SEVERANCE AGREEMENT & RELEASE OF CLAIMS

Exhibit 10.1

SEVERANCE AGREEMENT AND RELEASE OF CLAIMS

     This Severance Agreement and Release of Claims (“Agreement”) is made as of the day below written by and between Daniel E. O’Brien (“DOBRIEN” ) and TRM CORPORATION ( “TRM” ), a publicly-traded company with headquarters in Portland, Oregon. DOBRIEN and TRM shall be collectively referred to herein as the “Parties.”

      WHEREAS, DOBRIEN was employed by TRM as its Chief Financial Officer;

      WHEREAS, DOBRIEN’s position is to be terminated effective August 31, 2007 ( “Termination Date" ); and

      WHEREAS, the Parties desire to resolve all issues between them, amicably conclude their relationship, and identify certain continuing obligations of the Parties.

      NOW, THEREFORE, in consideration of the mutual promises, agreements and representations contained herein, and intending to be legally bound hereby, the Parties agree as follows:

     1.  Definitions . As used in this Agreement, any reference to DOBRIEN shall include himself and, in their capacities as such, his attorneys, heirs, administrators, representatives, executors, legatees, successors, agents and assigns. Any reference to TRM shall include itself, its predecessors, successors, controlling or related entities, affiliates, divisions, subsidiaries, employee benefit plans, managing agents, and joint ventures, and, in their capacities as such, all of its past, present and future representatives, agents, assigns, attorneys, directors, officers, partners, shareholders and employees (except DOBRIEN). The term “Person” shall mean a natural person, corporation, partnership, trust, estate, joint venture, sole proprietorship, government (and any branch or subdivision thereof), governmental agency, association, cooperative or other entity. The term “Effective Date” shall mean the eighth (8 ^th ) day after DOBRIEN executes this Agreement and does not revoke it.

     2.  TRM’s Obligations . In consideration for this Agreement, in exchange for the release set forth in paragraph 5 below, and subject to DOBRIEN’s performance of all terms of this Agreement, TRM agrees that:

          (a) TRM shall pay, DOBRIEN the sums of (i) $170,000 as a severance payment, (ii) $20,000 as a previously awarded but unpaid “stay bonus”, and (iii) accrued but unpaid salary from August 1, 2007 through Termination Date. TRM will not contest any claim for unemployment that DOBRIEN files with the state.

          (b) TRM may engage DOBRIEN for consulting services for a period of six months from his Termination Date at a rate of $200 per hour pursuant to a separate consulting agreement (the “Consulting Agreement”). DOBRIEN shall be allowed to retain the laptop computer provided by TRM, but agrees that, at the end of the six month consulting agreement he

shall destroy all TRM information on the laptop in accordance with paragraph 4(c) herein. Should TRM require DOBRIEN’s consulting services for any reason, including litigation, after the consulting term has expired, it shall compensate DOBRIEN at the rate of $200 per hour plus expenses. DOBRIEN agrees to make himself available as reasonably as may be required to provide services as requested by TRM.

          (c) TRM will take all such corporate action as is necessary to cause the vesting of all unvested restricted stock or stock options awarded to DOBRIEN on or before August 31, 2007. TRM shall additionally take necessary corporate action to extend the expiration date of all stock options to five years from the Termination Date. DOBRIEN acknowledges that, as a result of such extension, any incentive stock options held by him will no longer be treated as incentive stock options under the Internal Revenue Code of 1986, as amended, but rather as non-incentive stock options.

          (d) Provided that DOBRIEN makes an election to continue health insurance coverage in accordance with the requirements of COBRA, and subject to the terms and conditions of TRM’s group health insurance plan, TRM shall pay the employer’s share and the employee’s share of DOBRIEN’s health insurance premium for family coverage for one year from the Termination Date. DOBRIEN’s participation in TRM’s healthcare plan shall be otherwise subject to provisions of COBRA.

          (e) TRM shall pay the fee for one year of outplacement services at Lee Hecht Harrison or such other firm as is mutually agreeable, provided that such fee shall not exceed Fourteen Thousand Dollars ($14,000).

     3.  Consideration Sufficient for Agreement . DOBRIEN acknowledges that the payments and other consideration provided pursuant to paragraph 2 are in lieu of any other amount or benefit that would otherwise be due to him from TRM upon separation. DOBRIEN has received separate payment for any accrued but unused vacation pay.

     4.  DOBRIEN’s Obligations . In consideration of this Agreement, and in addition to the release set forth in paragraph 5 below, and his other covenants herein, DOBRIEN agrees that he:

          (a) Shall not , except with TRM’s express prior written consent, directly or indirectly, for his own benefit or the benefit of any Person, communicate, disclose, divulge, publish or otherwise express to any Person, or use for his own benefit or the benefit of any other Person, any trade secrets, confidential or proprietary knowledge or information, no matter when or how acquired, concerning the conduct and details of TRM’s business, including without limitation names of customers and suppliers, marketing methods, trade secrets, policies, prospects and financial condition;

          (b) Shall immediately resign from all positions held by him, if any, as an officer or director of TRM and its subsidiaries and affiliates, and from all positions held by him, if any, as a fiduciary with respect to any employee benefit plan of TRM or its subsidiaries and affiliates. DOBRIEN, waives, relinquishes and abandons any and all employment with TRM (or its

parent companies, subsidiaries, sister corporations, partners, related entities, contractors or sub-contractors) now and forevermore;

          (c) Shall immediately return to TRM, to the extent he has not already done so, all correspondence, files, customer and prospect lists, notes, computer data, technical data and other documents and materials that contain any such confidential or proprietary knowledge or information, without retaining any copies of such materials for himself;

          (d) Shall, except as provided in paragraph 2(b), return all other property belonging to TRM, including, but not limited to, all business machines, computers, computer hardware and software programs, telephones (cellular, mobile or other), pagers, keys, card keys and credit cards;

          (e) Shall fully cooperate with TRM as needed in the future with respect to any legal matters involving TRM or any of its subsidiaries and affiliates, provided that TRM will use good faith efforts to give DOBRIEN reasonable advance notice of the need for such cooperation, and TRM shall reimburse DOBRIEN’s reasonable costs, including attorney fees, in connection with any lawsuit(s) or investigation(s) in which DOBRIEN may be named as a defendant in his capacity as an officer of TRM; and

          (f) Shall confirm that Section 3 of the Employment Agreement, dated August 12, 2005 between DOBRIEN and TRM (the “Former Employment Agreement”) shall remain in full force and effect and agree to continue to be bound by Section 3 of the Former Employment Agreement, except to the extent that such provision is directly contradicted by a provision contained herein.

     5.  Release of Claims. DOBRIEN hereby irrevocably and unconditionally releases and forever discharges TRM and each and all of its parents, subsidiaries, sister corporations, partners, officers, agents, directors, shareholders, supervisors, employees, representatives, attorneys, insurers, and their successors and assigns and all persons acting by, through, under, or in concert with any of them from any and all charges, grievances, complaints, claims, and liabilities of any kind or nature whatsoever, known or unknown, suspected or unsuspected (hereinafter referred to as “claim” or “claims”) which DOBRIEN at any time heretofore had or claimed to have or which DOBRIEN may have or claim to have regarding events that have occurred as of the effective date of this Agreement, including, but not limited to, any and all claims related or in any manner incidental to DOBRIEN’s employment, the termination of his employment at TRM, or stock options. All claims (including related attorney fees and costs) are forever barred by this Agreement and without regard to whether those claims are based on any alleged breach of a duty arising in contract or tort, by statute or regulation; any alleged unlawful act, including, but not limited to, unpaid wages, benefits or other compensation or penalty, liquidated damages, employment discrimination, worker