Stock Pledge Agreement
EXHIBIT
99.2
THIS
STOCK PLEDGE AGREEMENT dated as of September 30, 2005 (this
"Agreement"), is entered into by and among SPORT CHALET, INC., a Delaware
corporation (the "Company"), XXXXXXX XXXXXX and XXXXX XXXXXX, both individually
and in their capacities as the trustees of THE OLBERZ FAMILY TRUST ("Olberz"),
XXXXX X. XXXXX ("Xxxxx") and XXXXXX X. XXXXXXXX ("Xxxxxxxx"), in light of
the
following facts:
RECITALS
A. The
parties hereto have entered into that certain Tax Indemnification Agreement
of
even date herewith, pursuant to which Xxxxx and Xxxxxxxx (each, an "Indemnitor")
have agreed to indemnify Olberz (the "Indemnitee") for certain tax liabilities
arising by reason of the Transfer of the Shares (as such terms as defined
in the
Tax Indemnification Agreement).
B. The
Indemnitee is unwilling to enter into the Tax Indemnification Agreement unless
the Indemnitors enter into this Agreement, by which the Indemnitors shall
grant
the Indemnitee an unperfected security interest in 457,263 shares of Company
Class B Common Stock owned by the Indemnitors as security for the payment
and
performance of the Indemnitors' obligations to the Indemnitees under the
Tax
Indemnification Agreement.
C. The
Indemnitors, to induce the Indemnitee to enter into the Transfer of the Shares,
are willing to enter into this Agreement with Indemnitee.
NOW,
THEREFORE, in consideration of the above premises, the parties hereby agree
as
follows:
1. Pledge
of Shares. Each
of the Indemnitors hereby pledges and grants a continuing security interest
to
the Indemnitees in the number of shares of Company Class B Common Stock set
forth below the name of such Indemnitor on the signature page of this Agreement,
together with all proceeds, replacements, substitutions, newly-issued stock,
stock received by reason of a stock split, bonus or any other form of issue,
dividend or distribution with respect to or arising from the stock
(collectively, the "Collateral").
2. Obligations
Secured. The
pledge and security interest of an Indemnitor effectuated hereby shall secure
all of such Indemnitor's obligations to the Indemnitee under the Tax
Indemnification Agreement (collectively, the "Obligations").
3. Representations
And Warranties Regarding The Collateral. Each
Indemnitor represents and warrants that: (i) all of
the shares
of stock described in Section 1 hereinabove pledged by such Indemnitor are
fully
paid, non-assessable and validly issued; (ii) such Collateral was
not
issued in violation of any person's or entity's preemptive rights;
(iii) such Collateral is owned free and clear of any and all security
interests, pledges, options to purchase or sell, redemptions or liens, other
than Permitted Liens (as defined below); (iv) such Indemnitor has
full
power to convey such Collateral; and (v) no financing statements covering
such Collateral are recorded with any cognizant state official or recording
office.
4. Permitted
Liens.
Notwithstanding anything contained herein to the contrary, the Indemnitors
may
now or hereafter deliver, pledge and grant a security interest in the Collateral
in favor of, and the Collateral may be subject to claims, security interests,
encumbrances and liens placed by, a lender to the Indemnitors as security
for
the indebtedness of the Indemnitors. At the discretion of the Indemnitors,
Permitted Liens may be senior in priority to the pledge and security interest
effectuated hereby.
5. Events
of Default. The
Indemnitors hereby appoint the President of the Company as each Indemnitor's
attorney-in-fact to arrange, upon the occurrence of an event of default under
the Tax Indemnification Agreement, for a transfer of the Collateral on the
books
of the Company to the name of the affected Indemnitee or to the name of the
Indemnitee's nominee, subject, in all cases, to any senior rights granted
to
others in connection with Permitted Liens.
6. Voting
Rights. During
the term of this Agreement, so long as no event of default has occurred under
the Tax Indemnification Agreement, the Indemnitors shall have the right to
vote
the Collateral on all corporate questions for all purposes not inconsistent
with
the terms of this Agreement. Upon the occurrence of such an
event of
default, the Indemnitee shall thereafter have, at his discretion, the option
to
exercise all voting powers and other corporate rights pertaining to the
Collateral, subject, in all cases, to any senior rights granted to others
in
connection with Permitted Liens. The Indemnitee may, upon
or at any
time after the occurrence of such an event of default, at the Indemnitee's
option, transfer or register the Collateral or any part thereof into the
Indemnitee's own or the Indemnitee's nominee's name, subject, in all cases,
to
any senior rights granted to others in connection with Permitted
Liens.
7. Stock
Adjustments. If
during the term of this Agreement, any stock dividend, reclassification,
readjustment or other change is declared or made in the capital structure
of the
Company or any option included within the Collateral is exercised, or both,
all
new, substituted and additional shares, or other securities, issued to the
Indemnitors by reason of any such change or exercise shall be delivered to
and
held by the Company under the terms of this Agreement in the same manner
as the
Collateral originally pledged hereunder.
8. Remedies
Upon Default. Upon
the occurrence and during the continuation of an event of default under the
Tax
Indemnification Agreement,
(a) The
Indemnitee may:
(i) Exercise
in respect of the Collateral, any one or more of the rights and remedies
available under the California Uniform Commercial Code and other applicable
law;
or
(ii) Sell
or
otherwise assign, give an option or options to purchase or dispose of and
deliver the Collateral (or contract to do so), or any part thereof, in one
or
more parcels at public or private sale or sales, at any exchange, broker's
board
or at any of the Company's offices or elsewhere upon such terms and conditions
as the Indemnitee may deem advisable and at such prices as the Indemnitee
may
deem best, for cash, on credit or for future delivery without assumption
of any
credit risk, free of any claim or right of whatsoever kind (including any
right
or equity of redemption) of the Indemnitors, which claim, right and equity
are
hereby expressly waived and released, subject, however, in all cases, to
any
senior rights granted to others in connection with Permitted Liens.
(b) The
Indemnitee shall not be obligated to make any sale or other disposition of
the
Collateral, or any part thereof, unless the terms thereof shall, in the
Indemnitee's sole discretion, be satisfactory to such Indemnitee. The Indemnitee
may, if it deems it reasonable, postpone or adjourn the sale of any of the
Collateral, or any part thereof, from time to time by an announcement at
the
time and place of such sale or by announcement at the time and place of such
postponed or adjourned sale, without being required to give a new notice
of
sale.
(c) All
cash
proceeds received by the Indemnitee in respect of any sale of, collection
from,
or other realization upon all or any part of the Collateral may, in the
discretion of the Indemnitee, be held by it as collateral for the Obligations
and/or then or at any time thereafter applied, without any marshaling of
rights,
remedies or assets, and after payment of any amounts payable to the Indemnitee
hereunder and, after deducting all reasonable costs and expenses of every
kind
in connection with the care, safekeeping, collection, sale, delivery or
otherwise of any or all of the Collateral or in any way relating to the rights
of the Indemnitee hereunder (including attorneys' fees and disbursements),
to
the payment of reduction of the Obligations. Any surplus of such cash or
cash
proceeds held by the Indemnitee and remaining after payment in full of all
the
Obligations shall be paid over to the Indemnitors or to whomsoever may be
lawfully entitled to receive such surplus.
(d) All
rights granted to the Indemnitee shall be subject, in all cases, to any senior
rights granted to others in connection with Permitted Liens.
9. Term. This
Agreement shall remain in full force and effect until the Indemnitors have
satisfied all of their obligations to the Indemnitee under the Tax
Indemnification Agreement.
10. Successors
and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors, heirs and assigns.
11. Applicable
Law. This
Agreement shall be governed by and construed under the laws of the State
of
California. Whenever possible, each provision of this Agreement
shall
be interpreted in such manner as to be effective and valid under applicable
law,
but, if any provision of this Agreement shall be held to be prohibited 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 the remaining provisions of this Agreement.
12. Integrated
Agreement. This
Agreement and the Tax Indemnification Agreement evidencing the Obligations
secured hereby set forth the entire understanding of the parties with respect
to
the within matters, and may not be modified except by a writing signed by
all
parties.
13. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, and all of which together shall constitute but one and
the
same instrument and agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of
this 30th
day of
September 2005.
| SPORT CHALET, INC. | ||
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| By: | /s/ Xxxxx X. Xxxxx | |
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Xxxxx X. Xxxxx, President |
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| By: | /s/ Xxxxxxx Xxxxxx | |
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Xxxxxxx
Xxxxxx, individually and as trustee of The Olberz Family
Trust
|
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| By: | /s/ Xxxxx Xxxxxx | |
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Xxxxx
Xxxxxx, individually and as trustee of The Olberz Family
Trust
|
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| By: | /s/ Xxxxx X. Xxxxx | |
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Xxxxx
X. Xxxxx
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| By: | /s/ Xxxxxx X. Xxxxxxxx | |
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Xxxxxx
X. Xxxxxxxx
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