Exhibit 10.25

CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”) is entered into as of July 9, 2014, by
and between ZUMIEZ SERVICES INC., a Washington corporation (“Borrower”), and
WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

RECITALS

Borrower has requested that Bank extend or continue credit to Borrower as
described below, and Bank has agreed to provide such credit to Borrower on the
terms and conditions contained herein.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Bank and Borrower hereby agree as follows:

ARTICLE I

CREDIT TERMS

SECTION 1.1. LINE OF CREDIT.

(a) Line of Credit. Subject to the terms and conditions of this Agreement, Bank
hereby agrees to make advances to Borrower from time to time up to and including
September 1, 2016, not to exceed at any time the aggregate principal amount of
Twenty Five Million Dollars ($25,000,000.00) (“Line of Credit”), the proceeds of
which shall be used to finance Borrower’s working capital requirements.
Borrower’s obligation to repay advances under the Line of Credit shall be
evidenced by a promissory note dated as of July 09, 2014 (“Line of Credit
Note”), all terms of which are incorporated herein by this reference.

(b) Line of Credit Increase. Borrower may, at any time during the term of the
Line of Credit and upon at least thirty (30) days written notice to Bank,
request that the Line of Credit be increased, and Bank agrees to make advances
during the term of the Line of Credit up to the aggregate principal amount of
Thirty Five Million Dollars ($35,000,000.00) (“Line of Credit Increase”)
provided that: (i) Bank has received a payment of Ten Thousand Dollars
($10,000.00) from Borrower for the Line of Credit Increase, (ii) no Event of
Default under this Agreement shall have occurred and be continuing,
(iii) Borrower and Zumiez Inc. (“Guarantor”, and Borrower and Guarantor, each a
“Credit Party”) is in compliance with all covenants and conditions under this
Agreement, (iv) all representations and warranties made by each Credit Party
under this Agreement are true and correct at all times, and (v) each Credit
Party has executed and delivered to Bank such documents as Bank may require in
its sole discretion, including any amendments to this Agreement, promissory
notes, and other such agreements, documents, or instruments necessary to reflect
the terms and conditions of the Line of Credit Increase, as further set forth on
Exhibit A attached hereto.

(c) Commercial Letter of Credit Subfeature. As a subfeature under the Line of
Credit, Bank agrees from time to time during the term thereof to issue or cause
an affiliate to issue sight letters of credit for the account of Borrower to
finance Borrower’s working capital requirements (“Subfeature Commercial LCs”);
provided however, that the aggregate undrawn amount of all outstanding
Subfeature Commercial LCs shall not at any time exceed Ten Million Dollars
($10,000,000.00). The form and substance of each Subfeature Commercial LC shall
be subject to approval by Bank, in its sole discretion. Each Subfeature
Commercial LC shall be issued for

 

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a term not to exceed one hundred twenty (120) days, as designated by Borrower;
provided however, that no Subfeature Commercial LC shall have an expiration date
more than one hundred twenty (120) days beyond the maturity date of the Line of
Credit. The undrawn amount of all Subfeature Commercial LCs shall be reserved
under the Line of Credit and shall not be available for borrowings thereunder.
Each Subfeature Commercial LC shall be subject to the additional terms and
conditions of Bank’s standard Commercial Letter of Credit agreement and all
applications and related documents required by Bank in connection with the
issuance thereof. Each drawing paid under a Subfeature Commercial LC shall be
deemed an advance under the Line of Credit and shall be repaid by Borrower in
accordance with the terms and conditions of this Agreement applicable to such
advances; provided however, that if advances under the Line of Credit are not
available, for any reason, at the time any drawing is paid, then Borrower shall
immediately pay to Bank the full amount drawn, together with interest thereon
from the date such drawing is paid to the date such amount is fully repaid by
Borrower, at the rate of interest applicable to advances under the Line of
Credit.

(d) Standby Letter of Credit Subfeature. As a subfeature under the Line of
Credit, Bank agrees from time to time during the term thereof to issue or cause
an affiliate to issue standby letters of credit for the account of Borrower to
back financial instruments (“Subfeature Standby LCs”); provided however, that
the aggregate undrawn amount of all outstanding Subfeature Standby LCs shall not
at any time exceed Five Million Dollars ($5,000,000.00). The form and substance
of each Subfeature Standby LC shall be subject to approval by Bank, in its sole
discretion. Each Subfeature Standby LC shall be issued for a term not to exceed
three hundred sixty five (365) days, as designated by Borrower; provided
however, that no Subfeature Standby LC shall have an expiration date more than
three hundred sixty five (365) days beyond the maturity date of the Line of
Credit. The undrawn amount of all Subfeature Standby LCs shall be reserved under
the Line of Credit and shall not be available for borrowings thereunder. Each
Subfeature Standby LC shall be subject to the additional terms and conditions of
Bank’s standard Standby Letter of Credit agreement and all applications and
related documents required by Bank in connection with the issuance thereof. Each
drawing paid under a Subfeature Standby LC shall be deemed an advance under the
Line of Credit and shall be repaid by Borrower in accordance with the terms and
conditions of this Agreement applicable to such advances; provided however, that
if advances under the Line of Credit are not available, for any reason, at the
time any drawing is paid, then Borrower shall immediately pay to Bank the full
amount drawn, together with interest thereon from the date such drawing is paid
to the date such amount is fully repaid by Borrower, at the rate of interest
applicable to advances under the Line of Credit.

(e) Borrowing and Repayment. Borrower may from time to time during the term of
the Line of Credit borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions contained
herein or in the Line of Credit Note or any other document or instrument
required hereby; provided however, that the total outstanding borrowings under
the Line of Credit shall not at any time exceed the maximum principal amount
available thereunder, as set forth above.

SECTION 1.2. INTEREST/FEES.

(a) Interest. The outstanding principal balance of each credit subject hereto
shall bear interest at the rate of interest set forth in each promissory note or
other instrument or document executed in connection therewith.

 

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(b) Computation and Payment. Interest shall be computed on the basis of a
360-day year, actual days elapsed. Interest shall be payable at the times and
place set forth in each promissory note or other instrument or document required
hereby.

(c) Letter of Credit Fees. Borrower shall pay to Bank fees upon the issuance of
each standby or commercial letter of credit issued under any credit subject
hereto, upon the payment or negotiation of each drawing under any such letter of
credit and upon the occurrence of any other activity with respect to any such
letter of credit (including without limitation, the transfer, amendment or
cancellation of any such letter of credit) determined in accordance with Bank’s
standard fees and charges then in effect for such activity.

SECTION 1.3. COLLECTION OF PAYMENTS. Except to the extent expressly specified
otherwise in any Loan Document (as defined in Section 2.2 hereof) other than
this Agreement, Borrower authorizes Bank to collect all amounts due to Bank from
Borrower under this Agreement or any other Loan Document (whether for principal,
interest or fees, or as reimbursement of drafts paid or other payments made by
Bank under any credit subject to this Agreement) by debiting any deposit account
maintained by Borrower with Bank for the full amount thereof. Should there be
insufficient funds in Borrower’s deposit accounts with Bank to pay all such sums
when due, the full amount of such deficiency shall be immediately due and
payable by Borrower.

SECTION 1.4. COLLATERAL.

As security for all indebtedness and other obligations of Borrower to Bank
subject hereto, Borrower hereby grants to Bank security interests of first
priority in all Borrower’s accounts receivable and other rights to payment,
general intangibles, inventory and equipment.

As security for all indebtedness and other obligations of Borrower to Bank
subject hereto, Borrower shall cause Guarantor to grant to Bank security
interests of first priority in all accounts receivable and other rights to
payment, general intangibles, inventory and equipment.

All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds or mortgages, and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank. Borrower shall pay to Bank immediately upon demand the
full amount of all charges, costs and expenses (to include fees paid to third
parties and all allocated costs of Bank personnel), expended or incurred by Bank
in connection with any of the foregoing security, including without limitation,
filing and recording fees and costs of appraisals, audits and title insurance.

SECTION 1.5. GUARANTIES. The payment and performance of all indebtedness and
other obligations of Borrower to Bank shall be guaranteed jointly and severally
by Guarantor, as evidenced by and subject to the terms of guaranties in form and
substance satisfactory to Bank.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Each Credit Party makes the following representations and warranties to Bank,
which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of all obligations of Borrower to Bank
subject to this Agreement.

 

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SECTION 2.1. LEGAL STATUS. Each Credit Party is a corporation, duly organized
and existing and in good standing under the laws of Washington, and is qualified
or licensed to do business (and is in good standing as a foreign corporation, if
applicable) in all jurisdictions in which such qualification or licensing is
required or in which the failure to so qualify or to be so licensed could have a
material adverse effect on such Credit Party.

SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each promissory
note, contract, instrument and other document required hereby or at any time
hereafter delivered to Bank in connection herewith (collectively, the “Loan
Documents”) have been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the party which executes the same,
enforceable in accordance with their respective terms.

SECTION 2.3. NO VIOLATION. The execution, delivery and performance by each
Credit Party of each of the Loan Documents do not violate any provision of any
law or regulation, or contravene any provision of the Articles of Incorporation
or By-Laws of such Credit Party, or result in any breach of or default under any
contract, obligation, indenture or other instrument to which such Credit Party
is a party or by which such Credit Party may be bound.

SECTION 2.4. LITIGATION. There are no pending, or to the best of each Credit
Party’s knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of such Credit Party other than those disclosed
by each Credit Party to Bank in writing prior to the date hereof.

SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The annual financial statement
of Guarantor dated February 1, 2014, and all interim financial statements
delivered to Bank since said date, true copies of which have been delivered by
Guarantor to Bank prior to the date hereof, (a) are complete and correct and
present fairly the financial condition of Guarantor, (b) disclose all
liabilities of Guarantor that are required to be reflected or reserved against
under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) have been prepared in accordance with
generally accepted accounting principles consistently applied. Since the dates
of such financial statements there has been no material adverse change in the
financial condition of Guarantor, nor has Guarantor mortgaged, pledged, granted
a security interest in or otherwise encumbered any of its assets or properties
except in favor of Bank or as otherwise permitted by Bank in writing.

SECTION 2.6. INCOME TAX RETURNS. Each Credit Party has no knowledge of any
pending assessments or adjustments of its income tax payable with respect to any
year.

SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower obligations
subject to this Agreement to any other obligation of Borrower.

SECTION 2.8. PERMITS, FRANCHISES. Each Credit Party possesses, and will
hereafter possess, all permits, consents, approvals, franchises and licenses
required and rights to all trademarks, trade names, patents, and fictitious
names, if any, necessary to enable it to conduct the business in which it is now
engaged in compliance with applicable law.

 

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SECTION 2.9. ERISA. Each Credit Party is in compliance in all material respects
with all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time (“ERISA”); each Credit Party
has not violated any provision of any defined employee pension benefit plan (as
defined in ERISA) maintained or contributed to by such Credit Party (each, a
“Plan”); no Reportable Event as defined in ERISA has occurred and is continuing
with respect to any Plan initiated by either Credit Party; each Credit Party has
met its minimum funding requirements under ERISA with respect to each Plan; and
each Plan will be able to fulfill its benefit obligations as they come due in
accordance with the Plan documents and under generally accepted accounting
principles.

SECTION 2.10. OTHER OBLIGATIONS. Each Credit Party is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.

SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by either Credit Party
to Bank in writing prior to the date hereof, each Credit Party is in compliance
in all material respects with all applicable federal or state environmental,
hazardous waste, health and safety statutes, and any rules or regulations
adopted pursuant thereto, which govern or affect any of such Credit Party’s
operations and/or properties, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Resource Conservation
and Recovery Act of 1976, and the Federal Toxic Substances Control Act, as any
of the same may be amended, modified or supplemented from time to time. None of
the operations of each Credit Party is the subject of any federal or state
investigation evaluating whether any remedial action involving a material
expenditure is needed to respond to a release of any toxic or hazardous waste or
substance into the environment. Neither Credit Party has any material contingent
liability in connection with any release of any toxic or hazardous waste or
substance into the environment.

ARTICLE III

CONDITIONS

SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank
to extend any credit contemplated by this Agreement is subject to the
fulfillment to Bank’s satisfaction of all of the following conditions:

(a) Approval of Bank Counsel. All legal matters incidental to the extension of
credit by Bank shall be satisfactory to Bank’s counsel.

(b) Documentation. Bank shall have received, in form and substance satisfactory
to Bank, each of the following, duly executed:

 

  (i) This Agreement and each promissory note or other instrument or document
required hereby.

 

  (ii) Corporation Resolution: Borrowing.

 

  (iii) Corporation Resolution: Continuing Guaranty.

 

  (iv) Corporate Resolution: Third Party Collateral.

 

  (v) Certificate of Incumbency (2).

 

  (vi) Continuing Security Agreement: Rights to Payment and Inventory.

 

  (vii) Security Agreement: Equipment.

 

  (viii) Third Party Security Agreement: Rights to Payment and Inventory.

 

  (ix) Third Party Security Agreement: Equipment.

 

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  (x) Fax and E-Mail Transmission and Acceptance of Requests, Instructions,
Documents and Information.

 

  (xi) Facsimile Transmissions of Applications for issuance of, and Amendment
to, Letters of Credit.

 

  (xii) Commercial Letter of Credit Agreement.

 

  (xiii) Standby Letter of Credit Agreement.

 

  (xiv) Continuing Guaranty from each guarantor listed in Section 1.5 hereof.

 

  (xv) Such other documents as Bank may require under any other Section of this
Agreement.

(c) Financial Condition. There shall have been no material adverse change, as
determined by Bank, in the financial condition or business of Borrower or any
guarantor hereunder, if any, nor any material decline, as determined by Bank, in
the market value of any collateral required hereunder or a substantial or
material portion of the assets of Borrower or any such guarantor, if any.

(d) Insurance. Each Credit Party shall have delivered to Bank evidence of
insurance coverage, in form, substance, amounts, covering risks and issued by
companies satisfactory to Bank, and where required by Bank, with lender loss
payable endorsements in favor of Bank.

SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to
make each extension of credit requested by Borrower hereunder shall be subject
to the fulfillment to Bank’s satisfaction of each of the following conditions:

(a) Compliance. The representations and warranties contained herein and in each
of the other Loan Documents shall be true on and as of the date of the signing
of this Agreement and on the date of each extension of credit by Bank pursuant
hereto, with the same effect as though such representations and warranties had
been made on and as of each such date, and on each such date, no Event of
Default as defined herein, and no condition, event or act which with the giving
of notice or the passage of time or both would constitute such an Event of
Default, shall have occurred and be continuing or shall exist.

(b) Documentation. Bank shall have received all additional documents which may
be required in connection with such extension of credit, including without
limitation, the following:

 

  (i) For the issuance of a commercial letter of credit under any credit subject
to this Agreement, Bank’s standard Application for Commercial Letter of Credit.

 

  (ii) For the issuance of a standby letter of credit under any credit subject
to this Agreement, Bank’s standard Application for Standby Letter of Credit.

(c) Payment of Fees. Bank shall have received payment in full of any fee
required by any of the Loan Documents to be paid at the time such credit
extension is made.

 

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ARTICLE IV

AFFIRMATIVE COVENANTS

Borrower covenants that so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or
other liabilities due under any of the Loan Documents at the times and place and
in the manner specified therein.

SECTION 4.2. ACCOUNTING RECORDS. Each Credit Party shall maintain adequate books
and records in accordance with generally accepted accounting principles
consistently applied, and permit any representative of Bank, at any reasonable
time, to inspect, audit and examine such books and records, to make copies of
the same, and to inspect the properties of each Credit Party.

SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following, in form
and detail satisfactory to Bank:

(a) not later than 90 days after and as of the end of each fiscal year, an
unqualified audited financial statement of Guarantor on a consolidated and
consolidating basis, prepared by a certified public accountant acceptable to
Bank in accordance with generally accepted accounting principles, to include
balance sheet, income statement and statement of cash flows;

(b) not later than 45 days after and as of the end of each fiscal quarter, a
financial statement of Guarantor on a consolidated and consolidating basis,
prepared by Guarantor, to include balance sheet, income statement and statement
of cash flows;

(c) contemporaneously with each annual and fiscal quarter end financial
statement of Guarantor required hereby, a certificate of the president or chief
financial officer of Guarantor that said financial statements are accurate and
that there exists no Event of Default nor any condition, act or event which with
the giving of notice or the passage of time or both would constitute an Event of
Default;

(d) from time to time such other information as Bank may reasonably request.

SECTION 4.4. COMPLIANCE. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which each Credit Party is organized and/or which govern each Credit
Party’s continued existence and with the requirements of all laws, rules,
regulations and orders of any governmental authority applicable to such Credit
Party and/or its business.

SECTION 4.5. INSURANCE. Maintain and keep in force, for each business in which
each Credit Party is engaged, insurance of the types and in amounts customarily
carried in similar lines of business, including but not limited to fire,
extended coverage, public liability, flood, and, if required, seismic property
damage and workers’ compensation, with all such insurance carried with companies
and in amounts satisfactory to Bank, and deliver to Bank from time to time at
Bank’s request schedules setting forth all insurance then in effect, together
with a lender’s loss payee endorsement for all such insurance naming Bank as a
lender loss payee.

SECTION 4.6. FACILITIES. Keep all properties useful or necessary to each Credit
Party’s business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.

 

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SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as each Credit Party may in good
faith contest or as to which a bona fide dispute may arise, and (b) for which
each Credit Party has made provision, to Bank’s satisfaction, for eventual
payment thereof in the event such Credit Party is obligated to make such
payment.

SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against each Credit Party with a claim in
excess of $500,000.00.

SECTION 4.9. FINANCIAL CONDITION. Guarantor shall maintain its financial
condition as follows using generally accepted accounting principles consistently
applied and used consistently with prior practices (except to the extent
modified by the definitions herein), with compliance determined commencing with
Guarantor’s financial statements for the period ending May 3, 2014:

(a) Quick Ratio not less than 1.25 to 1.0 at each fiscal quarter end, with
“Quick Ratio” defined as the sum of cash plus cash equivalents, marketable
securities and accounts receivable divided by the aggregate amount of all Credit
Extensions under the Line of Credit, with “Credit Extensions” definded as all
outstanding principal plus all outstanding Subfeature Commercial LCs and
Subfeature Standby LCs.

(b) Net income after taxes not less than $1.00 on a rolling 4-quarter basis
determined as of each fiscal quarter end, based on the sum of the results of
four consecutive quarters consisting of the present quarters and the three
preceding quarters; provided that there shall be added to net income all charges
for impairment of goodwill, other intangibles, and up to an aggregate of
$5,000,000.00 of store asset impairment on the balance sheet of Guarantor.

SECTION 4.10. NOTICE TO BANK. Promptly (but in no event more than five (5) days
after the occurrence of each such event or matter) give written notice to Bank
in reasonable detail of: (a) the occurrence of any Event of Default, or any
condition, event or act which with the giving of notice or the passage of time
or both would constitute an Event of Default; (b) any change in the name or the
organizational structure of each Credit Party; (c) the occurrence and nature of
any Reportable Event or Prohibited Transaction, each as defined in ERISA, or any
funding deficiency with respect to any Plan; or (d) any termination or
cancellation of any insurance policy which each Credit Party is required to
maintain, or any uninsured or partially uninsured loss through liability or
property damage, or through fire, theft or any other cause affecting each Credit
Party’s property.

 

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ARTICLE V

NEGATIVE COVENANTS

Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank’s prior written
consent:

SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article I hereof.

SECTION 5.2. OTHER INDEBTEDNESS. Each Credit Party will not create, incur,
assume or permit to exist any indebtedness or liabilities resulting from
borrowings, loans or advances, whether secured or unsecured, matured or
unmatured, liquidated or unliquidated, joint or several, except (a) the
liabilities of Borrower to Bank, and (b) any other liabilities of Borrower
existing as of, and disclosed to Bank prior to, the date hereof. Additionally,
Guarantor shall cause its subsidiary, Snowboard Dachstein Tauern GmbH, not to
create, incur, assume or permit to exist any indebtedness or liabilities
resulting from borrowings, loans or advances, whether secured or unsecured,
matured or unmatured, liquidated or unliquidated, joint or several, except
indebtedness not to exceed an aggregate of €10,000,000.00 at any time
outstanding.

SECTION 5.3. GUARANTIES. Each Credit Party will not guarantee or become liable
in any way as surety, endorser (other than as endorser of negotiable instruments
for deposit or collection in the ordinary course of business), accommodation
endorser or otherwise for, nor pledge or hypothecate any assets of such Credit
Party as security for, any liabilities or obligations of any other person or
entity, except any of the foregoing in favor of Bank.

SECTION 5.4. LOANS, ADVANCES, INVESTMENTS. Each Credit Party will not make any
loans or advances to or investments in any person or entity, except any of the
foregoing existing as of, and disclosed to Bank prior to, the date hereof, and
additional loans or advances in amounts not to exceed an aggregate of
$500,000.00 outstanding at any one time.

SECTION 5.5. PLEDGE OF ASSETS. Each Credit Party will not mortgage, pledge,
grant or permit to exist a security interest in, or lien upon, all or any
portion of such Credit Party’s assets now owned or hereafter acquired, except
any of the foregoing in favor of Bank or which is existing as of, and disclosed
to Bank in writing prior to, the date hereof.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.1. The occurrence of any of the following shall constitute an “Event
of Default” under this Agreement:

(a) Borrower shall fail to pay when due any principal, interest, fees or other
amounts payable under any of the Loan Documents.

(b) Any financial statement or certificate furnished to Bank in connection with,
or any representation or warranty made by Borrower or any other party under this
Agreement or any other Loan Document shall prove to be incorrect, false or
misleading in any material respect when furnished or made.

(c) Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those specifically described as an “Event of Default” in this
section 6.1), and with respect to any such default that by its nature can be
cured, such default shall continue for a period of twenty (20) days from its
occurrence.

 

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(d) Any default in the payment or performance of any obligation, or any defined
event of default, under the terms of any contract, instrument or document (other
than any of the Loan Documents) pursuant to which Borrower, any guarantor
hereunder or any general partner or joint venturer in Borrower if a partnership
or joint venture (with each such guarantor, general partner and/or joint
venturer referred to herein as a “Third Party Obligor”) has incurred any debt or
other liability to any person or entity, including Bank.

(e) Borrower or any Third Party Obligor shall become insolvent, or shall suffer
or consent to or apply for the appointment of a receiver, trustee, custodian or
liquidator of itself or any of its property, or shall generally fail to pay its
debts as they become due, or shall make a general assignment for the benefit of
creditors; Borrower or any Third Party Obligor shall file a voluntary petition
in bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Reform Act,
Title 11 of the United States Code, as amended or recodified from time to time
(“Bankruptcy Code”), or under any state or federal law granting relief to
debtors, whether now or hereafter in effect; or Borrower or any Third Party
Obligor shall file an answer admitting the jurisdiction of the court and the
material allegations of any involuntary petition; or Borrower or any Third Party
Obligor shall be adjudicated a bankrupt, or an order for relief shall be entered
against Borrower or any Third Party Obligor by any court of competent
jurisdiction under the Bankruptcy Code or any other applicable state or federal
law relating to bankruptcy, reorganization or other relief for debtors.

(f) The filing of a notice of judgment lien against Borrower or any Third Party
Obligor; or the recording of any abstract of judgment against Borrower or any
Third Party Obligor in any county in which Borrower or such Third Party Obligor
has an interest in real property; or the service of a notice of levy and/or of a
writ of attachment or execution, or other like process, against the assets of
Borrower or any Third Party Obligor; or the entry of a judgment against Borrower
or any Third Party Obligor; or any involuntary petition or proceeding pursuant
to the Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower or any Third Party Obligor.

(g) There shall exist or occur any event or condition that Bank in good faith
believes impairs, or is substantially likely to impair, the prospect of payment
or performance by Borrower, any Third Party Obligor, or the general partner of
either if such entity is a partnership, of its obligations under any of the Loan
Documents.

(h) The death or incapacity of Borrower or any Third Party Obligor if an
individual. The dissolution or liquidation of Borrower or any Third Party
Obligor if a corporation, partnership, joint venture or other type of entity; or
Borrower or any such Third Party Obligor, or any of its directors, stockholders
or members, shall take action seeking to effect the dissolution or liquidation
of Borrower or such Third Party Obligor.

(i) Any change in control of Borrower or any entity or combination of entities
that directly or indirectly control Borrower, with “control” defined as
ownership of an aggregate of twenty-five percent (25%) or more of the common
stock, members’ equity or other ownership interest (other than a limited
partnership interest).

SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a) all
indebtedness of Borrower under each of the Loan Documents, any term thereof to
the contrary notwithstanding, shall at Bank’s option and without notice become
immediately due and payable

 

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without presentment, demand, protest or notice of dishonor, all of which are
hereby expressly waived by Borrower; (b) the obligation, if any, of Bank to
extend any further credit under any of the Loan Documents shall immediately
cease and terminate; and (c) Bank shall have all rights, powers and remedies
available under each of the Loan Documents, or accorded by law, including
without limitation the right to resort to any or all security for any credit
subject hereto and to exercise any or all of the rights of a beneficiary or
secured party pursuant to applicable law. All rights, powers and remedies of
Bank may be exercised at any time by Bank and from time to time after the
occurrence of an Event of Default, are cumulative and not exclusive, and shall
be in addition to any other rights, powers or remedies provided by law or
equity.

ARTICLE VII

MISCELLANEOUS

SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.

SECTION 7.2. NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:

 

BORROWER:    ZUMIEZ SERVICES INC.    4001 204TH Street SW    Lynnwood, WA 98036
BANK:    WELLS FARGO BANK, NATIONAL ASSOCIATION    MAC P6540-126    999 3rd
Avenue, 12th Floor    Seattle, WA 98104

or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys’ fees (to include outside
counsel fees and all allocated costs of Bank’s in-house counsel), expended or
incurred by Bank in connection with (a) the negotiation and preparation of this
Agreement and the other Loan Documents, Bank’s continued administration hereof
and thereof, and the preparation of any amendments and waivers hereto and
thereto, (b) the enforcement of Bank’s rights and/or the collection of any
amounts which become due to Bank under any of the Loan Documents, and (c) the
prosecution or defense of any action in any way related to any of the Loan
Documents, including without limitation, any action for declaratory relief,
whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection

 

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with any bankruptcy proceeding (including without limitation, any adversary
proceeding, contested matter or motion brought by Bank or any other person)
relating to Borrower or any other person or entity.

SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interests or rights hereunder without
Bank’s prior written consent. Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in,
Bank’s rights and benefits under each of the Loan Documents. In connection
therewith, Bank may disclose all documents and information which Bank now has or
may hereafter acquire relating to any credit subject hereto, Borrower or its
business, any guarantor hereunder or the business of such guarantor, if any, or
any collateral required hereunder.

SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan
Documents constitute the entire agreement between Borrower and Bank with respect
to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only in writing signed by each
party hereto.

SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered
into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.

SECTION 7.7. TIME. Time is of the essence of each and every provision of this
Agreement and each other of the Loan Documents.

SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

SECTION 7.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement.

SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Washington.

SECTION 7.11. ARBITRATION.

(a) Arbitration. The parties hereto agree, upon demand by any party, to submit
to binding arbitration all claims, disputes and controversies between or among
them (and their respective employees, officers, directors, attorneys, and other
agents), whether in tort, contract or otherwise in any way arising out of or
relating to (i) any credit subject hereto, or any of the Loan Documents, and
their negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional credit. In the event of
a court ordered arbitration, the party requesting arbitration shall be
responsible for timely filing the demand for arbitration and

 

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paying the appropriate filing fee within 30 days of the abatement order or the
time specified by the court. Failure to timely file the demand for arbitration
as ordered by the court will result in that party’s right to demand arbitration
being automatically terminated.

(b) Governing Rules. Any arbitration proceeding will (i) proceed in a location
in Washington selected by the American Arbitration Association (“AAA”); (ii) be
governed by the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the documents
between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA’s commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA’s optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to herein, as applicable, as the “Rules”). If
there is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. §91 or any
similar applicable state law.

(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.

(d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which
the amount in controversy is $5,000,000.00 or less will be decided by a single
arbitrator selected according to the Rules, and who shall not render an award of
greater than $5,000,000.00. Any dispute in which the amount in controversy
exceeds $5,000,000.00 shall be decided by majority vote of a panel of three
arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral
attorney licensed in the State of Washington or a neutral retired judge of the
state or federal judiciary of Washington, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator’s discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of Washington and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Washington Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The

 

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institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.

(e) Discovery. In any arbitration proceeding, discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters
directly relevant to the dispute being arbitrated and must be completed no later
than 20 days before the hearing date. Any requests for an extension of the
discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is
essential for the party’s presentation and that no alternative means for
obtaining information is available.

(f) Class Proceedings and Consolidations. No party hereto shall be entitled to
join or consolidate disputes by or against others in any arbitration, except
parties who have executed any Loan Document, or to include in any arbitration
any dispute as a representative or member of a class, or to act in any
arbitration in the interest of the general public or in a private attorney
general capacity.

(g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs
and expenses of the arbitration proceeding.

(h) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators
and the parties shall take all action required to conclude any arbitration
proceeding within 180 days of the filing of the dispute with the AAA. No
arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties
potentially applies to a dispute, the arbitration provision most directly
related to the Loan Documents or the subject matter of the dispute shall
control. This arbitration provision shall survive termination, amendment or
expiration of any of the Loan Documents or any relationship between the parties.

(i) Small Claims Court. Notwithstanding anything herein to the contrary, each
party retains the right to pursue in Small Claims Court any dispute within that
court’s jurisdiction. Further, this arbitration provision shall apply only to
disputes in which either party seeks to recover an amount of money (excluding
attorneys’ fees and costs) that exceeds the jurisdictional limit of the Small
Claims Court.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.

 

ZUMIEZ SERVICES INC.    

WELLS FARGO BANK,

  NATIONAL ASSOCIATION

By:  

 

    By:  

 

  Christopher C. Work, Treasurer       Heather Ray, Vice President

Agreed and acknowledged to with respect to the provisions herein applicable to
Zumiez Inc.

 

ZUMIEZ INC. By:  

 

  Christopher C. Work, Chief Financial Officer

 

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Exhibit A

Line of Credit Increase Terms and Conditions

All capitalized terms used in this Exhibit A but not defined herein shall have
the respective meanings set forth in the Agreement. Pursuant to Section 1.1(b)
of the Agreement, the Line of Credit Increase is subject to certain additional
terms and conditions, including, but not limited to, the following:

 

Interest:   

At a fluctuating rate per annum determined by Bank to be one percent (1.00%)
above Daily Three Month LIBOR or at a fixed rate per annum determined by Bank to
be one percent (1.00%) above LIBOR in effect on the first day of the applicable
Fixed Rate Term.

 

Unused

Commitment Fee:

  

Borrower shall pay an unused commitment fee of one quarter percent (0.25%) per
annum. The unused commitment fee shall be based on the average daily, unused
amount of the commitment, and shall be calculated by Bank on a quarterly basis
and due and payable by Borrower in arrears.

 

Financial

Covenants:

  

1.      Total Liabilities divided by Tangible Net Worth not greater than 1.0 to
1.0 at each quarter end, with “Total Liabilities” defined as the aggregate of
current liabilities and non-current liabilities less subordinated debt, and with
“Tangible Net Worth” defined as the aggregate of total stockholders’ equity less
any intangible assets and less any loans or advances to, or investments in, any
related entities or individuals.

 

2.      Net income after taxes not less than $1.00 on a rolling 4-quarter basis
determined as of each fiscal quarter end, based on the sum of the results of
four consecutive quarters consisting of the present quarters and the three
preceding quarters; provided that there shall be added to net income all charges
for impairment of goodwill, other intangibles, and up to an aggregate of
$5,000,000.00 of store asset impairment on the balance sheet of Guarantor.

 

3.      “Collateral Coverage Ratio” where, as of each month end, the aggregate
sum of all amounts outstanding under the Line of Credit balance plus all
outstanding Subfeature Commercial LCs and Subfeature Standby LCs may not at any
time exceed (a) 80% of gross credit cards receivable plus (b) the lesser of (i)
50% of gross inventory or (ii) 75% of net orderly liquidation value of inventory
per inventory appraisal. Borrower acknowledges that said Collateral Coverage
Ratio shall be determined by Bank with the understanding that, among other
items, the inventory appraisal required below in section 1 of Conditions
Precedent would support the advance rate listed in (b). If such support is not
provided by the inventory appraisal, Bank, in its sole discretion, may reduce
the advance rate listed in (b).

 

The Guarantor shall only be obligated to comply with the foregoing financial
covenants at the time an advance is requested under the revolving loan and
sub-facilities and at all times any principal balance is outstanding and/or
letter of credit whether commercial or standby has been issued by Bank for the
benefit of the Borrower.

 

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Reporting:   

In addition to the existing reporting requirements set forth in the Agreement,
Guarantor shall provide Bank the following :

 

1.      Monthly Guarantor prepared report showing a detailed calculation of the
result under the Collateral Coverage Ratio, including, but not limited to gross
credit cards receivable and gross inventory balances.

 

Conditions

Precedent:

  

1.      Satisfactory completion and review of an inventory appraisal acceptable
to Bank, cost to be borne by Borrower.

 

2.      Executed amendment to the Agreement, promissory note or other instrument
or document required to reflect the terms and conditions contained herein.

 

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REVOLVING LINE OF CREDIT NOTE

 

$25,000,000.00      Seattle, Washington         July 9, 2014   

FOR VALUE RECEIVED, the undersigned ZUMIEZ SERVICES INC. (“Borrower”) promises
to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) at its
office at MAC P6540-126, 999 3rd Avenue, 12th Floor, Seattle, WA 98104, or at
such other place as the holder hereof may designate, in lawful money of the
United States of America and in immediately available funds, the principal sum
of Twenty Five Million Dollars ($25,000,000.00), or so much thereof as may be
advanced and be outstanding, with interest thereon, to be computed on each
advance from the date of its disbursement as set forth herein.

DEFINITIONS:

As used herein, the following terms shall have the meanings set forth after
each, and any other term defined in this Note shall have the meaning set forth
at the place defined:

(a) “Daily Three Month LIBOR” means, for any day, the rate of interest equal to
LIBOR then in effect for delivery for a three (3) month period.

(b) “LIBOR” means (i) for the purpose of calculating effective rates of interest
for loans making reference to LIBOR Periods, the rate of interest per annum
determined by Bank based on the rate for United States dollar deposits for
delivery on the first day of each LIBOR Period for a period approximately equal
to such LIBOR Period as reported on Reuters Screen LIBOR01 page (or any
successor page) at approximately 11:00 a.m., London time, two London Business
Days prior to the first day of such LIBOR Period (or if not so reported, then as
determined by Bank from another recognized source or interbank quotation), or
(ii) for the purpose of calculating effective rates of interest for loans making
reference to the Daily Three Month LIBOR Rate, the rate of interest per annum
determined by Bank based on the rate for United States dollar deposits for
delivery of funds for three (3) months as reported on Reuters Screen LIBOR01
page (or any successor page) at approximately 11:00 a.m., London time, or, for
any day not a London Business Day, the immediately preceding London Business Day
(or if not so reported, then as determined by Bank from another recognized
source or interbank quotation).

(c) “LIBOR Period” means a period commencing on a New York Business Day and
continuing for one (1), two (2), three (3) or six (6) months, as designated by
Borrower, during which all or a portion of the outstanding principal balance of
this Note bears interest determined in relation to LIBOR; provided however, that
(i) no LIBOR Period may be selected for a principal amount less than Two Hundred
Fifty Thousand Dollars ($250,000.00), (ii) if the day after the end of any LIBOR
Period is not a New York Business Day (so that a new LIBOR Period could not be
selected by Borrower to start on such day), then such LIBOR Period shall
continue up to, but shall not include, the next New York Business Day after the
end of such LIBOR Period, unless the result of such extension would be to cause
any immediately following LIBOR Period to begin in the next calendar month in
which event the LIBOR Period shall continue up to, but shall not include, the
New York Business Day immediately preceding the last day of such LIBOR Period,
and (iii) no LIBOR Period shall extend beyond the scheduled maturity date
hereof.

 

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(d) “London Business Day” means any day that is a day for trading by and between
banks in Dollar deposits in the London interbank market.

(e) “New York Business Day” means any day except a Saturday, Sunday or any other
day on which commercial banks in New York are authorized or required by law to
close.

(f) “State Business Day” means any day except a Saturday, Sunday or any other
day on which commercial banks in the jurisdiction described in “Governing Law”
herein are authorized or required by law to close.

INTEREST:

(a) Interest. The outstanding principal balance of this Note shall bear interest
(computed on the basis of a 360-day year, actual days elapsed) either (i) at a
fluctuating rate per annum determined by Bank to be one percent (1.00%) above
the Daily Three Month LIBOR Rate in effect from time to time, or (ii) at a fixed
rate per annum determined by Bank to be one percent (1.00%) above LIBOR in
effect on the first day of the applicable LIBOR Period. Bank is hereby
authorized to note the date, principal amount and interest rate applicable
thereto and any payments made thereon on Bank’s books and records (either
manually or by electronic entry) and/or on any schedule attached to this Note,
which notations shall be prima facie evidence of the accuracy of the information
noted.

(b) Selection of Interest Rate Options. Subject to the provisions herein
regarding LIBOR Periods and the prior notice required for the selection of a
LIBOR interest rate, (i) at any time any portion of this Note bears interest
determined in relation to LIBOR for a LIBOR Period, it may be continued by
Borrower at the end of the LIBOR Period applicable thereto so that all or a
portion thereof bears interest determined in relation to the Daily Three Month
LIBOR Rate or to LIBOR for a new LIBOR Period designated by Borrower, (ii) at
any time any portion of this Note bears interest determined in relation to the
Daily Three Month LIBOR Rate, Borrower may convert all or a portion thereof so
that it bears interest determined in relation to LIBOR for a LIBOR Period
designated by Borrower, and (iii) at the time an advance is made hereunder,
Borrower may choose to have all or a portion thereof bear interest determined in
relation to the Daily Three Month LIBOR Rate or to LIBOR for a LIBOR Period
designated by Borrower.

To select an interest rate option hereunder determined in relation to LIBOR for
a LIBOR Period, Borrower shall give Bank notice thereof that is received by Bank
prior to 11:00 a.m Washington time on a State Business Day at least two State
Business Days prior to the first day of the LIBOR Period, or at a later time
during such State Business Day if Bank, at its sole discretion, accepts
Borrower’s notice and quotes a fixed rate to Borrower. Such notice shall
specify: (A) the interest rate option selected by Borrower, (B) the principal
amount subject thereto, and (C) for each LIBOR selection, the length of the
applicable LIBOR Period. If Bank has not received such notice in accordance with
the foregoing before an advance is made hereunder or before the end of any LIBOR
Period, Borrower shall be deemed to have made a Daily Three Month LIBOR Rate
interest selection for such advance or the principal amount to which such LIBOR
Period applied. Any such notice may be given by telephone (or such other
electronic method as Bank may permit) so long as it is given in accordance with
the foregoing and, with respect to each LIBOR selection, if requested by Bank,
Borrower provides to Bank written confirmation thereof not later than three
State Business Days after such notice is given. Borrower shall reimburse Bank
immediately upon demand for any loss or expense (including any loss or expense
incurred by reason of the liquidation or redeployment of funds obtained to fund
or maintain a LIBOR borrowing) incurred by Bank as a result of the failure of
Borrower to

 

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accept or complete a LIBOR borrowing hereunder after making a request therefor.
Any reasonable determination of such amounts by Bank shall be conclusive and
binding upon Borrower.

(c) Taxes and Regulatory Costs. Borrower shall pay to Bank immediately upon
demand, in addition to any other amounts due or to become due hereunder, any and
all (i) withholdings, interest equalization taxes, stamp taxes or other taxes
(except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any manner to LIBOR, and (ii) costs,
expenses and liabilities arising from or in connection with reserve percentages
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for “Eurocurrency Liabilities” (as defined in Regulation D of the
Federal Reserve Board, as amended), assessment rates imposed by the Federal
Deposit Insurance Corporation, or similar requirements or costs imposed by any
domestic or foreign governmental authority or resulting from compliance by Bank
with any request or directive (whether or not having the force of law) from any
central bank or other governmental authority and related in any manner to LIBOR.
In determining which of the foregoing are attributable to any LIBOR option
available to Borrower hereunder, any reasonable allocation made by Bank among
its operations shall be conclusive and binding upon Borrower.

(d) Payment of Interest. Interest accrued on this Note shall be payable on the
last day of each month, commencing July 31, 2014.

(e) Default Interest. From and after the maturity date of this Note, or such
earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, or at Bank’s option upon the occurrence, and during
the continuance of an Event of Default, the outstanding principal balance of
this Note shall bear interest at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to four percent (4%) above
the rate of interest from time to time applicable to this Note.

BORROWING AND REPAYMENT:

(a) Borrowing and Repayment. Borrower may from time to time during the term of
this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note
and of any document executed in connection with or governing this Note; provided
however, that the total outstanding borrowings under this Note shall not at any
time exceed the principal amount stated above. The unpaid principal balance of
this obligation at any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon by or for
Borrower, which balance may be endorsed hereon from time to time by the holder.
The outstanding principal balance of this Note shall be due and payable in full
on September 1, 2016.

(b) Advances. Advances hereunder, to the total amount of the principal sum
stated above, may be made by the holder at the oral or written request of
(i) Richard M. Brooks, Brian Leith or Christopher C. Work, any one acting alone,
who are authorized to request advances and direct the disposition of any
advances until written notice of the revocation of such authority is received by
the holder at the office designated above, or (ii) any person, with respect to
advances deposited to the credit of any deposit account of Borrower, which
advances, when so deposited, shall be conclusively presumed to have been made to
or for the benefit of Borrower regardless of the fact that persons other than
those authorized to request advances may have authority to draw against such
account. The holder shall have no obligation to determine whether any person
requesting an advance is or has been authorized by Borrower.

 

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(c) Application of Payments. Each payment made on this Note shall be credited
first, to any interest then due and second, to the outstanding principal balance
hereof. All payments credited to principal shall be applied first, to the
outstanding principal balance of this Note which bears interest determined in
relation to the Daily Three Month LIBOR Rate, if any, and second, to the
outstanding principal balance of this Note which bears interest determined in
relation to LIBOR, with such payments applied to the oldest LIBOR Period first.

PREPAYMENT:

(a) Daily Three Month LIBOR Rate. Borrower may prepay principal on any portion
of this Note which bears interest determined in relation to the Daily Three
Month LIBOR Rate at any time, in any amount and without penalty.

(b) LIBOR. Borrower may prepay principal on any portion of this Note which bears
interest determined in relation to LIBOR at any time and in the minimum amount
of Two Hundred Fifty Thousand Dollars ($250,000.00); provided however, that if
the outstanding principal balance of such portion of this Note is less than said
amount, the minimum prepayment amount shall be the entire outstanding principal
balance thereof. In consideration of Bank providing this prepayment option to
Borrower, or if any such portion of this Note shall become due and payable at
any time prior to the last day of the LIBOR Period applicable thereto by
acceleration or otherwise, Borrower shall pay to Bank immediately upon demand a
fee which is the sum of the discounted monthly differences for each month from
the month of prepayment through the month in which such LIBOR Period matures,
calculated as follows for each such month:

 

  (i) Determine the amount of interest which would have accrued each month on
the amount prepaid at the interest rate applicable to such amount had it
remained outstanding until the last day of the LIBOR Period applicable thereto.

 

  (ii) Subtract from the amount determined in (i) above the amount of interest
which would have accrued for the same month on the amount prepaid for the
remaining term of such LIBOR Period at LIBOR in effect on the date of prepayment
for new loans made for such term and in a principal amount equal to the amount
prepaid.

 

  (iii) If the result obtained in (ii) for any month is greater than zero,
discount that difference by LIBOR used in (ii) above.

Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate of the
prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay
any prepayment fee when due, the amount of such prepayment fee shall thereafter
bear interest until paid at a rate per annum four percent (4.00%) above the
Daily Three Month LIBOR Rate in effect from time to time (computed on the basis
of a 360-day year, actual days elapsed).

 

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EVENTS OF DEFAULT:

This Note is made pursuant to and is subject to the terms and conditions of that
certain Credit Agreement between Borrower and Bank dated as of July 9, 2014, as
amended from time to time (the “Credit Agreement”). Any default in the payment
or performance of any obligation under this Note, or any defined event of
default under the Credit Agreement, shall constitute an “Event of Default” under
this Note.

MISCELLANEOUS:

(a) Remedies. Upon the occurrence of any Event of Default, the holder of this
Note, at the holder’s option, may declare all sums of principal and interest
outstanding hereunder to be immediately due and payable without presentment,
demand, notice of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by Borrower, and the obligation, if
any, of the holder to extend any further credit hereunder shall immediately
cease and terminate. Borrower shall pay to the holder immediately upon demand
the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees and all
allocated costs of the holder’s in-house counsel), expended or incurred by the
holder in connection with the enforcement of the holder’s rights and/or the
collection of any amounts which become due to the holder under this Note, and
the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower or any other person or entity.

(b) Obligations Joint and Several. Should more than one person or entity sign
this Note as a Borrower, the obligations of each such Borrower shall be joint
and several.

(c) Governing Law. This Note shall be governed by and construed in accordance
with the laws of the State of Washington.

ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR
ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first
written above.

 

ZUMIEZ SERVICES INC. By:  

 

  Christopher C. Work, Treasurer

 

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