SPORT CHALET INC
EXHIBIT 10.1
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<TYPE>EX-10.1
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<DESCRIPTION>EXHIBIT 10.1
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<P align="center"><FONT size="2"><B>Exhibit&nbsp;10.1</B>
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<P align="left"><FONT size="2"><IMG src="a94238a9423800.gif" alt="(BANK OF AMERICA LOGO)">
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<P align="center"><FONT size="2"><B>AMENDMENT NO. 5 TO LOAN AGREEMENT</B>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Amendment No.&nbsp;5 (the &#147;Amendment&#148;) dated as of September&nbsp;25, 2003, is
between Bank of America, N.A. (the &#147;Bank&#148;) and Sport Chalet, Inc. (the
&#147;Borrower&#148;).
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<P align="center"><FONT size="2"><B>RECITALS</B>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bank and the Borrower entered into a certain Business Loan
Agreement dated as of June&nbsp;19, 1998 (together with any previous amendments, the
&#147;Agreement&#148;).
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Bank and the Borrower desire to amend the Agreement.
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<P align="center"><FONT size="2"><B>AGREEMENT</B>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Definitions. Capitalized terms used but not defined in this Amendment
shall have the meaning given to them in the Agreement.
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendments. The Agreement is hereby amended as follows:
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
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    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">2.1</FONT></TD>
    <TD width="92%" colspan="2"><FONT size="2">Paragraph&nbsp;2.1(a) of the Agreement is amended to read in its
entirety as follows:</FONT></TD>
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    <TD width="3%"><FONT size="2">&#147;(a)</FONT></TD>
     <TD width="90%"><FONT size="2"> During the availability period described below, the
Bank will provide a line of credit to the Borrower. The amount
of the line of credit (the &#145;Commitment&#146;) is Twenty Million
Dollars ($20,000,000), provided, however, that the Commitment
shall be Thirty Five Million Dollars ($35,000,000) during the
period of October 1 through and including December&nbsp;31 of each
year.&#148;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">2.2</FONT></TD>
    <TD width="92%" colspan="2"><FONT size="2">Paragraph&nbsp;2.2 of the Agreement is amended to read in its
entirety as follows:</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%" colspan="2"><FONT size="2"><B>&#147;2.2 Availability Period. </B>The line of credit is available between
the date of this Agreement and September&nbsp;30, 2005, or such earlier
date as the availability may terminate as provided in this Agreement
(the &#145;Expiration Date&#146;).&#148;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">2.3</FONT></TD>
    <TD width="93%" colspan="2"><FONT size="2">Paragraph&nbsp;2.6(a) of the Agreement is amended to read in its
entirety as follows:</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&#147;(a)</FONT></TD>
    <TD width="93%"><FONT size="2"> The &#145;Short Term Fixed Rate&#146; means the Short Term
Base Fixed Rate plus 1.75&nbsp;percentage points.&#148;</FONT></TD>
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<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">2.4</FONT></TD>
    <TD width="93%" colspan="2"><FONT size="2">Paragraphs 2.9(i), 2.9(ii) and 2.9(iii) of the Agreement are
amended to read in their entirety as follows:</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(i)</FONT></TD>
    <TD width="93%"><FONT size="2">commercial letters of credit with a maximum
maturity of 120&nbsp;days but not to extend more than 120&nbsp;days
beyond the Expiration Date. Each commercial letter of credit
will require drafts payable at sight.</FONT></TD>
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<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(ii)</FONT></TD>
    <TD width="93%"><FONT size="2">standby letters of credit with a maximum maturity
of 365&nbsp;days but not to extend more than 365&nbsp;days beyond the
Expiration Date.</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="top">
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">(iii)</FONT></TD>
    <TD width="93%"><FONT size="2">The amount of the letters of credit outstanding at
any one time (including the drawn and unreimbursed amounts of
the letters of credit) may not exceed Four Million Dollars
($4,000,000).&#148;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">2.5</FONT></TD>
    <TD width="92%" colspan="2"><FONT size="2">A new sentence is added at the end of Paragraph&nbsp;8.2(a) of the
Agreement, which reads in its entirety follows:</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%" colspan="2"><FONT size="2">&#147;The statements shall be prepared on a consolidated basis.&#148;</FONT></TD>
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<P align="center"><FONT size="2">20</FONT>
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<P>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">2.6</FONT></TD>
    <TD width="93%" colspan="2"><FONT size="2">A new sentence is added at the end of Paragraph&nbsp;8.2(b) of the
Agreement, which reads in its entirety follows:</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%" colspan="2"><FONT size="2">&#147;The statements shall be prepared on a consolidated basis.&#148;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">2.7</FONT></TD>
    <TD width="92%" colspan="2"><FONT size="2">Paragraph&nbsp;8.5 of the Agreement is amended to read in its
entirety as follows:</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%" colspan="2"><FONT size="2"><B>&#147;8.5 Fixed Charge Coverage Ratio. </B>To maintain a Fixed Charge
Coverage ratio of at least 1.12:1.00:</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%" colspan="2"><FONT size="2">&#145;Fixed Charge Coverage Ratio&#146; is defined as the sum of net profit
after taxes, plus tax expense, interest expense, depreciation,
amortization, and rent expense, less dividends, loans and advances
to parents, affiliates and officers, and cash taxes paid divided by
the sum of current portion of long term debt, plus rent expense,
interest expense, and maintenance capital expenditures; provided,
however that for the purposes of calculating this ratio, maintenance
capital expenditures refers to (a)&nbsp;Four Million Dollars ($4,000,000)
for the periods ending September&nbsp;30, 2003 and December&nbsp;31, 2003 and
(b)&nbsp;One Hundred Forty Five Thousand Dollars ($145,000) per open
store location, as established annually at each fiscal year end
beginning March&nbsp;31, 2004 and thereafter. This ratio will be
calculated at the end of each fiscal quarter, using the results of
that quarter and each of the 3 immediately preceding quarters. The
current portion of long term debt will be measured as of the last
day of the preceding fiscal year.&#148;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">2.8</FONT></TD>
    <TD width="92%" colspan="2"><FONT size="2">Paragraph&nbsp;8.10 of the Agreement is amended to read in its
entirety as follows:</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="top">
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%" align="left" nowrap><FONT size="2">&nbsp;</FONT></TD>
    <TD width="92%" colspan="2"><FONT size="2"><B>&#147;8.10 Out of Debt Period</B>. To reduce the amount of advances
outstanding under this Agreement to zero for a period of at least 30
consecutive days between January 1 and August&nbsp;31 in each year.&#148;</FONT></TD>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Representations and Warranties. When the Borrower signs this
Amendment, the Borrower represents and warrants to the Bank that: (a)&nbsp;there is
no event which is, or with notice or lapse of time or both would be, a default
under the Agreement except those events, if any, that have been disclosed in
writing to the Bank or waived in writing by the Bank, (b)&nbsp;the representations
and warranties in the Agreement are true as of the date of this Amendment as if
made on the date of this Amendment, (c)&nbsp;this Amendment does not conflict with
any law, agreement, or obligation by which the Borrower is bound, and (d)&nbsp;this
Amendment is within the Borrower&#146;s powers, has been duly authorized, and does
not conflict with any of the Borrower&#146;s organizational papers.
</FONT>
<P align="left"><FONT size="2"><I>&#091;Use this paragraph if conditions precedent are required. Describe each item
being required in a series of sequentially numbered paragraphs beginning with
(a). You may choose from the paragraphs shown below, which can be modified to
meet the particular condition.&#093;</I>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Conditions. This Amendment will be effective when the Bank receives
the following items, in form and content acceptable to the Bank:
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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;If the Borrower is anything other than a natural person,
evidence that the execution, delivery and performance by the Borrower of
this Amendment and any instrument or agreement required under this
Amendment have been duly authorized.</FONT></TD>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect of Amendment. Except as provided in this Amendment, all of the
terms and conditions of the Agreement shall remain in full force and effect.
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Counterparts. This Amendment may be executed in counterparts, each of
which when so executed shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
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<P align="center"><FONT size="2">21</FONT>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>FINAL AGREEMENT. BY SIGNING THIS DOCUMENT EACH PARTY REPRESENTS AND
AGREES THAT: (A)&nbsp;THIS DOCUMENT REPRESENTS THE FINAL AGREEMENT BETWEEN PARTIES
WITH RESPECT TO THE SUBJECT MATTER HEREOF, (B)&nbsp;THIS DOCUMENT SUPERSEDES ANY
COMMITMENT LETTER, TERM SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS
RELATING TO THE SUBJECT MATTER HEREOF, UNLESS SUCH COMMITMENT LETTER, TERM
SHEET OR OTHER WRITTEN OUTLINE OF TERMS AND CONDITIONS EXPRESSLY PROVIDES TO
THE CONTRARY, (C)&nbsp;THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES,
AND (D)&nbsp;THIS DOCUMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR UNDERSTANDINGS OF THE
PARTIES.</B>
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Amendment is executed as of the date stated at the beginning of this
Amendment.
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    <TD valign="top"><FONT size="2">Borrower:</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" valign="top" align="left"><FONT size="2">Bank:</FONT></TD>
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    <TD valign="top"><FONT size="2">Sport Chalet, Inc.</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
Bank of America, N.A.</FONT></TD>
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    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
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<TR valign="bottom">
    <TD valign="top"><FONT size="2">By /s/ Howard K. Kaminsky
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Howard K. Kaminsky, CFO</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By /s/ Robert W. Troutman
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Robert W. Troutman, Senior Vice President</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
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<P align="center"><FONT size="2">22</FONT>
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