borrow from time to time from WEST ONE BANK, OREGON
("Lender"), on such terms as may be agreed upon between the Corporation
and Lender, such sum or sums of money as in his or her judgment should
be borrowed; however, not exceeding at any one time the amount of THIRTY
MILLION & 00/100 DOLLARS ($30,000,000.00), in addition to such sum or
sums of money as may be currently borrowed by the Corporation from
Lender.
EXECUTE NOTES. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accommodations of the Corporation, on
Lender's forms, at such rates of interest and on such terms as may be
agreed upon, evidencing the sums of money so borrowed or any
indebtedness of the Corporation to Lender, and also to execute and
deliver to Lender one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for one or more of the
notes, any portion of the notes, or any other evidence of credit
accommodations.
GRANT SECURITY. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of
any loans or credit accommodations so obtained, any promissory notes so
executed (including any amendments to or modifications, renewals, and
extensions of such promissory notes), or any other or further
indebtedness of the Corporation to Lender at any time owing, however the
same may be evidenced, any property now or hereafter belonging to the
Corporation or in which the Corporation now or hereafter may have an
interest, including without limitation all real property and all
personal property (tangible or intangible) of the Corporation. Such
property may be mortgaged, pledged, transferred, endorsed, hypothecated,
or encumbered at the time such loans are obtained or such indebtedness
is incurred, or at any other time or times, and may be either in
addition to or in lieu of any property theretofore mortgaged, pledged,
transferred, endorsed, hypothecated, or encumbered.
EXECUTE SECURITY DOCUMENTS. To execute and deliver to Lender the forms
of mortgage, deed of trust, pledge agreement, hypothecation agreement,
and other security agreements and financing statements which may be
submitted by Lender, and which shall evidence the terms and conditions
under and pursuant to which such liens and encumbrances, or any of them,
are given; and also to execute and deliver to Lender any other written
instruments, any chattel paper, or any other collateral, of any kind or
nature, which he or she may in his or her discretion deem reasonably
necessary or proper in connection with or pertaining to the giving of
the liens and encumbrances.
NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation in which the Corporation may
have an interest, and either to receive cash for the same or to cause
such proceeds to be credited to the account of the Corporation with
Lender, or to cause such other disposition of the proceeds derived
therefrom as they may deem advisable.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances
thereunder, and in all cases, to do and perform such other acts and
things, to pay any and all fees and costs, and to execute and deliver
such other documents and agreements, INCLUDING AGREEMENTS REQUIRING
DISPUTES WITH LENDER TO BE SUBMITTED TO BINDING ARBITRATION FOR FINAL
RESOLUTION AND WAIVING THE RIGHT TO A TRIAL BY JURY, as he or she may in
his or her discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions. The following
person or persons currently are authorized to request advances and
authorize payments under the line of credit until Lender receives
written notice of revocation of their authority: MICHAEL D. SIMON,
PRESIDENT; ROBERT A. BRUCE, VICE PRESIDENT/CFO; ROSEMARY EVANS,
TREASURER; and LINDA HAAS, CONTROLLER.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are
hereby ratified and approved, that these Resolutions shall remain in full
force and effect and Lender may rely on these Resolutions until written
notice of his or her revocation shall have been delivered to and received
by Lender. Any such notice shall not affect any of the Corporation's
agreements or commitments in effect at the time notice is given.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing
at Lender's address shown above (or such other addresses as Lender may
designate from time to time) prior to any (a) change in the name of the
Corporation, (b) change in the assumed business name(s) of the Corporation,
(c) change in the management of the Corporation, (d) change in the
authorized signer(s) or (e) change in any other aspect of the Corporation
that directly or indirectly relates to any agreements between the
Corporation and Lender. No change in the name of the Corporation will take
effect until after Lender has been notified.
I FURTHER CERTIFY that the officer, employee, or agent named above is duly
elected, appointed, or employed by or for the Corporation, as the case may
be, and occupies the position set opposite the name; that the foregoing
Resolutions now stand or record on the books of the Corporation; and that
the Resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever. The Corporation has no corporate seal,
and therefore, no seal is affixed to this certificate.
IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET MY HAND ON FEBRUARY 7, 1996 AND
ATTEST THAT THE SIGNATURES SET OPPOSITE THE NAMES LISTED ABOVE ARE THEIR
GENUINE SIGNATURES.
CERTIFIED TO AND ATTESTED BY:
X ROBERT A. BRUCE
-------------------------------
X
-------------------------------
NOTE: In case the Secretary or other certifying officer is designated by
the foregoing resolutions as one of the signing officers, it is advisable
to have this certificate signed by a second Officer or Director of the
Corporation.
================================================================================
<PAGE>
WEST ONE BANK
DISBURSEMENT REQUEST AND AUTHORIZATION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
<C> <C> <C> <C> <C> <C> <C> <C>
$4,000,000.00 02-07-1996 12-31-1997 0001 30 0001 8933637 PC
- ------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item.
- ------------------------------------------------------------------------------------------------------
</TABLE>
BORROWER: TRM COPY CENTERS LENDER: WEST ONE BANK, OREGON
CORPORATION EAST METRO COMMERCIAL
5208 N.E. 122ND AVENUE BANKING CENTER
PORTLAND, OR 97230 COMMERCIAL LOAN OPS/#ORW-504
234 S.W. BROADWAY - P.O. BOX 2882
PORTLAND, OR 97208
================================================================================
LOAN TYPE. This is a Variable Rate (at WEST ONE BANK, OREGON REFERENCE
RATE, making an initial rate of 8.250%), Revolving Line of Credit Loan to a
Corporation for $4,000,000.00 due on December 31, 1997.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for:
/ / PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR PERSONAL INVESTMENT.
/ X / BUSINESS (INCLUDING REAL ESTATE INVESTMENT).
SPECIFIC PURPOSE. The specific purpose of this loan is: Revolving line of
credit utilized for working capital and letters of credit.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will
be disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $4,000,000.00 as follows:
AMOUNT PAID TO OTHERS ON BORROWER'S BEHALF: $4,000,000.00
$4,000,000.00 LINE OF CREDIT: DISBURSE AS REQUESTED -------------
NOTE PRINCIPAL: $4,000,000.00
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT
AND THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL
CONDITION AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO
LENDER. THIS AUTHORIZATION IS DATED FEBRUARY 7, 1996.
BORROWER:
TRM COPY CENTERS CORPORATION
BY: MICHAEL D. SIMON
-----------------------------------
MICHAEL D. SIMON, PRESIDENT
================================================================================
LOAN AGREEMENT
Dated as of: February 7, 1996
Parties: TRM Copy Centers Corporation (USA) ("BORROWER")
TRM Copy Centers Corporation ("GUARANTOR")
And: WEST ONE BANK, IDAHO ("LENDER")
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
"Access Laws" means the American With Disabilities Act of 1990; the
Fair Housing Amendments Act of 1988; all other federal, state and local
laws or ordinances related to disabled access; and all statutes; rules,
regulations, ordinances, orders of governmental bodies and regulatory
agencies and orders and decrees of any court adopted, enacted or issued
with respect thereto; all as now existing or hereafter amended or adopted.
"Borrower" means TRM Copy Centers (USA) Corporation, an Oregon
corporation.
"Debt Coverage Ratio" means net profit after taxes plus depreciation
and non-cash expenses divided by $6,500,000.00.
"Default" means any Event of Default or any event which with the
giving of notice or the passage of time, or both, would constitute an Event
of Default.
"Default Rate" means a rate of interest 2% above the rate of interest
stated on the Note.
"Environmental Laws" means all local, state or federal laws, rules,
regulations, or ordinances pertaining to Hazardous Substances and
environmental regulation, contamination or clean-up including, without
limitation, the federal statutes commonly known as CERCLA and RCRA and all
other federal or state lien or environmental clean-up statutes, all as now
existing or hereafter amended or adopted.
<PAGE>
"GAAP" means generally accepted accounting principles consistently
applied. The definition of any accounting term used in this Agreement that
is not specifically defined shall be the GAAP definition therefor.
"Guarantor" means TRM Copy Centers Corporation.
"Guaranty" means each guaranty of any obligations of Borrower to
Lender heretofore, contemporaneously herewith or hereafter executed by any
Guarantor or any other Person.
"Hazardous Substances" means (a) any substance or material defined or
designated as hazardous or toxic waste, hazardous or toxic material, or a
hazardous, toxic or radioactive substance (or designated by any similar
term) by or for purposes of any applicable Environmental Law; (b) asbestos
and any substance or compound containing asbestos; and (c) any other
hazardous, toxic or dangerous waste, substance or material, including but
not limited to gasoline, crude oil, fuel oil, diesel oil, and any other
related petroleum products.
"Loan Documents" means this Agreement the Notes, the Guaranty and all
other documents and instruments attached hereto, referred to herein or
heretofore, contemporaneously herewith or hereafter executed or delivered
to Lender by any Person in connection with any indebtedness of Borrower to
Lender.
"Loan Party" means each party hereto other than Lender.
"Maximum Term Loan Amount" means $26,000,000.00.
"Maximum Revolving Loan Amount" means $26,000,000.00.
"Note(s)" means any one or more of the Revolving Note or the Term
Note.
"Person" means an individual or entity, including without limitation a
corporation, general or limited partnership, limited liability company,
trust, unincorporated association, government or government agency.
"Revolving Loan Review Date" means the earlier of January 1, 1998 and
the date Lender demands payment in full of the then outstanding balance of
the Revolving Note.
"Tangible Net Worth" means for any Person the net book value of (a)
all of such Person's assets exclusive of patents, trademarks, licenses,
goodwill and other intangibles and of loans to and notes and receivables
from officers, employees, directors, shareholders, partners and members of
such Person minus (b) all of such Person's liabilities determined in
accordance with GAAP.
"Term Loan Maturity Date" means January 1, 2002.
LOAN AGREEMENT - February 5, 1996 - Page 2
<PAGE>
ARTICLE II
REVOLVING LOANS
2.1 MAXIMUM AMOUNT. Subject to the terms and conditions of this
Agreement, Lender agrees to make loans to Borrower from time to time on a
revolving credit basis (each a "Revolving Advance", collectively,
"Revolving Loans"), provided that the aggregate principal amount of
outstanding Revolving Loans shall at no time exceed the Maximum Revolving
Loan Amount. The availability of Revolving Advances shall terminate on the
Revolving Loan Review Date.
2.2 USE OF PROCEEDS. Borrower shall use the proceeds of the Revolving
Loans for carrying accounts receivable and Inventory, paying trade
payables, taking discounts where appropriate and financing the installation
of copy centers at selected locations.
2.3 REVOLVING NOTE. The Revolving Loans shall be evidenced by a
promissory note executed by Borrower in the principal amount of
$26,000,000.00 substantially in the form attached as Exhibit A ("Revolving
Note"). The Revolving Loans shall be subject to all terms and conditions of
the Revolving Note and of this Agreement.
2.4 INTEREST. Interest on the unpaid principal balance of the
Revolving Note shall be due and payable at the times and at the rates set
forth in the Revolving Note.
2.5 PRINCIPAL PAYMENTS. The principal balance of the Revolving Note
shall be due and payable January 1, 1998.
2.6 ADDITIONAL PAYMENTS. In addition to the payments otherwise
required on the Revolving Note, if at any time the outstanding principal
balance of the Revolving Note exceeds the Maximum Revolving Loan Amount,
Borrower shall pay to Lender on demand an amount equal to the amount by
which such principal balance exceeds the Maximum Revolving Loan Amount.
2.7 REQUESTS FOR REVOLVING ADVANCES. Whenever Borrower wishes to
request a Revolving Advance, Borrower shall give Lender notice thereof in
accordance with the provisions of the Revolving Note.
2.8 REVOLVING LOAN NON-USAGE FEE. Borrower agrees to pay a non-usage
fee to Lender in an amount equal to .2% of the average daily unused portion
of the Revolving Loan which fee shall be payable quarterly in arrears.
ARTICLE III
TERM LOAN
3.1 TERM LOAN AMOUNT. Subject to the terms and conditions of this
Agreement, Lender agrees to make a term loan to Borrower on January 1, 1998
in the principal amount of the lesser of: (a) the Revolving Loan principal
balance on January 1, 1998, or (b) $26,000,000.00 ("Term Loan").
LOAN AGREEMENT - February 5, 1996 - Page 3
<PAGE>
3.2 TERM NOTE. The Term Loan shall be evidenced by a promissory note
to be executed by Borrower on January 1, 1998, or as soon thereafter as
practicable, in the principal amount of $26,000,000.00 or the lesser amount
of the Revolving Loan principal balance on January 1, 1998 ("Term Note").
The Term Loan shall be subject to all terms and conditions of the Term Note
and of this Agreement.
3.3 INTEREST ON TERM LOAN. Interest on the unpaid principal balance of
the Term Loan shall be due and payable at the times and at the rates set
forth in the Term Note.
3.4 REPAYMENT OF TERM LOAN PRINCIPAL. The principal amount of the Term
Loan shall be due and payable at the times and at the rates set forth in
the Term Note.
3.5 USE OF PROCEEDS OF TERM LOAN: The proceeds of the Term Loan shall
be used to pay in full the principal and interest amount of the Revolving
Loan.
ARTICLE IV
ADDITIONAL TERMS APPLICABLE TO CERTAIN CREDIT FACILITIES
4.1 REPRESENTATION AND WARRANTY OF CREDIT AVAILABILITY. Each request
by Borrower for a Revolving Advance shall be deemed to be its
representation and warranty that (a) such Revolving Advance may be made
without exceeding the applicable maximum amount determined in accordance
with the provisions of this Agreement, (b) no Default has occurred, or will
occur as a result of making such Revolving Advance and (c) all
representations and warranties set forth in this Agreement are true,
accurate and complete as of the date of such request.
ARTICLE V
GUARANTY AND RELATED MATTERS
5.1 GUARANTY. All present and future obligations of Borrower to Lender
shall be guaranteed as set forth in the Current Guaranties and in this
section. Concurrently with execution of this Agreement, Guarantor shall
execute and deliver a guaranty to Lender.
5.2 NEGATIVE PLEDGE.
5.2.1 Without the prior written consent of Lender, Borrower shall
not grant, create, assume or permit to exist any pledge, assignment for
security purposes, encumbrance, mortgage, hypothecation, or any other
security interest (including without limitation, any conditional sale or
other title retention agreement and any financing or capital lease having
substantially the same economic effect as any of the foregoing) in all or
any portion of any real or personal property now owned or hereafter
acquired by Borrower (collectively, "Property").
LOAN AGREEMENT - February 5, 1996 - Page 4
<PAGE>
ARTICLE VI
CONDITIONS PRECEDENT
6.1 INITIAL CONDITIONS PRECEDENT. The effectiveness of this Agreement
is subject to satisfaction of each of the following conditions precedent
concurrently with or prior to execution of this Agreement:
6.1.1 Lender shall have received executed originals of this
Agreement, the Notes, and each other Loan Document required by Lender.
6.1.2 Lender shall have received all documents and information
Lender may request relating to the authority for and validity of this
Agreement and the other Loan Documents, and to any other related matters,
each in form and substance satisfactory to Lender.
6.1.3 Lender shall have received such additional documents and
information and each Loan Party shall have satisfied such additional
requirements as Lender reasonably requires.
6.1.4 No Default shall have occurred or will occur as a result of
Borrower's action or inaction.
6.1.5 The representations and warranties in this Agreement shall
be true and correct as of such date.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Each Loan Party hereby represents and warrants:
7.1 EXISTENCE AND POWER. It is a duly organized and validly existing
corporation, is duly qualified and in good standing in each jurisdiction
where the conduct of its business or the ownership of its properties
requires such qualification, and has full power, authority and legal right
to carry on its business as presently conducted, to own and operate its
properties and assets, and to execute, deliver and perform the Loan
Documents and all other documents to be executed and delivered by it.
7.2 AUTHORIZATION. Its execution, delivery and performance of the Loan
Documents and all documents to be executed, delivered or performed by it
and any borrowing in connection therewith have been duly authorized by all
necessary corporate action, do not contravene any law, regulation, rule or
order binding on it or its articles of incorporation, and do not contravene
the provisions of or constitute a default under any agreement or instrument
to which it is a party or by which it may be bound or affected.
7.3 LITIGATION. There are no actions, proceedings, investigations, or
claims pending against it, or to its knowledge, threatened against or
affecting it, before any court or arbitrator or any
LOAN AGREEMENT - February 5, 1996 - Page 5
<PAGE>
governmental body or agency which would be likely to result in a judgment
or order against it (in excess of insurance coverage) for more than
$500,000 individually or in the aggregate.
7.4 FINANCIAL CONDITION. Its most recent balance sheet and related
statements of income, retained earnings and changes in financial position
heretofore delivered to Lender fairly present as of the date thereof its
financial condition for the period then ended, all in accordance with GAAP.
Since that date there have been no material adverse changes in its
financial condition or operations, except as disclosed to Lender in
writing.
7.5 TAXES. It has filed all tax returns and reports required of it,
and has paid all taxes payable by it which have become due pursuant to such
tax returns and all other taxes and assessments payable by it.
7.6 OTHER AGREEMENTS. It is not in breach of or in default under any
agreement to which it is a party or which is binding on it or any of its
assets, which such breach or default would have a material adverse effect
on its financial condition or operations.
7.7 GOOD TITLE AND VALIDITY. It is the true and lawful owner of and
has good title to all Property which it now owns and it will have good
title to all such Property acquired hereafter, free of any security
interests, liens or encumbrances.
7.8 COMPLIANCE WITH LAWS. It is in compliance with all applicable
federal, state, regional and local laws, regulations and ordinances,
including without limitation all environmental permits, Environmental Laws
and Access Laws.
7.9 ERISA AND FLSA COMPLIANCE. Any employee pension benefit plan
("Plan") maintained for its employees which is subject to the Employment
Retirement Income Security Act of 1974 and any regulations issued thereto
complies in all material respects with ERISA and any other applicable laws
and (a) such Plan has not incurred any material accumulated "funding
deficiency" and (b) with respect to such Plan, no "reportable event" nor
"prohibited transaction" has occurred. It is in full compliance with the
Fair Labor Standards Act.
7.10 NO MATERIAL MISSTATEMENTS. No report, financial statement,
representation or other information furnished by it to Lender contains any
material misstatement of fact or omits to state any material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
7.11 ENFORCEABILITY. This Agreement constitutes, and each other Loan
Document to which it is a party when executed and delivered to Lender will
constitute a legal, valid and binding obligation of such Loan Party,
enforceable in accordance with its terms.
LOAN AGREEMENT - February 5, 1996 - Page 6
<PAGE>
ARTICLE VIII
FINANCIAL COVENANTS AND INFORMATION
8.1 FINANCIAL COVENANTS. Until payment and performance in full of all
obligations of each Loan Party under the Loan Documents each Loan Party
agrees that:
8.1.1 DEBT TO WORTH RATIO. BORROWER shall maintain a debt to
Tangible Net Worth ratio not to exceed 1.00 to 1.00.
8.1.2 Current Ratio. Borrower shall maintain a ratio of current
assets to current liabilities of at least 1.50 to 1.00. As used herein
"current assets" means the total assets of the Borrower that may properly
be classified as current assets in accordance with GAAP, but excluding all
loans to and notes and receivables from officers, employees, directors,
shareholders, partners and members of the Borrower.
8.1.3 DEBT COVERAGE RATIO. Borrower shall maintain a minimum Debt
Coverage Ratio of 1.25 to 1.00.
8.1.4 MINIMUM TANGIBLE NET WORTH. Borrower shall maintain a
minimum Tangible Net Worth of not less than $30,000,000 plus fifty percent
(50%) of the cumulative net, income after taxes for each fiscal year
beginning after June 30, 1995.
8.2 FINANCIAL INFORMATION.
8.2.1 As soon as available and in any event within 90 days after
the end of each of its fiscal years, shall deliver to Lender its CPA
audited balance sheet as at the end of such fiscal year; related statements
of income, retained earnings and changes in financial position for such
year; and report, if any, to management by the accountant who prepared the
financial statements, in each case certified by a certified public
accountant acceptable to Lender. No document or report shall contain a
disclaimer of opinion or adverse opinion except such as Lender in its sole
discretion may determine to be immaterial.
8.2.2 As soon as available and in any event within 45 days after
the end of each of its fiscal quarters, Borrower shall deliver to Lender
its internally prepared balance sheet and related statements of income,
retained earnings and changes in financial position as at the end of such
quarter, and for the fiscal year to date.
8.2.3 From time to time, each Loan Party shall provide to Lender
such information as Lender may reasonably request concerning the financial
condition and business affairs of such Loan Party, or of any partners in
such Loan Party.
LOAN AGREEMENT - February 5, 1996 - Page 7
<PAGE>
ARTICLE IX
AFFIRMATIVE COVENANTS
Until payment and performance in full of all obligations of each Loan
Party under the Loan Documents, each Loan Party agrees that:
9.1 INSPECTION RIGHTS. At any reasonable time, and from time to time,
it will permit Lender to examine and make copies of and abstracts from its
records and books of account, to visit its properties and to discuss its
affairs, finances and accounts with any of its officers or representatives.
9.2 KEEPING OF BOOKS AND RECORDS. It will keep adequate records and
books of account in which complete entries will be made reflecting all
material financial transactions, and except as otherwise specifically
provided herein, will prepare all financial statements, computations and
information required hereunder in accordance with GAAP.
9.3 OTHER OBLIGATIONS. It will pay and discharge before the same shall
become delinquent all indebtedness, taxes and other obligations for which
it is liable or to which its income or property is subject and all claims
for labor and materials or supplies which, if unpaid, might become by law a
lien upon its assets, unless it is contesting the indebtedness, taxes, or
other obligations in good faith and provision has been made to the
reasonable satisfaction of Lender for the payment thereof in the event any
such contest is determined adversely to it.
9.4 INSURANCE. It will maintain insurance upon its properties and
operations, carried with companies acceptable to Lender, in such form and
amounts and covering such risks as Lender may require, and upon request of
Lender, provide certificates therefor.
9.5 ERISA COMPLIANCE. It will cause each Plan to comply in all
material respects with ERISA and any other applicable laws, will promptly
make all contributions necessary to meet the minimum funding standards set
forth in ERISA and will promptly notify Lender of the occurrence of any
"reportable event" (as defined in ERISA) or any other event which might
constitute grounds for termination of any ERISA Plan. It will not terminate
any ERISA Plan nor permit to exist any "termination event" (as defined in
ERISA).
9.6 COMPLIANCE WITH LAWS. It shall comply in all material respects
with all federal, state, regional and local laws, regulations and
ordinances (including but not limited to all Environmental Laws, Access
Laws and the Fair Labor Standards Act) and promptly provide written notice
to Lender of the receipt of any notice of violation thereof from any
governmental authority which violation, alone or together with any other
such violations, could reasonably be expected to have a material adverse
effect on its business, assets, operations or condition, financial or
otherwise.
LOAN AGREEMENT - February 5, 1996 - Page 8
<PAGE>
9.7 NOTIFICATION. Promptly after learning thereof, it will notify
Lender in writing of:
9.7.1 The occurrence of any Default, and if such Default is then
continuing, a certificate of its chief financial officer or other
authorized officer setting forth the details thereof and the action which
it is taking or proposes to take with respect thereto;
9.7.2 The occurrence of any release of any Hazardous Substances
onto or affecting any of its property or any adjacent property, any
Collateral, or any other environmental problem or liability with respect to
any such property; and
9.7.3 The details of any claim, lien, litigation, administrative
proceeding or judgment involving $500,000 or more individually or in the
aggregate threatened, instituted or completed against any Loan Party, any
Collateral or any assets of any Loan Party, including but not limited to
any and all enforcement, cleanup, removal or other governmental or
regulatory proceedings pursuant to any Environmental Laws.
ARTICLE X
NEGATIVE COVENANTS
Until payment and performance in full of all obligations of each Loan
Party under the Loan Documents, each Loan Party agrees that except with the
written consent of Lender:
10.1 LIQUIDATION, MERGER. It shall not liquidate, dissolve or enter
into any merger, consolidation or other combination.
10.2 SALE OF ASSETS. It shall not sell, lease or dispose of any
portion of its business or assets except in the ordinary course of
business.
10.3 GUARANTIES, ETC. It shall not assume, guarantee, endorse or
otherwise become directly or contingently liable for, nor obligated to
purchase, pay or provide funds for payment of, any obligation or
indebtedness of any other Person.
10.4 LOANS AND INVESTMENTS. It shall not make or contract to make any
loan to any Person or purchase or otherwise acquire the capital stock, or
any interest in, any Person.
10.5 LIENS. It shall not at any time grant a security interest in any
or all of its presently owned or hereafter acquired. Property.
10.6 TYPE OF BUSINESS. It shall not make any material change in the
character of its business.
10.7 STRUCTURE. It shall not make any material change in its corporate
structure.
LOAN AGREEMENT - February 5, 1996 - Page 9
<PAGE>
ARTICLE XI
DEFAULT
11.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under this Agreement and each of the Loan
Documents:
11.1.1 Any default in the payment of any portion of any
principal, interest, fees or any other amount when due under this
Agreement, any Note or any other Loan Document.
11.1.2 Any other default in the performance of or compliance
with any term of this Agreement, any other Loan Document, or any other
agreement between Lender and any Loan Party.
11.1.3 Any indebtedness of any Loan Party under any note,
indenture, agreement, undertaking or obligation of any kind to any Person,
including Lender, becomes due by acceleration or otherwise and is not paid.
11.1.4 Any Guaranty shall cease to be, or shall be asserted by
any Person not to be, in full force and effect.
11.1.5 Any warranty, representation, statement, or information
made or furnished to Lender by or on behalf of any Loan Party proves to
have been false or misleading in any material respect when made or
furnished or when deemed made or furnished.
11.1.6 The commencement of any proceeding under any bankruptcy
or insolvency laws by or against, appointment of a receiver for any part of
the property of, insolvency or business failure of, or any attachment,
seizure or levy on any property of, any Loan Party.
11.1.7 The death or incapacity of any individual Loan Party or
partner in any Loan Party; or the dissolution or liquidation of any Loan
Party which is a corporation, partnership, limited liability company or
other type of entity.
11.1.8 The interruption or cessation of a material portion of
any Loan Party's ordinary business operations.
11.1.9 Any judgment, writ of attachment or similar process in an
amount in excess of $500,000 individually or in the aggregate shall be
entered or filed against any Loan Party or any property of any Loan Party
and remains unpaid, unvacated, unbonded or unstayed for a period of 30 days
or more.
11.1.10 The failure of any Loan Party or partner in any Loan
Party to provide Lender with financial information promptly when requested.
LOAN AGREEMENT - February 5, 1996 - Page 10
<PAGE>
11.1.11 Any material adverse change, as determined solely by
Lender, in the financial condition or management of any Loan Party or
Lender reasonably deems itself insecure with respect to the payment or
performance of the obligations of any Loan Party to Lender.
11.2 CONSEQUENCES OF DEFAULT; LENDER'S RIGHTS AND REMEDIES. Time is of
the essence of this Agreement.
11.2.1 Without prejudice to any right of Lender to require
payment of any obligations of Borrower to Lender under any of the Loan
Documents on demand, upon the occurrence of any Event of Default and at any
time thereafter Lender may, at its sole option, do any one or more of the
following:
(a) Without notice to any Loan Party, declare the entire
outstanding balance of principal and interest on the Notes and other
Loan Documents immediately due and payable, whereupon the same shall
become immediately due and payable without presentment, demand,
protest or other requirements of any kind, all of which are expressly
waived by each Loan Party; and
(b) Exercise any and all other rights and remedies provided in
the Loan Documents and in any related agreements and documents, and as
otherwise provided by law.
11.2.2 Notwithstanding any right to cure events of default
provided in any Note or any of the other Loan Documents, each Loan Party
agrees that such Loan Party shall have only such cure rights as may be set
forth herein.
ARTICLE XII
ARBITRATION
12.1 ARBITRATION OF CLAIMS. Lender and each Loan Party agree
that all disputes, claims and controversies between them, whether
individual, joint, or class in nature, arising from this Agreement or
otherwise, including without limitation contract and tort disputes, shall
be subject to binding arbitration pursuant to the Rules of the American
Arbitration Association, upon request of any party. No act to take or
dispose of any Collateral shall constitute a waiver of this arbitration
agreement or be prohibited by this arbitration agreement. This includes,
without limitation, obtaining injunctive relief or a temporary restraining
order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment of imposition of a receiver; or exercising
any rights relating to personal property, including taking or disposing of
such property with or without judicial process pursuant to Article 9 of the
Uniform Commercial Code. Any disputes, claims, or controversies concerning
the lawfulness or reasonableness of any act, or exercise of any right,
concerning any Collateral, including any claim to rescind, reform, or
otherwise modify any agreement relating to the Collateral, shall also be
arbitrated, provided however, that no arbitrator shall have the right or
the power to enjoin or restrain any act of any party. Judgment upon any
award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Agreement shall preclude any party from
seeking equitable relief from a court of competent
LOAN AGREEMENT - February 5, 1996 - Page 11
<PAGE>
jurisdiction. The statute of limitations, estoppel, waiver, laches, and
similar doctrines which would otherwise be applicable in an action brought
by a party shall be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed the commencement
of an action for these purposes. The Federal Arbitration Act shall apply to
the construction, interpretation, and enforcement of this arbitration
provision.
ARTICLE XIII
MISCELLANEOUS
13.1 NO WAIVER BY LENDER. No failure or delay of Lender in exercising
any right, power or remedy under this Agreement or any Loan Document shall
operate as a waiver of such right, power or remedy of Lender or of any
other right. A waiver of any provision of any Loan Document shall not
constitute a waiver of or prejudice Lender's right otherwise to demand
strict compliance with that provision or any other provision. Any waiver,
permit, consent or approval of any kind or character on the part of Lender
must be in writing and shall be effective only to the extent specifically
set forth in such writing.
13.2 COSTS AND FEES. Without limiting any other provisions of this
Agreement, Borrower hereby agrees to pay Lender on demand an amount equal
to all costs and expenses incurred by Lender in connection with the
negotiation, preparation, execution, administration and enforcement of the
Loan Documents, including without limitation all recording costs, filing
fees, costs of appraisals, collateral audits, costs of perfecting,
maintaining and defending Lender's security interest in the Collateral and
fees of in-house and outside counsel.
13.3 AGREEMENTS ENFORCEABLE. Each Loan Party reaffirms the
representations and warranties in each of the existing Loan Documents and
acknowledges that except as amended previously or herein, each such Loan
Document remains in full force and effect and is and shall remain valid and
enforceable in accordance with its terms.
13.4 NOTICES. Except as otherwise specifically set forth in any Loan
Document, all notices, requests and demands hereunder shall be in writing,
and shall be deemed to have been given when hand-delivered, when deposited
in the mail as first class, registered or certified mail, postage prepaid,
or when sent by telecopier, addressed as set forth below; provided,
however, that any notice, request or demand by Borrower to Lender pursuant
to Section 9.7 shall not be effective until received by Lender. Any party
may at any time change its address for notices by giving notice of such
change to the other parties.
If to Lender: West One Bank, Idaho
Attn: Portland Corporate Banking
P.O. Box 2882
623 S.W. Oak
Portland, Oregon 97208
LOAN AGREEMENT - February 5, 1996 - Page 12
<PAGE>
If to Borrower: TRM Copy Centers (USA) Corporation
5208 NE 122nd Avenue
Portland, Oregon 97230
13.5 COLLECTION COSTS AND ATTORNEY FEES. Whether or not litigation or
arbitration is commenced, each Loan Party promises to pay all costs of
collecting any amounts which may become due to Lender under any of the Loan
Documents. Without limiting the foregoing, if litigation or arbitration is
commenced to enforce or construe any term of any of the Loan Documents, the
prevailing party shall be entitled to recover from the other party all
costs thereof, including but not limited to such sums as the court or
arbitrator(s) may adjudge reasonable as attorney fees at trial, in any
appellate proceeding, proceeding under the bankruptcy code or receivership
and post-judgment attorney fees incurred in enforcing any judgment.
13.6 INTEGRATION; CONFLICTING TERMS. This Agreement together with the
other Loan Documents comprises the entire agreement of the parties on the
subject matter hereof and supersedes and replaces all prior agreements,
oral and written, on such subject matter. If any term of any of the other
Loan Documents expressly conflicts with the provisions of this Agreement,
the provisions of this Agreement shall control; provided, however, that the
inclusion of supplemental rights and remedies of Lender in any of the other
Loan Documents shall not be deemed a conflict with this Agreement.
13.7 GOVERNING LAW. Except to the extent that Lender has greater
rights and remedies under federal law, this Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of
Oregon without regard to conflicts of law principles.
13.8 ADDITIONAL ACTS. Upon request by Lender, each Loan Party will
from time to time provide such information, execute such documents and do
such acts as may reasonably be required by Lender in connection with any
indebtedness or obligations of any of them to Lender.
13.9 DOCUMENTS SATISFACTORY TO LENDER. All information, documents and
instruments required to be executed or delivered to Lender shall be in form
and substance satisfactory to Lender.
13.10 JURY WAIVER. LENDER AND EACH LOAN PARTY HEREBY WAIVE
THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING,
OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR ANY LOAN
PARTY AGAINST THE OTHER.
13.11 EXHIBITS. All Exhibits referred to herein are attached hereto
and hereby incorporated by reference as if fully set forth herein.
13.12 RECITALS. The Recitals are hereby incorporated by reference as
if fully set forth herein.
13.13 COMPUTATIONS. All interest rates and fees referred to herein
shall be computed as set forth in the Revolving Note.
LOAN AGREEMENT - February 5, 1996 - Page 13
<PAGE>
13.14 REFERENCES.
13.14.1 References to any Loan Document shall mean such Loan
Document as amended, modified, supplemented or extended from time to time
and any number of substitutions, renewals and replacements thereof or
therefor.
13.14.2 References to governmental laws, statutes, ordinances,
rules and regulations shall be construed as including all amendments,
consolidations and replacements thereof or therefor.
13.15 DISCLOSURE.
UNDER OREGON LAW, MOST AGREEMENTS PROMISES AND
COMMITMENTS MADE BY LENDERS AFTER OCTOBER 3, 1989,
CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT
FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY
BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS
CONSIDERATION AND BE SIGNED BY THE LENDER TO BE ENFORCEABLE.
Each Loan Party acknowledges receipt of a copy of this Agreement.
BORROWER LENDER
TRM COPY CENTERS (USA) CORPORATION WEST ONE BANK, IDAHO
By: MICHAEL D. SIMON By: MALVERN F. HAWLEY
------------------------------ ------------------------------
Title: PRESIDENT Title: VICE PRESIDENT
GUARANTOR:
TRM COPY CENTERS CORPORATION
By: MICHAEL D. SIMON
------------------------------
Title: PRESIDENT
LOAN AGREEMENT - February 5, 1996 - Page 14
<PAGE>
PROMISSORY NOTE
================================================================================
BORROWER: TRM COPY CENTERS (USA) LENDER: WEST ONE BANK, IDAHO
CORPORATION PORTLAND CORPORATE BANKING
5208 N.E. 122ND AVENUE DEPT.
PORTLAND, OR 97230 623 S.W. OAK
P.O. BOX 2882
PORTLAND, OR 97208
================================================================================
PRINCIPAL AMOUNT: $26,000,000.00 DATE OF NOTE: FEBRUARY 7, 1996
PROMISE TO PAY. TRM COPY CENTERS (USA) CORPORATION ("BORROWER") PROMISES TO
PAY TO WEST ONE BANK, IDAHO ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE
UNITED STATES OF AMERICA, THE PRINCIPAL AMOUNT OF TWENTY SIX MILLION &
00/100 DOLLARS ($26,000,000.00) OR SO MUCH AS MAY BE OUTSTANDING, TOGETHER
WITH INTEREST ON EACH OF THE UNPAID OUTSTANDING PRINCIPAL BALANCES FROM THE
DATE OF THE ADVANCE, UNTIL REPAYMENT OF THE ADVANCE OR MATURITY, WHICHEVER
OCCURS FIRST.
PAYMENT. BORROWER WILL PAY THIS LOAN IN ONE PAYMENT OF ALL OUTSTANDING
PRINCIPAL PLUS ALL ACCRUED UNPAID INTEREST ON JANUARY 1, 1998. IN ADDITION,
BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF ACCRUED UNPAID INTEREST
BEGINNING MARCH 1, 1996, AND ALL SUBSEQUENT INTEREST PAYMENTS ARE DUE ON
THE SAME DAY OF EACH MONTH AFTER THAT. IF BORROWER CHOOSES THE LIBOR OPTION
(as defined below), Borrower will pay accrued interest on each LIBOR Option
on the maturity date of each such LIBOR Option, rather than monthly on the
first day of each month. Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied
first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the West One Bank,
Idaho Reference Rate (the "Index"). The Index is not necessarily the lowest
rate charged by Lender on its loans and is set by Lender in its sole
discretion. If the Index becomes unavailable during the term of this loan,
Lender may designate a substitute index after notifying Borrower. Lender
will tell Borrower the current Index rate upon Borrower's request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each date a change
occurs. THE INDEX CURRENTLY IS 8.250% PER ANNUM. THE INTEREST RATE TO BE
APPLIED TO THE UNPAID PRINCIPAL BALANCE OF THIS NOTE WILL BE AT A RATE
EQUAL TO THE INDEX, RESULTING IN AN INITIAL RATE OF 8.250% PER ANNUM.
Interest accruing under the Index shall be computed on the basis of a year
of 365 days for the actual days elapsed. NOTICE: Under no circumstances
will the interest rate on this Note be more than the maximum rate allowed
by applicable law.
LIBOR INTEREST RATE OPTION. As an alternative to the Index, the Borrower
may request an alternative interest rate on all or part of the principal
balance of this note for terms of 7, 30, 60, 90 or 180 days at a per annum
fixed rate of interest equal to the asking price per annum for U.S. Dollar
denominated deposits in the London, England interbank market as such price
is presented to the Lender by Dow Jones & Company through its Dow Jones
Telerate, Inc. subsidiary or a similar quote reporting service ("LIBOR")
plus One and Thirty Hundredths (1.30%) ("the LIBOR Option"). Unless the
Borrower specifically requests a LIBOR Option, interest will accrue at the
Index. NOTICE: Under no circumstances will the interest rate on this Note
be more than the maximum rate allowed by applicable law. Interest accruing
under the LIBOR Option shall be computed on the basis of a year of 360
days.
PREPAYMENT. Borrower may pay all or a portion of the amount owed earlier
than it is due at any time except for amounts subject to a LIBOR Option
which may be paid only on the expiration of a LIBOR Option term. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower
of Borrower's obligation to continue to make payments under the payment
schedule.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any
promise Borrower has made to Lender, or Borrower fails to perform promptly
at the time and strictly in the manner provided in this Note or any
agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Any representation or statement made or furnished to
Lender by Borrower or on Borrower's behalf is false or misleading in any
material respect. (d) Borrower becomes insolvent, a receiver is appointed
for any part of Borrower's property, Borrower makes an assignment for the
benefit of creditors, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (e) Any creditor
tries to take any of Borrower's property on or in which Lender has a lien
or security interest. This includes a garnishment of any of Borrower's
accounts with Lender. (f) Any of the events described in this default
section occurs with respect to any guarantor of this Note.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest immediately
due, without notice, and then Borrower will pay that amount. Lender may
hire or pay someone else to help collect this Note if Borrower does not
pay. Borrower also will pay Lender that amount. This includes, subject to
any limits under applicable law, Lender's attorneys' fees and Lender's
legal expenses whether or not there is a lawsuit, including attorneys' fees
and legal expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all other sums
provided by law. THIS NOTE HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY
LENDER IN THE STATE OF OREGON. IF THERE IS A LAWSUIT, BORROWER AGREES UPON
LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF MULTNOMAH
COUNTY, THE STATE OF OREGON. LENDER AND BORROWER HEREBY WAIVE THE RIGHT TO
ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER
LENDER OR BORROWER AGAINST THE OTHER. SUBJECT TO THE PROVISIONS ON
ARBITRATION, THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF OREGON.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory
security interest in, and hereby assigns, conveys, delivers, pledges, and
transfers to Lender all Borrower's right, title and interest in and to,
Borrower's accounts with Lender (whether checking, savings, or some other
account), including without limitation all accounts held jointly with
someone else and all accounts Borrower may open in the future, excluding
however all IRA, Keogh, and trust accounts. Borrower authorizes Lender, to
the extent permitted by applicable law, to charge or setoff all sums owing
on this Note against any and all such accounts.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note may be requested either orally or in writing by Borrower or
as provided in this paragraph. Lender may, but need not, require that all
oral requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to
Lender's office shown above. The following party or parties are authorized
as provided in this paragraph to request advances under the line of credit
until Lender receives from Borrower at Lender's address shown above written
notice of revocation of their authority: ROBERT A. BRUCE, VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER; ROSEMARY H. EVANS, TREASURER; AND LINDA HAAS,
CONTROLLER. ADVANCES MAY BE MADE AT THE WRITTEN OR ORAL REQUEST OF ANY ONE
OF THE AUTHORIZED INDIVIDUALS. Borrower agrees to be liable for all sums
either: (a) advanced in accordance with the instructions of an authorized
person or (b) credited to any of Borrower's accounts with Lender. The
unpaid principal balance owing on this Note at any time may be evidenced by
endorsements on this Note or by Lender's internal records, including daily
computer print-outs. Lender will have no obligation to advance funds under
this Note if: (a) Borrower or any guarantor is in default under the terms
of this Note or any agreement that Borrower or any guarantor has with
Lender, including any agreement made in connection with the signing of this
Note; (b) Borrower or any guarantor ceases doing business or is insolvent;
(c) any guarantor seeks, claims or otherwise attempts to limit, modify or
revoke such guarantor's guarantee of this Note or any other loan with
Lender; or (b) Borrower has applied funds provided pursuant to this Note
for purposes other than those authorized by Lender.
ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS NOTE OR OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT
AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE
AMERICAN ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to
take or dispose of any collateral securing this Note shall constitute a
waiver of this arbitration agreement or be prohibited by this arbitration
agreement. This includes, without limitation, obtaining injunctive relief
or a temporary restraining order; invoking a power of sale under any deed
of trust or mortgage; obtaining a writ of attachment or imposition of a
receiver; or exercising any rights relating to personal property, including
taking or disposing of such property with or without judicial process
pursuant to Article 9 of the Uniform Commercial Code. Any disputes, claims,
or controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning any collateral securing this Note,
including any claim to rescind, reform, or otherwise modify any agreement
relating to the collateral securing this Note, shall also be arbitrated,
provided however that no arbitrator shall have the right or the power to
enjoin or restrain any act of any party. Judgment upon any award rendered
by any arbitrator may be entered in any court having jurisdiction. Nothing
in this Note shall preclude any party from seeking equitable relief from a
court of competent jurisdiction. The statute of limitations, estoppel,
waiver, laches, and similar doctrines which would otherwise be applicable
in an action brought by a party shall be applicable in any arbitration
proceeding, and the commencement of an arbitration proceeding shall be
deemed the commencement of an action for these purposes. The Federal
Arbitration Act shall apply to the construction,
<PAGE>
02-07-1996 PROMISSORY NOTE Page 2
(Continued)
================================================================================
interpretation, and enforcement of this arbitration provision.
ADDITIONAL PROVISIONS. This Note, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Note. There are no unwritten oral agreements
between the Parties. No alteration of or amendment to this Note shall be
effective unless given in writing and signed by the party or parties sought
to be charged or bound by the alteration or amendment. The written Loan
Agreement may not be contradicted by evidence of any prior,
contemporaneous, or subsequent oral agreements or understandings of the
Parties.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Promissory Note.
PRIOR NOTE. THIS NOTE IS A RENEWAL OF A NOTE DATED JUNE 16, 1994 IN THE
ORIGINAL PRINCIPAL AMOUNT OF $21,000,000.00.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights
or remedies under this Note without losing them. Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed
by law, waive presentment, demand for payment, protest and notice of
dishonor. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend
(repeatedly and for any length of time) this loan, or release any party or
guarantor or collateral; or impair, fail to realize upon or perfect
Lender's security interest in the collateral; and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All
such parties also agree that Lender may modify this loan without the
consent of or notice to anyone other than the party with whom the
modification is made.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US
(LENDER) AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS
WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY
BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND
BE SIGNED BY US TO BE ENFORCEABLE.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED
COPY OF THE NOTE.
BORROWER:
TRM COPY CENTERS (USA) CORPORATION
By: MICHAEL D. SIMON
--------------------------------------------------------
MICHAEL D. SIMON, President and Chief Executive Officer
LENDER:
WEST ONE BANK, IDAHO
By: MALVERN F. HAWLEY
--------------------------------------------------------
Authorized Officer
================================================================================
<PAGE>
CORPORATE RESOLUTION TO BORROW
================================================================================
BORROWER: TRM COPY CENTERS (USA) LENDER: WEST ONE BANK, IDAHO
CORPORATION PORTLAND CORPORATE BANKING
5208 N.E. 122ND AVENUE DEPARTMENT
PORTLAND, OR 97230 623 S.W. OAK
P.O. BOX 2882
PORTLAND, OR 97208
================================================================================
I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF TRM COPY CENTERS
(USA) CORPORATION (THE "CORPORATION"), HEREBY CERTIFY THAT
the Corporation is organized and existing under and by virtue of the laws
of the State of Oregon as a corporation for profit, with its principal
office at 5208 N.E. 122ND AVENUE, PORTLAND, OR 97230, and is duly
authorized to transact business in the State of Oregon.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation (or
by other duly authorized corporate action in lieu of a meeting), duly
called and held ON JUNE 17, 1994, at which a quorum was present and voting,
the following resolutions were adopted:
BE IT RESOLVED, that ANY ONE (1) of the following named officers,
employees, or agents of this Corporation, whose actual signature is shown
below:
NAME POSITION ACTUAL SIGNATURE
---- -------- ----------------
MICHAEL D. SIMON President and Chief X MICHAEL D. SIMON
Executive Officer ----------------------
acting for and on behalf of this Corporation and as its act and deed be,
and he or she hereby is, authorized and empowered:
BORROW MONEY. To borrow from time to time from WEST ONE BANK, IDAHO
("Lender"), on such terms as may be agreed upon between officer,
employee, or agent and Lender, such sum or sums of money as in his or
her judgment should be borrowed, without limitation.
EXECUTE NOTES. To execute and deliver to Lender the promissory note or
notes of the Corporation, on Lender's forms, at such rates of interest
and on such terms as may be agreed upon, evidencing the sums of money so
borrowed or any indebtedness of the Corporation to Lender, and also to
execute and deliver to Lender one or more renewals, extensions,
modifications, refinancings, consolidations, or substitutions for one or
more of the notes, or any portion of the notes.
GRANT SECURITY. To mortgage, pledge, hypothecate, or otherwise encumber
and deliver to Lender, as security for the payment of any loans so
obtained, any promissory notes so executed, or any other or further
indebtedness of the Corporation to Lender at any time owing, however the
same may be evidenced, any property now or hereafter belonging to the
Corporation or in which the Corporation now or hereafter may have an
interest, including without limitation all real property and all
personal property of the Corporation. Such property may be mortgaged,
pledged, hypothecated, or encumbered at the time such loans are obtained
or such indebtedness is incurred, or at any other time or times, and may
be either in addition to or in lieu of any property theretofore
mortgaged, pledged, hypothecated, or encumbered.
EXECUTE SECURITY DOCUMENTS. To execute and deliver to Lender the forms
of mortgage, deed of trust, pledge agreement, hypothecation agreement,
and other security agreements and financing statements which may be
submitted by Lender, and which shall evidence the terms and conditions
under and pursuant to which such liens and encumbrances, or any of them,
are given; and also to execute and deliver to Lender any other written
instruments, any chattel paper, or any other collateral, of any kind or
nature, which he or she may in his or her discretion deem reasonably
necessary or proper in connection with or pertaining to the giving of
the liens and encumbrances.
NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation or in which the Corporation
may have an interest, and either to receive cash for the same or to
cause such proceeds to be credited to the account of the Corporation
with Lender, or to cause such other disposition of the proceeds derived
therefrom as they may deem advisable.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances
thereunder, and in all cases, to do and perform such other acts and
things, to pay any and all fees and costs, and to execute and deliver
such other documents and agreements, INCLUDING AGREEMENTS WAIVING THE
RIGHT TO A TRIAL BY JURY, as he or she may in his or her discretion deem
reasonably necessary or proper in order to carry into effect the
provisions of these Resolutions. The following person or persons are
authorized, except as provided below, to request advances and authorize
payments under the line of credit until Lender receives written notice
of revocation of their authority: ROBERT A. BRUCE, Vice President and
Chief Financial Officer; ROSEMARY H. EVANS, Treasurer; and LINDA HAAS,
Controller. Advances may be made at the written or oral request of any
one of the authorized individuals.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full
force and effect and Lender may rely on these Resolutions until written
notice of their revocation shall have been delivered to and received by
Lender. Any such notice shall not affect any of the Corporation's
agreements or commitments in effect at the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above are
duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the
Corporation; and that the Resolutions are in full force and effect and have
not been modified or revoked in any manner whatsoever. The Corporation has
no corporate seal, and therefore, no seal is affixed to this certificate.
IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET MY HAND ON FEBRUARY 7, 1996 AND
ATTEST THAT THE SIGNATURES SET OPPOSITE THE NAMES LISTED ABOVE ARE THEIR
GENUINE SIGNATURES.
CERTIFIED TO AND ATTESTED BY:
X ROBERT A. BRUCE
------------------------------------------
*Secretary or Assistant Secretary
X
------------------------------------------
* NOTE: In case the Secretary or other certifying officer is designated by
the foregoing resolutions as one of the signing officers, this certificate
should also be signed by a second Officer or Director of the Corporation.
================================================================================
<PAGE>
CORPORATE RESOLUTION TO GUARANTEE/GRANT COLLATERAL
================================================================================
BORROWER: TRM COPY CENTERS (USA) LENDER: WEST ONE BANK, IDAHO
CORPORATION PORTLAND CORPORATE BANKING
5208 N.E. 122ND AVENUE DEPARTMENT
PORTLAND, OR 97230 623 S.W. OAK
P.O. BOX 2882
PORTLAND, OR 97208
GUARANTOR: TRM COPY CENTERS CORPORATION
5208 N.E. 122ND AVENUE
PORTLAND, OR 97230-1074
================================================================================
I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF TRM COPY CENTERS
CORPORATION (THE "CORPORATION"), HEREBY CERTIFY AS FOLLOWS: The Corporation
is organized and existing under and by virtue of the laws of the State of
Oregon. The Corporation has its principal office at 5208 N.E.
122ND AVENUE, PORTLAND, OR 97230-1074.
I FURTHER CERTIFY that a meeting of the Directors of the Corporation (or by
other duly authorized corporate action in lieu of a meeting), duly called
and held ON JUNE 17, 1994, at which a quorum was present and voting, the
following resolutions were adopted:
BE IT RESOLVED, that ANY ONE (1) of the following named officers or
employees of this Corporation, whose actual signature is shown below:
NAME POSITION ACTUAL SIGNATURE
MICHAEL D. SIMON PRESIDENT X MICHAEL D. SIMON
----------------------------
acting for and on behalf of this Corporation and as its act and deed be,
and he or she hereby is, authorized and empowered in the name of the
Corporation:
GUARANTY. To guarantee or act as surety for loans or other financial
accommodations to TRM COPY CENTERS (USA) CORPORATION from WEST ONE BANK,
IDAHO ("Lender") on such guarantee or surety terms as may be agreed upon
between the officers or employees of this Corporation and Lender and in
such sum or sums of money as in his or her judgment should be guaranteed
or assured, without limit (the "Guaranty").
GRANT SECURITY. To mortgage, pledge, hypothecate, or otherwise encumber
and deliver to Lender, as security for the Guaranty, any property
belonging to the Corporation or in which the Corporation may have an
interest, real, personal or mixed. Such property may be mortgaged,
pledged, hypothecated, or encumbered at the time such loans are made or
such indebtedness is incurred, or at any other time or times, and may be
either in addition to or in lieu of any property theretofore mortgaged,
pledged, hypothecated, or encumbered. The provisions of these
Resolutions authorizing or relating to the pledge, mortgage,
hypothecation, granting of a security interest in, or in any way
encumbering, the assets of the Corporation shall include, without
limitation, doing so in order to lend collateral security for the
indebtedness, now or hereafter existing, and of any nature whatsoever,
of TRM COPY CENTERS (USA) CORPORATION to Lender. The Corporation has
considered the value to itself of lending collateral in support of such
indebtedness, and the Corporation represents to Lender that the
Corporation is benefited by doing so.
EXECUTE SECURITY DOCUMENTS. To execute and deliver to Lender the form of
mortgage, deed of trust, pledge agreement, hypothecation agreement, and
other security agreements and financing statements which may be
submitted by Lender, and which shall evidence the terms and conditions
under and pursuant to which such liens and encumbrances, or any of them,
are given; and also to execute and deliver to Lender any other written
instruments, of any kind or nature, which may be necessary or proper in
connection with or pertaining to the giving of liens and encumbrances.
FURTHER ACTS. To do and perform such other acts and things and to
execute and deliver such other documents as may in his or her discretion
be deemed reasonably necessary or proper in order to carry into effect
any of the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full
force and effect and Lender may rely on these Resolutions until written
notice of their revocation shall have been delivered to and received by
Lender. Any such notice shall not affect any of the Corporation's
agreements or commitments in effect at the time notice is given.
I FURTHER CERTIFY that the person named above is a principal officer of the
Corporation and occupies the position set opposite the name; that the
foregoing Resolutions now stand of record on the books of the Corporation;
and that they are in full force and effect and have not been modified or
revoked in any manner whatsoever.
IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET MY HAND ON FEBRUARY 7, 1996 AND
ATTEST THAT THE SIGNATURES SET OPPOSITE THE NAMES LISTED ABOVE ARE THEIR
GENUINE SIGNATURES.
CERTIFIED AND ATTESTED BY:
X ROBERT A. BRUCE
------------------------------------
*Secretary or Assistant Secretary
X
------------------------------------
*NOTE: In case the Secretary or other certifying officer is designated by
the foregoing resolutions as one of the signing officers, this certificate
should also be signed by a second Officer or Director of the Corporation.
================================================================================
<PAGE>
COMMERCIAL GUARANTY
================================================================================
BORROWER: TRM COPY CENTERS (USA) LENDER: WEST ONE BANK, IDAHO
CORPORATION PORTLAND CORPORATE BANKING
5208 N.E. 122ND AVENUE DEPARTMENT
PORTLAND, OR 97230 623 S.W. OAK
P.O. BOX 2882
PORTLAND, OR 97208
GUARANTOR: TRM COPY CENTERS CORPORATION
5208 N.E. 122ND AVENUE
PORTLAND, OR 97230-1074
================================================================================
AMOUNT OF GUARANTY. THE AMOUNT OF THIS GUARANTY IS UNLIMITED.
CONTINUING UNLIMITED GUARANTY. FOR GOOD AND VALUABLE CONSIDERATION, TRM
COPY CENTERS CORPORATION ("GUARANTOR") ABSOLUTELY AND UNCONDITIONALLY
GUARANTEES AND PROMISES TO PAY TO WEST ONE BANK, IDAHO ("LENDER") OR ITS
ORDER, IN LEGAL TENDER OF THE UNITED STATES OF AMERICA, THE INDEBTEDNESS
(AS THAT TERM IS DEFINED BELOW) OF TRM COPY CENTERS (USA) CORPORATION
("BORROWER") TO LENDER ON THE TERMS AND CONDITIONS SET FORTH IN THIS
GUARANTY. UNDER THIS GUARANTY, THE LIABILITY OF GUARANTOR IS UNLIMITED AND
THE OBLIGATIONS OF GUARANTOR ARE CONTINUING.
DEFINITIONS. The following words shall have the following meanings when
used In this Guaranty:
BORROWER. The word "Borrower" means TRM COPY CENTERS (USA) CORPORATION.
GUARANTOR. The word "Guarantor" means TRM COPY CENTERS CORPORATION.
GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor for
the benefit of Lender dated February 7, 1996.
INDEBTEDNESS. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower's liabilities,
obligations, debts, and indebtedness to Lender, now existing or
hereinafter incurred or created, including, without limitation, all
loans, advances, interest, costs, debts, overdraft indebtedness, credit
card indebtedness, lease obligations, other obligations, and liabilities
of Borrower, or any of them, and any present or future judgments against
Borrower, or any of them; and whether any such Indebtedness is
voluntarily or involuntarily incurred, due or not due, absolute or
contingent, liquidated or unliquidated, determined or undetermined;
whether Borrower may be liable individually or jointly with others, or
primarily or secondarily, or as guarantor or surety; whether recovery on
the Indebtedness may be or may become barred or unenforceable against
Borrower for any reason whatsoever; and whether the Indebtedness arises
from transactions which may be voidable on account of infancy, insanity,
ultra vires, or otherwise.
LENDER. The word "Lender" means WEST ONE BANK, IDAHO, its successors and
assigns.
RELATED DOCUMENTS. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, guaranties, security agreements, mortgages, deeds of trust,
and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains in force. Guarantor
intends to guarantee at all times the performance and prompt payment when
due, whether at maturity or earlier by reason of acceleration or otherwise,
of all Indebtedness. Accordingly, no payments made upon the Indebtedness
will discharge or diminish the continuing liability of Guarantor In
connection with any remaining portions of the Indebtedness or any of the
Indebtedness which subsequently arises or is thereafter incurred or
contracted.
DURATION OF GUARANTY. This Guaranty will take effect when received by
Lender without the necessity of any acceptance by Lender, or any notice to
Guarantor or to Borrower, and will continue in full force until all
Indebtedness incurred or contracted before receipt by Lender of any notice
of revocation shall have been fully and finally paid and satisfied and all
other obligations of Guarantor under this Guaranty shall have been
performed in full. If Guarantor elects to revoke this Guaranty, Guarantor
may only do so in writing. Guarantor's written notice of revocation must be
delivered to Lender at the address of Lender listed above or such other
place as Lender may designate in writing. This Guaranty may be revoked only
with respect to Indebtedness incurred or contracted by Borrower, or
acquired by Lender thirty (30) days or more after the date on which written
notice of revocation is actually received by Lender. No notice of
revocation hereof shall be effective as to any Indebtedness: (a) existing
at the date of receipt of such notice; (b) incurred or contracted by
Borrower, or acquired by Lender, within thirty (30) days after receipt of
such notice; (c) now existing or hereafter created pursuant to or evidenced
by a loan agreement or commitment under which Borrower is or may become
obligated to Lender; or (d) renewals, extensions, consolidations,
substitutions, and refinancings of the foregoing. Any revocation of this
Guaranty by less than all guarantors of the Indebtedness shall not affect
the liability hereunder of the remaining guarantors as to any present or
future transactions or Indebtedness. The death of any guarantor of the
Indebtedness shall not operate as a revocation of liability hereunder of
the estate of any such guarantor as to transactions entered into or
Indebtedness created subsequent to such death until actual receipt by
Lender of written notice of the death of such guarantor. Guarantor waives
notice of revocation given by any other guarantor of the Indebtedness. Any
payment by Guarantor with respect to the Indebtedness guaranteed shall not
reduce the maximum obligation hereunder, unless written notice to that
effect be actually received by Lender at or prior to the time of such
payment. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or incapacity of
Guarantor, regardless of Lender's actual notice of Guarantor's death.
Subject to the foregoing, Guarantor's executor or administrator or other
legal representative may terminate this Guaranty in the same manner in
which Guarantor might have terminated it and with the same effect. Release
of any other guarantor or termination of any other guaranty of the
Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation received by Lender from any one or more Guarantors
shall not affect the liability of any remaining Guarantors under this
Guaranty. IT IS ANTICIPATED THAT FLUCTUATIONS MAY OCCUR IN THE AGGREGATE
AMOUNT OF INDEBTEDNESS COVERED BY THIS GUARANTY, AND IT IS SPECIFICALLY
ACKNOWLEDGED AND AGREED BY GUARANTOR THAT REDUCTIONS IN THE AMOUNT OF
INDEBTEDNESS, EVEN TO ZERO DOLLARS ($0.00), PRIOR TO WRITTEN REVOCATION OF
THIS GUARANTY BY GUARANTOR SHALL NOT CONSTITUTE A TERMINATION OF THIS
GUARANTY. THIS GUARANTY IS BINDING UPON GUARANTOR AND GUARANTOR'S HEIRS,
SUCCESSORS AND ASSIGNS SO LONG ANY OF THE GUARANTEED INDEBTEDNESS REMAINS
UNPAID AND EVEN THOUGH THE INDEBTEDNESS GUARANTEED MAY FROM TIME TO TIME BE
ZERO DOLLARS ($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either
before or after any revocation hereof, WITHOUT NOTICE OR DEMAND AND WITHOUT
LESSENING GUARANTOR'S LIABILITY UNDER THIS GUARANTY, FROM TIME TO TIME: (A)
PRIOR TO REVOCATION AS SET FORTH ABOVE, TO MAKE ONE OR MORE ADDITIONAL
SECURED OR UNSECURED LOANS TO BORROWER, TO LEASE EQUIPMENT OR OTHER GOODS
TO BORROWER, OR OTHERWISE TO EXTEND ADDITIONAL CREDIT TO BORROWER; (B) TO
ALTER, COMPROMISE, RENEW, EXTEND, ACCELERATE, OR OTHERWISE CHANGE ONE OR
MORE TIMES THE TIME FOR PAYMENT OR OTHER TERMS OF THE INDEBTEDNESS OR ANY
PART OF THE INDEBTEDNESS, INCLUDING INCREASES AND DECREASES OF THE RATE OF
INTEREST ON THE INDEBTEDNESS; EXTENSIONS MAY BE REPEATED AND MAY BE FOR
LONGER THAN THE ORIGINAL LOAN TERM; (C) TO TAKE AND HOLD SECURITY FOR THE
PAYMENT THIS GUARANTY OR THE INDEBTEDNESS, AND EXCHANGE, ENFORCE, WAIVE,
FAIL OR DECIDE NOT TO PERFECT, AND RELEASE ANY SUCH SECURITY, WITH OR
WITHOUT THE SUBSTITUTION OF NEW COLLATERAL; (D) TO RELEASE, SUBSTITUTE,
AGREE NOT TO SUE, OR DEAL WITH ANY ONE OR MORE OF BORROWER'S SURETIES,
ENDORSERS OR OTHER GUARANTORS ON ANY TERMS OR IN ANY MANNER LENDER MAY
CHOOSE; (E) TO DETERMINE HOW, WHEN AND WHAT APPLICATION OF PAYMENTS AND
CREDITS SHALL BE MADE ON THE INDEBTEDNESS; (F) TO APPLY SUCH SECURITY AND
DIRECT THE ORDER OR MANNER OF SALE THEREOF, INCLUDING WITHOUT LIMITATION,
ANY NONJUDICIAL SALE PERMITTED BY THE TERMS OF THE CONTROLLING SECURITY
AGREEMENT OR DEED OF TRUST, AS LENDER IN ITS DISCRETION MAY DETERMINE; (G)
TO SELL, TRANSFER, ASSIGN, OR GRANT PARTICIPATIONS IN ALL OR ANY PART OF
THE INDEBTEDNESS; AND (H) TO ASSIGN OR TRANSFER THIS GUARANTY IN WHOLE OR
IN PART.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and
warrants to Lender that (a) no representations or agreements of any kind
have been made to Guarantor which would limit or qualify in any way the
terms of this Guaranty; (b) this Guaranty is executed at Borrower's request
and not at the request of Lender; (c) Guarantor has not and will not,
without the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein; (d) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; (e)
upon Lender's request, Guarantor will provide to Lender financial and
credit information in form acceptable to Lender, and all such financial
information provided to Lender is true and correct in all material respects
and fairly presents the financial condition of Guarantor as of the dates
thereof, and no material adverse change has occurred in the financial
condition of Guarantor since the date of the financial statements; and (f)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition.
Guarantor agrees to keep adequately informed from such means of any facts,
events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request
for information, Lender shall have no obligation to disclose to Guarantor
any information or documents acquired by Lender in the course of its
relationship with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor
waives any right to require Lender (a) to continue lending money or to
extend other credit to Borrower; (b) to make any presentment, protest,
demand, or notice of any kind, including notice of any nonpayment of the
Indebtedness or of any nonpayment related to any collateral, or notice of
any action or nonaction on the part of Borrower, Lender, any surety,
endorser, or other guarantor in connection with the Indebtedness or in
connection with the creation of new or additional loans or obligations; (c)
to resort for payment or to proceed directly or at once against any person,
including Borrower or any other guarantor; (d) to proceed directly against
or exhaust any collateral held by Lender from Borrower, any other
guarantor, or any other person; (e) to give notice of the terms, time, and
place of any public or
<PAGE>
02-07-1996 COMMERCIAL GUARANTY PAGE 2
(CONTINUED)
================================================================================
private sale of personal property security held by
Lender from Borrower or to comply with any other applicable provisions of
the Uniform Commercial Code; (f) to pursue any other remedy within Lender's
power; or (g) to commit any act or omission of any kind, or at any time,
with respect to any matter whatsoever.
If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by
collateral pledged by Borrower, Guarantor hereby forever waives and
relinquishes in favor of Lender and Borrower, and their respective
successors, any claim or right to payment Guarantor may now have or
hereafter have or acquire against Borrower, by subrogation or otherwise, so
that at no time shall Guarantor be or become a "creditor" of Borrower
within the meaning of 11 U.S.C.
section 547(b), or any successor provision of the Federal bankruptcy laws.
Guarantor also waives any and all rights or defenses arising by reason of
(a) any "one action" or "anti-deficiency" law or any other law which may
prevent Lender from bringing any action, including a claim for deficiency,
against Guarantor, before or after Lender's commencement or completion of
any foreclosure action, either judicially or by exercise of a power of
sale; (b) any election of remedies by Lender which destroys or otherwise
adversely affects Guarantor's subrogation rights or Guarantor's rights to
proceed against Borrower for reimbursement, including without limitation,
any loss of rights Guarantor may suffer by reason of any law limiting,
qualifying, or discharging the Indebtedness; (c) any disability or other
defense of Borrower, of any other guarantor, or of any other person, or by
reason of the cessation of Borrower's liability from any cause whatsoever,
other than payment in full in legal tender, of the Indebtedness; (d) any
right to claim discharge of the Indebtedness on the basis of unjustified
impairment of any collateral for the Indebtedness; (e) any statute of
limitations, if at any time any action or suit brought by Lender against
Guarantor is commenced there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (f)
any defenses given to guarantors at law or in equity other than actual
payment and performance of the Indebtedness. If payment is made by
Borrower, whether voluntarily or otherwise, or by any third party, on the
Indebtedness and thereafter Lender is forced to remit the amount of that
payment to Borrower's trustee in bankruptcy or to any similar person under
any federal or state bankruptcy law or law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of enforcement of
this Guaranty.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether
such claim, demand or right may be asserted by the Borrower, the Guarantor,
or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's
full knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy
or law. If any such waiver is determined to be contrary to any applicable
law or public policy, such waiver shall be effective only to the extent
permitted by law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of
setoff against the moneys, securities or other property of Guarantor given
to Lender by law, Lender shall have, with respect to Guarantor's
obligations to Lender under this Guaranty and to the extent permitted by
law, a contractual possessory security interest in and a right of setoff
against, and Guarantor hereby assigns, conveys, delivers, pledges, and
transfers to Lender all of Guarantor's right, title and interest in and to,
all deposits, moneys, securities and other property of Guarantor now or
hereafter in the possession of or on deposit with Lender, whether held in a
general or special account or deposit, whether held jointly with someone
else, or whether held for safekeeping or otherwise, excluding however all
IRA, Keogh, and trust accounts. Every such security interest and right of
setoff may be exercised without demand upon or notice to Guarantor. No
security interest or right of setoff shall be deemed to have been waived by
any act or conduct on the part of Lender or by any neglect to exercise such
right of setoff or to enforce such security interest or by any delay in so
doing. Every right of setoff and security interest shall continue in full
force and effect until such right of setoff or security interest is
specifically waived or released by an instrument in writing executed by
Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter
created, shall be prior to any claim that Guarantor may now have or
hereafter acquire against Borrower, whether or not Borrower becomes
insolvent. Guarantor hereby expressly subordinates any claim Guarantor may
have against Borrower, upon any account whatsoever, to any claim that
Lender may now or hereafter have against Borrower. In the event of
insolvency and consequent liquidation of the assets of Borrower, through
bankruptcy, by an assignment for the benefit of creditors, by voluntary
liquidation, or otherwise, the assets of Borrower applicable to the payment
of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or
acquire against Borrower or against any assignee or trustee in bankruptcy
of Borrower; provided however that such assignment shall be effective only
for the purpose of assuring to Lender full payment in legal tender of the
Indebtedness. If Lender so requests, any notes or credit agreements now or
hereafter evidencing any debts or obligations of Borrower to Guarantor
shall be marked with a legend that the same are subject to this Guaranty
and shall be delivered to Lender. Guarantor agrees, and Lender hereby is
authorized, in the name of Guarantor, from time to time to execute and file
financing statements and continuation statements and to execute such other
documents and to take such other actions as Lender deems necessary or
appropriate to perfect, preserve and enforce its rights under this
Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Guaranty. No alteration of or amendment to
this Guaranty shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted
by Lender in the State of Oregon. If there is a lawsuit, Guarantor
agrees upon Lender's request to submit to the jurisdiction of the courts
of Multnomah County, State of Oregon. Lender and Guarantor hereby waive
the right to any jury trial in any action, proceeding, or counterclaim
brought by either Lender or Guarantor against the other. Subject to the
provisions on arbitration, this Guaranty shall be governed by and
construed in accordance with the laws of the State of Oregon.
ARBITRATION. LENDER AND GUARANTOR AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN
NATURE, ARISING FROM THIS GUARANTY OR OTHERWISE, INCLUDING WITHOUT
LIMITATION CONTRACT AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO
THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION, UPON REQUEST OF
EITHER PARTY. No act to take or dispose of any Collateral shall
constitute a waiver of this arbitration agreement or be prohibited by
this arbitration agreement. This includes, without limitation, obtaining
injunctive relief or a temporary restraining order; foreclosing by
notice and sale under any dead of trust or mortgage; obtaining a writ of
attachment or imposition of a receiver; or exercising any rights
relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the
Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness of any act, or exercise of
any right, concerning any Collateral, including any claim to rescind,
reform, or otherwise modify any agreement relating to the Collateral,
shall also be arbitrated, provided however that no arbitrator shall have
the right or the power to enjoin or restrain any act of any party.
Judgment upon any award rendered by any arbitrator may be entered in any
court having jurisdiction. Nothing in this Guaranty shall preclude any
party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches, and
similar doctrines which would otherwise be applicable in an action
brought by a party shall be applicable in any arbitration proceeding,
and the commencement of an arbitration proceeding shall be deemed the
commencement of an action for these purposes. The Federal Arbitration
Act shall apply to the construction, interpretation, and enforcement of
this arbitration provision.
ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of
Lender's costs and expenses, including attorneys' fees and Lender's
legal expenses, incurred in connection with the enforcement of this
Guaranty. Lender may pay someone else to help enforce this Guaranty, and
Guarantor shall pay the costs and expenses of such enforcement. Costs
and expenses include Lender's attorneys' fees and legal expenses whether
or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (and including efforts to modify or vacate
any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Guarantor also shall pay all court
costs and such additional fees as may be directed by the court.
NOTICES. Except for revocation notices by Guarantor, all notices
required to be given by either party to the other under this Guaranty
shall be in writing and shall be effective when actually delivered or
when deposited with a nationally recognized overnight courier, or when
deposited in the United States mail, first class postage prepaid,
addressed to the party to whom the notice is to be given at the address
shown above or to such other addresses as either party may designate to
the other in writing. All revocation notices by Guarantor shall be in
writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." If there is more
than one Guarantor, notice to any Guarantor will constitute notice to
all Guarantors. For notice purposes, Guarantor agrees to keep Lender
informed at all times of Guarantor's current address.
INTERPRETATION. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be
deemed to have been used in the plural where the context and
construction so require; and where there is more than one Borrower named
in this Guaranty or when this Guaranty is executed by more than one
Guarantor, the words "Borrower" and "Guarantor" respectively shall mean
all and any one or more of them. The words "Guarantor," "Borrower," and
"Lender" include the heirs, successors, assigns, and transferees of each
of them. Caption headings in this Guaranty are for convenience purposes
only and are not to be used to interpret or define the provisions of
this Guaranty. If a court of competent jurisdiction finds any provision
of this Guaranty to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances, and all
provisions of this Guaranty in all other respects shall remain valid and
enforceable. If any one or more of Borrower or Guarantor are
corporations or partnerships, it is not necessary for Lender to inquire
into the powers of Borrower or Guarantor or of the officers, directors,
partners, or agents acting or purporting to act on their behalf, and any
Indebtedness made or created in reliance upon the professed exercise of
such powers shall be guaranteed under this
<PAGE>
02-07-1996 COMMERCIAL GUARANTY PAGE 3
(CONTINUED)
================================================================================
Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Guaranty shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Guaranty. No prior waiver by
Lender, nor any course of dealing between Lender and Guarantor, shall
constitute waiver of any of Lender's rights or of any of Guarantor's
obligations as to any future transactions. Whenever the consent of
Lender is required under this Guaranty, the granting of such consent by
Lender in any instance shall not constitute continuing consent to
subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of
Lender.
BANKRUPTCY PREFERENCE AND ADDITIONAL WAIVER. Guarantor hereby indemnifies
Lender from any preference liability as well as the costs of defending a
preference suit in a bankruptcy case involving Borrower. Guarantor also
waives any right of indemnity, reimbursement, contribution, or subrogation
from Borrower.
ADDENDUM TO GUARANTOR'S WAIVERS SECTION. Guarantor further waives any and
all rights or defenses including but not limited to, those arising by
reason of failure of consideration, breach of warranty, fraud, payment,
accord and satisfaction, strict foreclosure, statue of frauds, bankruptcy,
infancy, lender liability and usury.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF
THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR
UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND
DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE
UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED "DURATION OF
GUARANTY." NO FORMAL ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS
GUARANTY EFFECTIVE. THIS GUARANTY IS DATED FEBRUARY 7,1996.
GUARANTOR:
TRM COPY CENTERS CORPORATION
BY: MICHAEL D. SIMON
-----------------------------------
MICHAEL D. SIMON, PRESIDENT
- --------------------------------------------------------------------------------
CORPORATE ACKNOWLEDGMENT
STATE OF OREGON )
) ss
COUNTY OF MULTNOMAH )
On this 22 day of February, 19 96 , before me, the undersigned Notary
Public, personally appeared MICHAEL D. SIMON, PRESIDENT OF TRM COPY CENTERS
CORPORATION, and known to me to be an authorized agent of the corporation
that executed the Commercial Guaranty and acknowledged the Guaranty to be
the free and voluntary act and deed of the corporation, by authority of its
Bylaws or resolution of its board of directors, for the uses and purposes
therein mentioned, and on oath stated that he or she is authorized to
execute this Guaranty and in fact executed the Guaranty on behalf of the
corporation.
BY ROSMARY H. EVANS RESIDING AT Portland, Oregon
------------------------------ ----------------------------
NOTARY PUBLIC IN AND FOR THE MY COMMISSION EXPIRES: 12-29-96
STATE OF Oregon -----------------
-----------------------
================================================================================
To: Fred Paulsell , Ralph Shaw
From: Michael Simon
Subject: Employment Agreement As CEO - Extension beyond September 30, 1996
Thursday, April 25, 1996
Fred, Ralph, "thank you" for the time and energy spent to get the details
of this agreement finalized. I appreciate that your strong commitment to
best represent the interests of the shareholders made this effort
personally challenging. That negotiation necessity understood, I especially
appreciate your overall vote of confidence in me.
This letter captures our agreement to extend my employment agreement as
TRM's Chief Executive Officer, President and Director for two years,
followed by three years in a capacity to be mutually agreed. The total term
of this extension of our employment agreement is sixty months past
September 30, 1996 which is the expiration date of the existing agreement.
This letter documents our new agreement and, when signed, will append and
extend (as appropriate) the prior agreements.
1. Effective on signature of this document my employment agreement with TRM
is extended sixty months past September 30, 1996. to September 30, 2001.
2. Base compensation for this sixty month period is continued at the
present level (annualized at $300,000.), but the present cash bonus formula
will not extend past the next pay-out due on February 1, 1997. Cash bonuses
paid for the period beyond February 1, 1997 will be at the discretion of
the TRM B.O.D.
3. Three new stock options are granted as follows:
a. Per our understanding at the close of the March 15, 1996 B.O.D.
meeting, an option is granted within the plan currently approved by
the shareholders, for 116,000 shares at an option price of $10.375
(which was the FMV on that date). It is our understanding that this
share amount is available under the existing plan. A second option
is granted for 19,000 shares also at an option price of 10.375, but
as these shares are not currently available under the approved
plan, they are granted subject to shareholder approval.
b. Also per our understanding at the close of the March 15, 1996
B.O.D. meeting, a third option is granted for an additional 40,000
shares which are also currently not available within the plan
approved by the shareholders. It is intended to price these options
at FMV when approved shares become available or when shareholder
approval is received for a new or amended plan which authorizes the
needed additional shares. These options will be priced at FMV no
later than on the date of the anticipated shareholder meeting in
October 1996 or the next actual shareholders meeting, which ever
comes first.
c. The vesting schedule for all three options will be monthly over the
five year extension period at the annualized rate of 40% of each
option's total grant amount in the first year, 30% in the second
year, 20% in the third year, 5% in the fourth year and the
remaining 5% in the fifth year.
d. Option agreements will allow exercise for a five year period beyond
vesting dates. Vesting of all remaining options shall immediately
accelerate under any of the conditions of: termination without
cause, death, disability or change of control. A significant change
in job responsibilities at TRM's request will be deemed a change of
control.
This letter is accepted and the terms are agreed to by:
date: 4/25/96 date: May 7, 1996
MICHAEL D. SIMON FRED PAULSELL
- ---------------------------------- ------------------------------------
Michael D. Simon Fred Paulsell, Chairman of the Board
of Directors, TRM Corporation
CORPORATE DIRECTORY
<TABLE>
<CAPTION>
<S> <C> <C>
BOARD OF DIRECTORS LEGAL COUNSEL FORM 10-K
Frederick O. Paulsell Stoel Rives LLP A copy of the Company's
Chairman of the Board Suite 2300 Annual Report on Form
Partner, Olympic Capital 900 S.W. Fifth Avenue 10-K, as filed with the
Partners, P.L.L.C. Portland, Oregon 97204 Securities and Exchange
Telephone: (503) 224-3380 Commission, will be made
Edwin S. Chan available without charge
Vice Chairman INDEPENDENT AUDITORS upon written request to
Retired President and KPMG Peat Marwick LLP Investor Relations, TRM
Chief Executive Officer Suite 2000 Copy Centers Corporation,
1211 S.W. Fifth Avenue 5208 N.E. 122nd Avenue,
Sherman M. Coe Portland, Oregon 97204 Portland, OR 97230-1074.
Vice President, Gene Juarez Telephone: (503) 221-6500
Salons, Inc. COMMON STOCK
CORPORATE OFFICES TRM Copy Centers
Ralph R. Shaw TRM Copy Centers Corporation Corporation's common
Co-Chairman 5208 N.E. 122nd Avenue stock, of which there are
Shaw, Glasgow & Co., L.L.C. Portland, Oregon 97230-1074 approximately 3,000
Telephone: (503) 257-8766 beneficial owners, trades
Michael D. Simon Facsimile: (503) 251-5473 on the Nasdaq National
President and Market under the symbol
Chief Executive Officer REGISTRAR AND "TRMM." The Company has
TRANSFER AGENT not paid dividends on its
Donald Van Maren U.S. Bank of Idaho common stock and has no
Private Investor, 101 S. Capitol Boulevard plans to do so in the
Retired Doctor of Optometry Boise, Idaho 83701 near future.
Telephone: (208) 383-7098
EXECUTIVE OFFICERS STOCK PRICE HISTORY
Michael D. Simon ANNUAL MEETING The following table sets
President and The annual meeting of forth the high and low
Chief Executive Officer stockholders of TRM sale prices for the last
Copy Centers Corporation two fiscal years.
Robert A. Bruce will be held at the
Chief Financial Officer U.S. Bancorp Tower, High Low
Vice President of Finance 41st Floor, John ---- ---
Corporate Secretary Elorriaga Auditorium, Fiscal 1995:
111 S.W. Fifth Avenue, 1st Quarter $ 7 $ 5
James W. Perris Portland, Oregon 97204, 2nd Quarter 6 3 3/8
Chief Operating Officer on October 22, 1996, 3rd Quarter 7 1/4 4 3/4
and Vice President of at 9 a.m. 4th Quarter 7 3/4 5 7/8
Operations
Fiscal 1996:
Danial J. Tierney 1st Quarter $ 8 3/8 $ 6 1/4
Vice President of 2nd Quarter 11 3/8 7 3/8
Corporate Sales 3rd Quarter 11 1/2 10
4th Quarter 11 1/2 10 5/8
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
(In thousands, except per share data) 1996 1995 1994 1993* 1992*
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Year ended June 30:
Sales $67,538 $60,544 $47,957 $38,774 $30,547
Net income 4,124 3,699 3,354 3,236 2,582
Net income per share 0.57 0.53 0.49 0.47 0.43
As of June 30:
Working capital $ 8,860 $ 9,543 $ 8,523 $ 5,667 $ 9,097
Total assets 54,251 55,736 43,504 30,323 24,470
Long-term debt 8,128 14,238 9,500 850 40
Stockholders' equity 35,444 31,528 27,155 23,704 20,552
<FN>
* In the first quarter of fiscal 1994, the Company retroactively adopted
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Accordingly, selected data for periods prior to fiscal 1994
described above as net income, net income per share and stockholders'
equity have been adjusted retroactively.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SELECTED QUARTERLY FINANCIAL DATA
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
(In thousands, except per share data) 1996 1995 1996 1995 1996 1995 1996 1995
------- ------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $15,716 $13,179 $16,727 $14,789 $17,394 $16,089 $17,701 $16,487
Gross profit 5,788 4,968 6,263 5,486 6,659 5,949 7,170 6,146
Net income 844 822 910 874 1,077 963 1,293 1,040
Net income per share 0.12 0.12 0.13 0.13 0.15 0.14 0.18 0.15
</TABLE>
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
TRM continues to expand in new and existing metropolitan areas. The
number of metropolitan areas served has increased from 42 to 66 over the
last three fiscal years and includes 46 in the United States, 5 in Canada,
14 in the United Kingdom and 1 in France. TRM Centers have increased 62
percent over the three year period, from 19,592 to 31,719. In addition to
expanding, the Company is also focused on improving the profit performance
of the installed base of TRM Centers.
RESULTS OF OPERATIONS
The percentage of change in dollar amounts and the percentage of sales
represented by each item on the Consolidated Statements of Operations (page
7 of this Annual Report) follow:
<TABLE>
<CAPTION>
Percentage Change As a Percentage of Sales
-------------------- ------------------------------
1995-96 1994-95 1996 1995 1994
------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Sales 11.6% 26.2% 100.0% 100.0% 100.0%
Sales discounts 5.3 17.7 17.4 18.4 19.7
Cost of sales 11.4 32.9 44.3 44.3 42.1
Selling, general and administrative 17.1 24.7 26.0 24.8 25.1
------ ------ ------ ------ ------
Operating income 10.2 20.7 12.3 12.5 13.1
Interest expense, net 1.3 178.8 (1.4) (1.6) (0.7)
Other, net (1.3) 29.5 (0.7) (0.8) (0.8)
------ ------ ------ ------ ------
Income before income taxes 12.4 10.5 10.2 10.1 11.6
Provision for income taxes 13.9 10.8 4.1 4.0 4.6
------ ------ ------ ------ ------
Net income 11.5% 10.3% 6.1% 6.1% 7.0%
====== ====== ====== ====== ======
</TABLE>
The 1996 sales growth of 11.6 percent was primarily due to an 8.9
percent increase in the number of billed units. Average sales per unit also
increased 2.4 percent during the year. The number of billed units and
average sales per unit were significantly affected by two factors:
aggressive unit growth in Europe, where sales per unit are above Company
averages, and active management of the installed base of accounts, through
removals, redeployments and re-pricings to improve profitability, primarily
in North America. Growth in Europe accounted for 84.3 percent of total
sales growth for the year. In actively managing the profit performance of
the installed base, under-performing machines are removed and put back into
stock to be redeployed at better sites. Machines under-priced for the
supporting copy volume are repriced to higher levels. The majority of the
machines repriced during 1996 showed increased profits and lower sales per
unit. The Company expects to continue to aggressively grow in Europe and to
raise prices as appropriate.
During 1995, billed unit growth was 26.3 percent while sales growth
was 26.2 percent. The Company began actively removing, re-deploying and
repricing its low-performing locations during the latter two quarters of
1995, affecting the number of billed units and average sales per unit
growth during that period. Growth in Europe accounted for 59.2 percent of
total sales growth in 1995.
As indicated above, foreign sales, primarily in Europe, have accounted
for more than half of the sales increases for the past two years. Foreign
sales have grown from $7.9 million in 1994 to $15.7 million in 1995 to
$22.0 million in 1996.
3
<PAGE>
To date, sales from products not related to black and white
photocopying have been insignificant, amounting to less than 5 percent of
total sales.
Sales discounts are the portion of revenue retained by retail
customers. They generally vary at individual retail businesses depending on
volume--the higher the volume the greater the discount and vice versa. The
downward trend in sales discounts as a percentage of sales reflects changes
made in business agreements with new customers over the periods.
Cost of sales increased 11.4 percent from 1995 to 1996. Comparing 1995
and 1996, paper costs increased a significant 16.6 percent in total (23.0
percent in North America and 5.8 percent in Europe). The Company's active
program to raise copy prices at thousands of locations, which had a
decreasing influence on the number of copies made (due to expected demand
elasticity), helped reduce the effect higher paper costs had on costs of
sales. All told, the effects of overall company growth and the repricing
program resulted in an increase in total copies made during the year of 0.8
percent to 1.3 billion. With year-end paper prices below their peak of the
fall of 1995, it is expected that fiscal 1997 will not be adversely
affected by paper costs when compared to 1996. The increase in cost of
sales was also affected by higher field service and field sales payroll
costs.
Comparing 1995 to 1994, cost of sales increased 32.9 percent,
primarily due to the 26.3 percent growth in the number of billed units.
Also affecting this increase were higher consumables (paper, toner and
parts) and depreciation costs in Europe, as compared to North America, and
increased paper costs worldwide.
Selling, general and administrative expense increased 17.1 percent in
1996. This exceeded the sales growth rate of 11.6 percent because of
investments in people and systems. From mid 1995 to early 1996 key
additions were made across all levels of the management team. Investments
in our computerized management information systems were also made and are
continuing. Comparing 1995 to 1994, selling, general and administrative
expense increased 24.7 percent compared to sales growth of 26.2 percent for
the same period. The lower rate of expense growth was due to the benefits
of economies of scale, the focus on automation and lower start-up costs.
Interest costs grew in 1994 and 1995 because the Company increased
bank borrowings to help fund its aggressive unit expansion. In 1996, the
Company was able to reduce bank borrowings resulting in interest expense
near 1995's levels.
In October 1995, the Financial Accounting Standards Board issued SFAS
123, "Accounting for Stock-Based Compensation," which is effective for
fiscal years beginning after December 15, 1995. This Standard allows
employers to adopt a fair value-based method of accounting to recognize
compensation expense for employee stock compensation plans, and if not
adopted, requires pro forma disclosures in the footnotes to the financial
statements. The Company does not currently intend to adopt the fair
value-based method of recognition under SFAS 123 and as such there will be
no impact on the Company's financial position or results of operations.
LIQUIDITY AND CAPITAL RESOURCES
During 1996, cash flow from operations fully funded capital
expenditures of $5.5 million and allowed for repayment of $6.1 million in
bank borrowings. This level of capital expenditures was below the $13.3 and
$13.4 million spent in 1995 and 1994, respectively, because the Company
focused on removing and redeploying low-performing customer placements in
North
4
<PAGE>
America during 1996. The primary sources of capital for expansion in
1995 and 1994 were cash from operating activities and bank borrowings.
As of June 30, 1996, no borrowings were outstanding under a $4.0
million unsecured bank line of credit. Letters of credit of approximately
$179,000 were supported by this bank line at that time. This line expires
in December 1997. The Company has an additional unsecured bank borrowing
arrangement under which $26.0 million is available, and $8.1 million was
borrowed as of June 30, 1996. Interest only is due until January 1, 1998,
at which time no additional borrowings will be available, and the loan
balance outstanding will convert into a fully amortizing term loan through
January 1, 2002. Under these arrangements, the Company has interest rate
alternatives to choose from, including the bank's reference rate and
LIBOR-based rates.
The Company currently anticipates capital expenditures of $7 to $10
million during fiscal 1997. The Company expects to finance these capital
expenditures with cash generated from operations and with bank borrowings.
The Company expects that these sources will provide adequate cash to fund
its expansion through at least June 30, 1997.
FORWARD-LOOKING STATEMENTS
Information in "Management's Discussion and Analysis," the letter to
shareholders and elsewhere in this Annual Report about the Company's goals,
plans and expectations regarding: future performance; growth opportunities;
expansion; improvements in efficiencies and cost controls; new products and
services; repricing machines; paper costs and capital expenditures
constitutes forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The following factors are among the factors that could cause
actual results to differ materially from the forward-looking statements:
business conditions in the market areas in which the Company operates,
competitive factors, customer demand for the Company's services, the
Company's ability to execute its plans successfully and the volatility of
paper costs. Any forward-looking statements should be considered in light
of these factors.
5
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
June 30,
(In thousands) 1996 1995
--------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 873 $ 755
Accounts receivable, net 7,264 6,735
Inventories (note 2) 5,253 6,545
Prepaid expenses and other 1,580 1,726
--------- ---------
Total current assets 14,970 15,761
Equipment and vehicles, less accumulated depreciation (note 3) 39,172 39,823
Other assets 109 152
--------- ---------
$ 54,251 $ 55,736
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Checks in transit $ 938 $ 1,422
Accounts payable 1,799 1,493
Accrued expenses (note 4) 3,373 3,303
--------- ---------
Total current liabilities 6,110 6,218
Long-term debt (note 5) 8,128 14,238
Deferred income taxes (note 6) 4,569 3,752
--------- ---------
Total liabilities 18,807 24,208
--------- ---------
Commitments (notes 7 and 9) -- --
Stockholders' equity (notes 7 and 8):
Preferred stock, no par value.
Authorized 5,000 shares; no
shares issued and outstanding -- --
Common stock, no par value.
Authorized 10,000 shares; issued and
outstanding 6,484 and 6,432 shares 16,214 15,940
Retained earnings 19,704 15,580
Cumulative translation adjustment (474) 8
--------- ---------
Total stockholders' equity 35,444 31,528
--------- ---------
$54,251 $55,736
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal year ended June 30,
(In thousands, except per share data) 1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Sales $67,538 $60,544 $47,957
Less discounts 11,728 11,138 9,462
------- ------- -------
Net sales 55,810 49,406 38,495
Cost of sales 29,930 26,857 20,211
------- ------- -------
Gross profit 25,880 22,549 18,284
Selling, general and
administrative expense 17,569 15,006 12,036
------- ------- -------
Operating income 8,311 7,543 6,248
Interest expense 957 945 339
Other expense, net 464 470 363
------- ------- -------
Income before income taxes 6,890 6,128 5,546
Provision for income taxes (note 6) 2,766 2,429 2,192
------- ------- -------
Net income $ 4,124 $ 3,699 $ 3,354
======= ======= =======
Net income per share $ 0.57 $ 0.53 $ 0.49
======= ======= =======
Weighted average common
and common equivalent
shares outstanding 7,262 6,934 6,882
======= ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Cumulative
Common Stock Retained Translation
(In thousands) Shares Amount Earnings Adjustment Total
-------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Balances, June 30, 1993 6,339 $ 15,506 $ 8,527 $ (329) $23,704
Exercise of stock options 38 161 -- -- 161
Tax benefit of stock options -- 74 -- -- 74
Issuance of stock to employees 13 81 -- -- 81
Foreign currency translation adjustment -- -- -- (219) (219)
Net income -- -- 3,354 -- 3,354
-------- --------- --------- -------- ---------
Balances, June 30, 1994 6,390 15,822 11,881 (548) 27,155
Exercise of stock options 27 55 -- -- 55
Issuance of stock to employees 15 63 -- -- 63
Foreign currency translation adjustment -- -- -- 556 556
Net income -- -- 3,699 -- 3,699
-------- --------- --------- -------- ---------
Balances, June 30, 1995 6,432 15,940 15,580 8 31,528
Exercise of stock options 36 137 -- -- 137
Tax benefit of stock options -- 26 -- -- 26
Issuance of stock to employees 16 111 -- -- 111
Foreign currency translation adjustment -- -- -- (482) (482)
Net income -- -- 4,124 -- 4,124
-------- --------- --------- -------- ---------
Balances, June 30, 1996 6,484 $ 16,214 $ 19,704 $ (474) $ 35,444
======== ========= ========= ======== =========
See accompanying notes to consolidated financial statements.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal year ended June 30,
(In thousands) 1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Operating activities:
Net income $ 4,124 $ 3,699 $ 3,354
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 5,101 4,623 3,236
Loss on disposal of equipment and vehicles 40 18 27
Changes in items affecting operations:
Accounts receivable (529) (1,789) (1,288)
Inventories 1,292 (2,318) (601)
Prepaid expenses and other 146 745 (756)
Accounts payable 306 240 (151)
Accrued expenses 70 1,161 196
Deferred income taxes 817 687 933
------- ------- -------
Total operating activities 11,367 7,066 4,950
------- ------- -------
Investing activities:
Proceeds from sale of equipment 146 130 65
Capital expenditures (5,494) (13,259) (13,448)
Other 44 (17) (39)
------- ------- -------
Total investing activities (5,304) (13,146) (13,422)
------- ------- -------
Financing activities:
Change in checks in transit (484) 1,033 102
Principal payments on borrowings (9,636) (7,337) (660)
Proceeds from borrowings 3,526 12,075 9,310
Net proceeds from issuance of common stock 274 118 316
------- ------- -------
Total financing activities (6,320) 5,889 9,068
------- ------- -------
Effect of exchange rate changes 375 283 (238)
------- ------- -------
Net increase in cash 118 92 358
Beginning cash and cash equivalents 755 663 305
------- ------- -------
Ending cash and cash equivalents $ 873 $ 755 $ 663
======= ======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Description of Business
TRM Copy Centers Corporation, headquartered in Portland, Oregon, as
its primary business, owns, supplies and maintains more than 31,000
self-service photocopiers in pharmacies, stationery stores, hardware
stores, convenience stores and other retail establishments in the United
States, Canada, the United Kingdom and France. Each retail establishment
collects payment from its customers, shares in the revenue of the
photocopier and benefits from any increase in customer traffic within the
store.
Principles of Consolidation
The consolidated financial statements include the accounts of the
parent and its subsidiary companies (the Company). All significant
intercompany accounts and profits have been eliminated. Assets and
liabilities of foreign operations are translated into U.S. dollars at
current exchange rates. Income and expense accounts are translated into
U.S. dollars at average rates of exchange prevailing during the periods.
Adjustments resulting from translating foreign functional currency
financial statements into U.S. dollars are taken directly to a separate
component of stockholders' equity. Foreign currency transaction gains and
losses are included in income and have been immaterial to date.
Fair Value of Financial Instruments
Financial instruments, including cash, accounts receivable, checks in
transit and accounts payable, approximate fair market value because of the
short maturity for these instruments. Fair value approximates carrying
value of the Company's borrowings under its long-term debt arrangements
based upon interest rates available for the same or similar loans.
Revenue Recognition and Accounts Receivable
A portion of each copy sale is retained by the retail business,
generally depending on copy volume. The Company invoices each retailer via
monthly billings based on usage at the program price per copy less the
applicable discount (the amount retained by the retailer). Total sales
activity and discount amounts are recorded separately in the accounting
records and in the consolidated statements of operations to arrive at net
sales.
Accounts receivable are shown net of allowance for doubtful accounts
of $287,000 and $266,000 at June 30, 1996 and 1995, respectively.
Inventories
Inventories are stated at the lower of FIFO cost or market.
10
<PAGE>
Equipment and Vehicles
Equipment and vehicles are recorded at cost. Depreciation begins when
the asset is placed in service and is generally recorded using the
straight-line method over the estimated remaining useful lives of the
related assets as follows:
Photocopiers and other centers 5-10 years
Furniture and fixtures 5-7 years
Computer equipment 5 years
Vehicles 5 years
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Statements of Cash Flows Supplemental Information
Income taxes paid were approximately $2,465,000, $1,075,000, and
$1,477,000 for the fiscal years 1996, 1995 and 1994, respectively. Interest
paid does not materially differ from interest expense.
Net Income Per Share
Net income per share is computed based on the weighted average number
of shares of common stock and dilutive common stock equivalents outstanding
during the periods. Common stock equivalents consist of options to purchase
stock (using the treasury stock method).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
2. INVENTORIES:
June 30,
(In thousands) 1996 1995
------- -------
Paper $ 1,505 $ 2,740
Toner and developer 828 1,533
Parts 2,920 2,272
------- -------
$ 5,253 $ 6,545
======= =======
11
<PAGE>
3. EQUIPMENT AND VEHICLES:
June 30,
(In thousands) 1996 1995
------- -------
Photocopiers and other centers $47,918 $46,075
Furniture and fixtures 1,787 1,609
Computer equipment 1,392 1,075
Vehicles 5,950 4,813
------- -------
57,047 53,572
Accumulated depreciation 17,875 13,749
------- -------
$39,172 $39,823
------- -------
4. ACCRUED EXPENSES:
June 30,
(In thousands) 1996 1995
------- -------
Accrued payroll expenses $ 2,443 $ 1,839
Income taxes payable -- 488
Customer security deposits 276 415
Other accrued expenses 654 561
------- -------
$ 3,373 $ 3,303
------- -------
5. BANK BORROWINGS:
June 30,
(In thousands) 1996 1995
------- -------
Bank revolving line of credit,
unsecured, due on demand,
maximum limit of $4.0 million $ -- $ --
Bank revolving loan, unsecured,
maximum limit of
$26.0 million 8,128 14,238
------- -------
$ 8,128 $14,238
------- -------
The revolving line of credit calls for monthly payments of interest
only until expiration on December 31, 1997, or as renegotiated. This $4.0
million line supported $179,000 in letters of credit as of June 30, 1996,
leaving $3.8 million of the facility unused. The $26.0 million loan
arrangement calls for monthly payments of interest only until January 1,
1998. At that time, no additional borrowings will be available, and the
loan balance outstanding will convert into a fully amortizing term loan
with principal payable in equal monthly installments through January 1,
2002.
Both arrangements allow the Company to choose from identical interest
rate alternatives during the interest only periods. These alternatives are
based on the bank's reference rate or on LIBOR. Further, the $26.0 million
loan arrangement makes available certain additional fixed interest rate
options during the term loan period. This arrangement also calls for a fee
on the unused loan commitment.
The interest rates applicable to bank borrowings as of June 30, 1996,
ranged from 6.68% to 6.86% The debt agreements contain certain restrictive
covenants as to working capital, total liabilities and stockholders'
equity. The Company is in compliance with the covenants.
12
<PAGE>
Maturities of long-term debt are as follows: $847,000, $2,032,000,
$2,032,000 and $2,032,000 for fiscal years 1998, 1999, 2000 and 2001,
respectively; and $1,185,000 thereafter.
6. INCOME TAXES:
Deferred income taxes arise primarily from different depreciation
calculations used for financial statement and income tax purposes. The
foreign jurisdiction component of income before income taxes is not
significant. The components of income tax expense, pursuant to SFAS 109,
are as follows:
(In thousands) 1996 1995 1994
------- ------- -------
Current:
Federal $ 1,503 $ 1,341 $ 977
State 446 401 282
Deferred:
Federal 623 585 803
State 194 102 130
------- ------- -------
$ 2,766 $ 2,429 $ 2,192
======= ======= =======
The effective tax rate differed from the federal statutory tax rate as
follows:
1996 1995 1994
---- ---- ----
Statutory federal rate 34.0% 34.0% 34.0%
State taxes, net of federal benefit 5.9 5.9 5.5
Other .2 (0.3) --
---- ---- ----
40.1% 39.6% 39.5%
==== ==== ====
13
<PAGE>
7. STOCKHOLDERS' EQUITY:
The Company reserved 1,300,000 shares of common stock for issuance
under an incentive and nonqualified stock option plan established in 1986.
Under the plan, incentive stock options are granted at no less than 100% of
the fair market value per share of the common stock, while nonqualified
stock options are granted at prices determined by the Board of Directors.
The options are exercisable over a period of ten years from the date of
grant. Generally, the options vest over five years. In fiscal 1995, 300,000
option shares were granted at fair market value outside the Plan. During
fiscal 1996, the Company made a commitment to grant options for 59,000
shares pending shareholder approval. These options vest over two to five
years and are exercisable for seven to ten years after the date of grant.
A summary of stock option activity follows:
<TABLE>
<CAPTION>
Shares
Under Option Price Range
------------ ---------------------------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1993 642,250 $ .25 - $ 6.00
Options granted 59,000 $ 6.25
Options exercised (37,850) $ .25 - $ 6.00
Options canceled (12,250) $ 2.00 - $ 6.00
------------ ---------------------------
Balance, June 30, 1994 651,150 $ .25 - $ 6.25
Options granted 639,500 $ 4.00 - $ 7.375
Options exercised (27,000) $ 2.00 - $ 4.125
Options canceled (26,000) $ 4.125 - $ 6.375
------------ ---------------------------
Balance, June 30, 1995 1,237,650 $ .25 - $ 7.375
Options granted 196,500 $ 6.375 - $ 10.625
Options exercised (36,100) $ .25 - $ 6.375
Options canceled (15,000) $ 4.125 - $ 6.375
------------ ---------------------------
Balance, June 30, 1996 ( 918,850 exercisable,
-0- available for grant under the plan) 1,383,050 $ .25 - $ 10.625
============ ===========================
</TABLE>
8. BENEFIT PLANS:
Profit Sharing Retirement Plan
On January 1, 1990, the Company established a profit sharing
retirement plan for eligible U.S. employees. The Plan has profit sharing
and 401(k) components. The Company's contribution under the profit sharing
portion of the Plan is discretionary. The Company accrued profit sharing
contributions of $240,000 for fiscal 1996, $230,000 for fiscal 1995 and
$210,000 for fiscal 1994. Under the 401(k) part of the Plan, each employee
may contribute, on a pretax basis, up to 20% of the employee's gross
earnings, subject to certain limitations.
Employee Stock Purchase Plan
The Company's Employee Stock Purchase Plan was approved by
stockholders in October 1992, and became effective January 1, 1993. The
Plan permits each eligible employee to purchase shares of common stock
through payroll deductions, not to exceed 10% of the employee's
compensation. The purchase price of the shares is the lower of 85% of the
fair market value of the stock at the beginning of each six-month offering
14
<PAGE>
period or 85% of the fair market value at the end of such period. Amounts
accumulated through payroll deductions during the offering period are used
to purchase shares on the last day of the offering period. Of the 100,000
shares authorized to be issued under the Plan, 47,262 shares have been
purchased, and 52,738 shares remain available for purchase as of June 30,
1996.
9. LEASE COMMITMENTS:
The Company leases vehicles, office and warehouse space in several
locations under operating leases. Minimum lease payments are as follows:
$1,760,000, $1,660,000, $1,487,000, $1,255,000 and $914,000 for fiscal
years 1997, 1998, 1999, 2000 and 2001, respectively, and $5,191,000
thereafter. Rental expense for fiscal years 1996, 1995 and 1994 was
$1,921,000, $1,757,000, and $1,319,000, respectively.
10. OPERATIONS BY GEOGRAPHIC AREAS:
The Company operates in one industry segment as a service company
maintaining and supporting its programs which have been developed and
placed with retail establishments. Information about the Company's domestic
and foreign operations are presented below:
<TABLE>
<CAPTION>
Sales Operating Income (Loss) Assets
----------------------------- --------------------------- -----------------------------
(In thousands) 1996 1995 1994 1996 1995 1994 1996 1995 1994
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States $45,559 $44,814 $40,019 $ 5,717 $ 6,779 $ 5,943 $31,527 $33,858 $31,544
Foreign:
Europe 17,575 11,677 4,220 2,310 389 (134) 19,786 19,330 9,349
Other 4,404 4,053 3,718 284 375 439 2,938 2,548 2,611
------- ------- ------- ------- ------- ------- ------- ------- -------
$67,538 $60,544 $47,957 $ 8,311 $ 7,543 $ 6,248 $54,251 $55,736 $43,504
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
TRM Copy Centers Corporation:
We have audited the accompanying consolidated balance sheets of TRM
Copy Centers Corporation and subsidiaries as of June 30, 1996 and 1995, and
the related consolidated statements of operations, stockholders' equity and
cash flows for each of the years in the three-year period ended June 30,
1996. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
TRM Copy Centers Corporation and subsidiaries at June 30, 1996 and 1995,
and the results of their operations and their cash flows for each of the
years in the three-year period ended June 30, 1996 in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Portland, Oregon
August 13, 1996
15
Exhibit 21.1
Subsidiaries of TRM Copy Centers Corporation
--------------------------------------------
State or Place
Subsidiary of Incorporation
- ---------- ----------------
TRM Copy Centers (USA) Corporation Oregon
TRM Copy Centres (Canada) Ltd.* Canada
TRM Copy Centres (U.K.) Ltd.* Oregon
TRM France Ltd.* Oregon
BisCard Corporation Oregon
*TRM Copy Centres (Canada) Ltd., TRM Copy Centres (U.K.) Ltd. and
TRM France Ltd. are subsidiaries of TRM Copy Centers (USA)
Corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 873
<SECURITIES> 0
<RECEIVABLES> 7,551
<ALLOWANCES> 287
<INVENTORY> 5,253
<CURRENT-ASSETS> 14,970
<PP&E> 57,047
<DEPRECIATION> 17,875
<TOTAL-ASSETS> 54,251
<CURRENT-LIABILITIES> 6,110
<BONDS> 8,128
0
0
<COMMON> 16,214
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 54,251
<SALES> 55,810
<TOTAL-REVENUES> 55,810
<CGS> 29,930
<TOTAL-COSTS> 29,930
<OTHER-EXPENSES> 464
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 957
<INCOME-PRETAX> 6,890
<INCOME-TAX> 2,766
<INCOME-CONTINUING> 4,124
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,124
<EPS-PRIMARY> .57
<EPS-DILUTED> .57
</TABLE>
