Exhibit 10.16


 


CREDIT AGREEMENT


 


THIS CREDIT AGREEMENT (this “Agreement”) is entered
into as of June 10, 2009, by and between ZUMIEZ INC., a Washington
corporation (“Borrower”), and WELLS FARGO HSBC TRADE BANK, NATIONAL ASSOCIATION
(“Bank”).  All references to Wells Fargo
Bank in this Agreement shall mean Wells Fargo Bank, National Association.


 


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, 2011, 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 first, to refinance Borrower’s
outstanding credit accommodations from Bank, and second to refinance 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 June 10, 2009 (“Line of Credit Note”), all
terms of which are incorporated herein by this reference.


 


(b)                                           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 importation of goods (“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 a term not to exceed one hundred and twenty (120) days, as designated by
Borrower; provided however, that no Subfeature Commercial LC shall have an
expiration date subsequent to 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.


 


(c)                                            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 support lease and other obligations of Borrower
(“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 subsequent to 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.


 


(d)                                           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 issued shall bear interest from the date such drawing is
paid to the date such amount is fully repaid by Borrower at the rate of
interest set forth in each promissory note or other instrument of document
executed in correction therewith.


 

















 


(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)                                            Commitment Fee.  Borrower shall pay to Bank a non-refundable
commitment fee for the line of credit equal to Seven Thousand Five Hundred
Dollars ($7,500.00), which fee shall be due and payable in full upon the
execution of this Agreement.


 


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 charging any deposit account maintained by Borrower with Wells
Fargo Bank for the full amount thereof. 
Should there be insufficient funds in Borrower’s deposit accounts with
Wells Fargo 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, equipment and fixtures.


 


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.


 


ARTICLE II


REPRESENTATIONS AND
WARRANTIES


 


Borrower 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.


 


SECTION 2.1.                                 LEGAL
STATUS.  Borrower 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 Borrower.


 


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 Borrower 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 Borrower, or result in any breach of or default
under any contract, obligation, indenture or other instrument to which Borrower
is a party or by which Borrower may be bound.


 


SECTION 2.4.                                 LITIGATION.  There are no pending, or to the best of
Borrower’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 Borrower other than those disclosed by
Borrower to Bank in writing prior to the date hereof.


 


SECTION 2.5.                                 CORRECTNESS OF
FINANCIAL STATEMENT.  The annual
financial statement of Borrower dated January 31, 2009, and all interim
financial statements delivered to Bank since said date, true copies of which
have been delivered by Borrower to Bank prior to the date hereof, (a) are
complete and correct and present fairly the financial condition of Borrower, (b) disclose
all liabilities of Borrower 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 Borrower, nor has Borrower 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.  Borrower 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’s obligations subject to this Agreement to any other obligation
of Borrower.


 

















 


SECTION 2.8.                                 PERMITS,
FRANCHISES.  Borrower 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.


 


SECTION 2.9.                                 ERISA.  Borrower 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”);
Borrower has not violated any provision of any defined employee pension benefit
plan (as defined in ERISA) maintained or contributed to by Borrower (each, a “Plan”);
no Reportable Event as defined in ERISA has occurred and is continuing with
respect to any Plan initiated by Borrower; Borrower 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.  Borrower 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 Borrower
to Bank in writing prior to the date hereof, Borrower 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 Borrower’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 Borrower 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.  Borrower has no 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)                               Corporate
Resolution: Borrowing.


(iii)                            Certificate
of Incumbency.


(iv)                            Security
Agreement: Equipment and Fixtures


(v)                               Continuing
Security Agreement: Rights to payment and Inventory.


(vi)                            Fax
Transmission and Acceptance of Requests, Instructions, Documents and
Information.


(vii)                         Facsimile
Transmissions of Applications For Issuance of, and Amendments to, Letters of
Credit.


(viii)                      Commercial
Letter of Credit Agreement.


(ix)                             Standby
Letter of Credit Agreement


(x)                                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, 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.


 


(d)                                           Insurance.  Borrower shall have delivered to Bank
evidence of insurance coverage on all Borrower’s property, in form, substance,
amounts, covering risks and issued by companies satisfactory to Bank, and where
required by Bank, with loss payable endorsements in favor of Bank, including
without limitation, policies of marine cargo insurance, accounts receivable
insurance and business personal property insurance.


 


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.


 


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.  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 Borrower.


 


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 Borrower 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, statement of cash flow, and source and application of funds;


 


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


 


(c)                                            contemporaneously
with each annual and fiscal quarter end financial statement of Borrower
required hereby, a certificate of the president or chief financial officer of
Borrower 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 Borrower is organized and/or which govern Borrower’s
continued existence and with the requirements of all laws, rules, regulations
and orders of any governmental authority applicable to Borrower and/or its
business.


 


SECTION 4.5.                                 INSURANCE.  Maintain and keep in force, for each business
in which Borrower 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, 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.


 


SECTION 4.6.                                 FACILITIES.  Keep all properties useful or necessary to
Borrower’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.


 


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 such (a) as Borrower may
in good faith contest or as to which a bona fide dispute may arise, and (b) for
which Borrower has made provision, to Bank’s satisfaction, for eventual payment
thereof in the event Borrower is obligated to make such payment.


 


SECTION 4.8.                                 FINANCIAL
CONDITION.  At any time an advance is
requested under the Line of Credit and at all times any amounts are outstanding
under any of the Loan Documents, maintain Borrower’s 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 Borrower’s
financial statements for the period ending May 2, 2009:


 


(a)                                            Quick Ratio not
less than 1.25 to 1.0 at each fiscal quarter end, with “Quick Ratio” defined as
the aggregate of cash, cash equivalents, marketable securities and accounts
receivables divided by the total amount outstanding under the Line of Credit.


 


(b)                                           Net loss after
taxes not greater than $10,000,000 on a trailing four-quarter basis determined
as of each fiscal quarter end and based on the sum of the results of four 


 

















 


consecutive quarters consisting of the present
quarter and the three preceding quarters; provided, that, there shall be added
to net income all charges for impairment of goodwill and store assets on the
balance sheet of the Borrower not to exceed $5,000,000 in the aggregate for the
relevant period.


 


SECTION 4.9.                                 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 Borrower; (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 Borrower 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 Borrower’s property.


 


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.  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.


 


SECTION 5.3.                                 MERGER,
CONSOLIDATION, TRANSFER OF ASSETS. Merge into or consolidate with any other
entity; make any substantial change in the nature of Borrower’s business as
conducted as of the date hereof; acquire all or substantially all of the assets
of an other entity where the aggregate value of consideration for such
acquisition is greater than $25,000,000; nor sell, lease, transfer or otherwise
dispose of all or a substantial or material portion of Borrower’s assets except
in the ordinary course of its business.


 


SECTION 5.4.                                 GUARANTIES.  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 Borrower as security
for, any liabilities or obligations of any other person or entity, except any
of the foregoing in favor of Bank.


 

















 


SECTION 5.5.                                 LOANS,
ADVANCES, INVESTMENTS.  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.


 


SECTION 5.6.                                 PLEDGE OF
ASSETS.  Mortgage, pledge, grant or
permit to exist a security interest in, or lien upon, all or any portion of
Borrower’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.


 


(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 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.


 


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 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 INC.

  
	
   

  	
  6300 Merrill
  Creek Parkway, Suite B

  
	
   

  	
  Everett, WA
  98203

  
	
   

  	
   

  
	
  BANK:

  	
  WELLS FARGO
  HSBC TRADE BANK, NATIONAL ASSOCIATION

  
	
   

  	
  999 Third
  Ave., 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 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, 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.


 


(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
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.


 


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


 


	
   

  	
   

  	
  WELLS FARGO
  HSBC TRADE BANK,

  
	
  ZUMIEZ INC.

  	
   

  	
  NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Chris Casey

  
	
  Title:

  	
   

  	
   

  	
   

  
						



 

















 


REVOLVING LINE OF CREDIT NOTE


 


	
  $25,000,000.00

  	
    Seattle, Washington

  
	
   

  	
  June 10, 2009

  



 


FOR VALUE RECEIVED, the undersigned ZUMIEZ INC., a Washington
corporation (“Borrower”) promises to pay to the order of WELLS FARGO BANK,
NATIONAL ASSOCIATION (“Bank”) at its office at 999 Third Avenue, 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)           “Business
Day” means any day except a Saturday, Sunday or any other day on which
commercial banks in Washington are authorized or required by law to close.


 


(b)           “Daily
One Month LIBOR” means for any day, the rate of interest equal to LIBOR then in
effect for delivery for a one (1) month period.


 


(c)           “Fixed
Rate Term” means a period commencing on a Business Day and continuing for 1, 2,
3 or 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 no Fixed Rate Term may be selected
for a principal amount less than Two Hundred Fifty Thousand Dollars
($250,000.00); and provided further, that no Fixed Rate Term shall extend
beyond the scheduled maturity date hereof. 
If any Fixed Rate Term would end on a day which is not a Business Day,
then such Fixed Rate Term shall be extended to the next succeeding Business
Day.


 


(d)           “LIBOR”
means the rate per annum (rounded upward, if necessary, to the nearest whole
1/8 of 1%) and determined pursuant to the following formula:


 


	
  LIBOR =

  	
   

  	
  Base LIBOR

  	
   

  
	
   

  	
   

  	
  100% - LIBOR Reserve Percentage

  	
   

  



 


(i)           “Base LIBOR” means the rate per annum for
United States dollar deposits quoted by Bank (A) for the purpose of
calculating effective rates of interest for loans


 

















 


making reference to LIBOR, as the Inter-Bank
Market Offered Rate, with the understanding that such rate is quoted by Bank
for the purpose of calculating effective rates of interest for loans making
reference thereto, on the first day of a Fixed Rate Term for delivery of funds
on said date for a period of time approximately equal to the number of days in such
Fixed Rate Term and in an amount approximately equal to the principal amount to
which such Fixed Rate Term applies, or (B) for the purpose of calculating
effective rates of interest for loans making reference to the Daily One Month
LIBOR Rate, as the Inter-Bank Market Offered Rate in effect from time to time
for delivery of funds for one (1) month in amounts approximately equal to
the principal amount of such loans. 
Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of
the Inter-Bank Market as Bank in its discretion deems appropriate including,
but not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.


 


(ii)  “LIBOR Reserve Percentage” means the reserve
percentage 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), adjusted by Bank for expected
changes in such reserve percentage during the applicable term of this Note.


 


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%) above the Daily One 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%) above LIBOR in effect on the first day of the applicable Fixed
Rate Term.  When interest is determined
in relation to the Daily One Month LIBOR Rate, each change in the interest rate
shall become effective each Business Day that the Bank determines that the Daily
One Month LIBOR Rate has changed.  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.  At any
time any portion of this Note bears interest determined in relation to LIBOR
for a Fixed Rate Term, it may be continued by Borrower at the end of the Fixed
Rate Term applicable thereto so that all or a portion thereof bears interest
determined in relation to the Daily One Month LIBOR Rate or to LIBOR for a new
Fixed Rate Term designated by Borrower. 
At any time any portion of this Note bears interest determined in
relation to the Daily One Month LIBOR Rate, Borrower may at any time convert
all or a portion thereof so that it bears interest determined in relation to
LIBOR for a Fixed Rate Term designated by Borrower.  At such time as Borrower requests an advance
hereunder or wishes to select an interest rate determined in relation to the
Daily One Month LIBOR Rate or a Fixed
Rate Term for all or a portion of the outstanding principal balance
hereof, and at the end of each Fixed Rate


 

















 


Term, Borrower shall give Bank notice specifying: (i) the interest
rate option selected by Borrower; (ii) the principal amount subject
thereto; and (iii) for each LIBOR selection for a Fixed Rate Term, the length of the applicable Fixed Rate
Term.  Any such notice may be given by
telephone (or such other electronic method as Bank may permit) so long as, with
respect to each LIBOR selection for a
Fixed Rate Term, (A) if requested by Bank, Borrower provides to
Bank written confirmation thereof not later than three (3) Business Days
after such notice is given, and (B) such notice is given to Bank prior to
10:00 a.m. on the first day of the Fixed Rate Term, or at a later time
during any Business Day if Bank, at its sole option but without obligation to
do so, accepts Borrower’s notice and quotes a fixed rate to Borrower.  If Borrower does not immediately accept a
fixed rate when quoted by Bank, the quoted rate shall expire and any subsequent
LIBOR request from Borrower shall be subject to a redetermination by Bank of
the applicable fixed rate.  If no
specific designation of interest is made at the time any advance is requested
hereunder or at the end of any Fixed Rate Term, Borrower shall be deemed to
have made a Daily One Month LIBOR Rate interest selection for such advance or
the principal amount to which such Fixed Rate Term applied.


 


(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) future, supplemental, emergency or other changes in the
LIBOR Reserve Percentage, 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 to the
extent they are not included in the calculation of 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 1,
2009.


 


(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,
2011.


 


(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, Trevor Lang, Thomas Campion, Derek
Baxter or Brian Leith, 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.


 


(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 One 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 Fixed Rate Term
first.


 


PREPAYMENT:


 


(a)           Daily
One Month LIBOR Rate.  Borrower may
prepay principal on any portion of this Note which bears interest determined in
relation to the Daily One 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 Fixed Rate Term 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 Fixed Rate Term 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 Fixed
  Rate Term 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 Fixed Rate Term 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%) above
the Daily One Month LIBOR Rate in effect from time to time (computed on the
basis of a 360-day year, actual days elapsed).


 


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 June 10, 2009, 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 INC.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title: