Sport Chalet, Inc. One Sport Chalet Drive La Cañada, California 91011 March 31, 2006
EXHIBIT
99.1
Sport
Chalet, Inc.
One
Sport
Chalet Drive
La
Cañada, California 91011
March
31,
2006
[Name
of
Optionholder]
One
Sport
Chalet Drive
La
Cañada, California 91011
Dear
[______________]:
This
letter agreement confirms the agreement between you and Sport Chalet, Inc.,
a
Delaware corporation (the "Company"), concerning the acceleration of the vesting
of all stock options that have been granted to you by the Company under its
1992
Incentive Award Plan or its 2004 Equity Incentive Plan (the "Incentive Plans")
that are unvested as of the date of this letter (collectively, "Your
Options").
1. Consent
to Acceleration.
You
hereby consent and agree to the acceleration of the vesting of Your
Options.
2. Consent
to Non-Qualified Option Treatment.
You
hereby consent and agree that, if the acceleration of the vesting of Your
Options would cause the aggregate fair market value of the Company's common
stock with respect to which incentive stock options are exercisable for the
first time by you in the 2006 calendar year to exceed $100,000, then such
acceleration may result in the treatment of any incentive
stock option
exceeding the $100,000 threshold as a non-qualified
stock option.
For the
purpose of the immediately preceding sentence, the fair market value of common
stock with respect to which a stock option is exercisable is equal to the
option's exercise price.
3. Lock-Up
Agreement.
You
hereby agree that you will not sell, transfer, assign, pledge or otherwise
dispose of, alienate or encumber, either voluntarily or involuntarily, any
shares that you acquire upon exercise of that portion of Your Options the
vesting of which has been accelerated hereby, until the date on which such
exercise would have been permitted under the terms of the applicable Incentive
Plan and award agreement without giving effect to this acceleration of vesting,
but including any possible acceleration of vesting that would otherwise occur
following a change in control or other circumstances causing accelerated vesting
as set forth in the applicable Incentive Plan or award agreement. Except as
provided below, any sale or transfer, or purported sale or transfer, of any
such
shares or any interest therein prior to that vesting date shall be null and
void. This restriction on the transfer of shares will not apply to any transfer
that would have been permitted with respect to Your Options under the terms
of
the applicable Incentive Plan or award agreement (for example, a transfer upon
your death); provided that any permitted transferee will acquire the shares
subject to the transfer restrictions set forth in this paragraph 3.
4. Legend.
(A)
If
you decide to exercise that portion of Your Options the vesting of which has
been accelerated hereby, prior to the time that portion of Your Options
otherwise would have vested (including any possible acceleration of vesting
set
forth in the applicable Incentive Plan or award agreement), the Company will
issue shares only in certificate form evidencing the shares you acquire on
exercise with the following legend and such other legends as may be required
or
appropriate under applicable law:
"THE
OWNERSHIP OF THIS CERTIFICATE AND THE SHARES OF STOCK EVIDENCED HEREBY AND
ANY
INTEREST THEREIN ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER UNDER
AN
AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND SPORT CHALET, INC.
A
COPY OF SUCH AGREEMENT IS ON FILE IN THE OFFICE OF THE SECRETARY OF SPORT
CHALET, INC."
(B)
You
agree that the Company shall hold in escrow all share certificates to which
such
restrictions on transfer apply, until the restrictions on transfer have lapsed
(i.e.,
until
the accelerated portion of Your Options otherwise would have vested). Promptly
after the transfer restrictions on any such shares have lapsed, the Company
will
deliver to you a certificate or certificates, free of the restrictive legend
described above, evidencing such shares. Upon the occurrence of a stock split,
reverse stock split, stock dividend or any other change in capitalization,
reorganization, merger or similar event affecting the Company's common stock,
the transfer restrictions set forth above applicable to any shares that you
may
have acquired upon exercise of Your Options will continue with respect to any
consideration or other securities received in respect of such
shares.
By
executing this letter agreement, you and the Company agree that this letter
agreement amends, and supersedes any inconsistent provisions of, the award
agreements evidencing Your Options.
Please
acknowledge your agreement with the foregoing by signing the enclosed copy
of
this letter agreement where indicated below and returning the executed copy
to
the Company, to the attention of Xxxxxx X. Xxxxxxxx. You should return the
letter so that it is received by the Company no later than March 31, 2006.
If you have any questions, please call Xxxxxx X. Xxxxxxxx at
(000) 000-0000.
| Sincerely, | ||
| Xxxxx Xxxxx | ||
| Chairman and CEO | ||
Acknowledged
and Agreed:
By
_________________________
[Name
of
Optionholder]
