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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><strong>UNITED
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        AND EXCHANGE COMMISSION</strong></font></div>
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        D.C. 20549</strong></font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><strong>FORM
        8-K</strong></font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CURRENT
        REPORT</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Pursuant
        to Section 13 or 15(d) of the Securities Exch</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>a</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>nge
        Act of 1934 </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
        of
        Report (Date of the earliest event reported): November 29, 2005</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 24pt; FONT-FAMILY: Times New Roman"><strong>SPORT
        CHALET, INC.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
        name of registrant as specified in its charter) </font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Delaware</strong></font></div>
              </td>
              <td valign="bottom" width="34%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>0-20736</strong></font></div>
              </td>
              <td valign="bottom" width="33%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>95-4390071</strong></font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                  or other jurisdiction </font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
                  incorporation or organization)</font></div>
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              <td valign="top" width="34%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                  </font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">File
                  Number)</font></div>
              </td>
              <td valign="top" width="33%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(I.R.S.
                  Employer </font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Identification
                  No.)</font></div>
              </td>
            </tr>

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      <div align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">One
        Sport
        Chalet Drive, La Canada, CA 91011</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
        of principal executive offices) (Zip Code) </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(818)
        949-5300</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Registrant&#8217;s
        telephone number, including area code) </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
        the
        appropriate box below if the Form 8-K filing is intended to simultaneously
        satisfy the filing obligation of the registrant under any of the following
        provisions:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>&#160;Written
        communications pursuant to Rule 425 under the Securities Act (17 CFR
        230.425)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Wingdings">o</font>&#160;Soliciting
        material pursuant to Rule 14a-12 under
        the Exchange Act (17 CFR 240.14a-12)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Wingdings">o</font>&#160;Pre-commencement
        communications pursuant to Rule
        14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Wingdings">o</font>&#160;Pre-commencement
        communications pursuant to Rule
        13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        1.01.</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Entry
        into a Material Definitive Agreement.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Amendment
        to Employment Agreement</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        connection with the settlement of certain litigation described in Item&#160;8.01
        below, on December&#160;9, 2005, Sport Chalet, Inc. (the "Company") and
        Norbert
        J. Olberz, the Chairman Emeritus of the Company, entered into an amendment
        of
        his employment agreement which reduced his annual base salary from $300,000
        to
        $150,000. A copy of the amendment is attached as </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exhibit&#160;99.1</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        to this
        Report.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Settlement
        Agreement</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
        connection with the settlement of certain litigation described in Item&#160;8.01
        below, on December&#160;9, 2005, the Company entered into an Agreement
        (the
        "Settlement Agreement") with Craig L. Levra, the Chairman of the Board,
        President and Chief Executive Officer of the Company, and Howard K. Kaminsky,
        the Executive Vice President- Finance and Chief Financial Officer of the
        Company, under which they agreed to certain restrictions on the acquisition,
        transfer and voting of Class&#160;B Common Stock. A copy of the Settlement
        Agreement is attached as </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exhibit&#160;99.2</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        to this
        Report.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
        8.01 Other Events.</strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Settlement
        of Litigation </strong></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        July
        22, 2005, a purported stockholder of the Company brought an action (the
        "Action") captioned </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Miriam
        Gruber v. Sport Chalet, Inc., Norbert Olberz, Irene Olberz, Craig Levra,
        Howard
        K. Kaminsky, Al D. McCready, Eric S. Olberz, Frederick H. Schneider, John
        R.
        Attwood, Donald H. Howard and Kenneth Olson</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        in the
        Court of Chancery of the State of Delaware. The Action, which was purportedly
        brought individually, derivatively and as a class action on behalf of the
        public
        stockholders of the Company, challenged the Company's proposed recapitalization
        transaction (the "Recapitalization") involving:: (i)&#160;an amendment
        to the
        Company's Amended and Restated Certificate of Incorporation to increase the
        authorized number of shares of the Company's capital stock from 17,000,000
        to
        50,000,000, establish the rights, preferences and privileges of, and the
        restrictions on, the Company's Class A Common Stock and Class B Common Stock
        and
        reclassify each share of the Company's Common Stock as 0.25 shares of Class
        B
        Common Stock (the "Amendment"); (ii)&#160;a dividend of seven shares of
        Class A
        Common Stock for each share of Class B Common Stock outstanding on the record
        date for the dividend (the "Dividend"); and (iii)&#160;a transfer by The
        Olberz
        Family Trust to Messrs. Levra and Kaminsky of such number of shares of Class
        B
        Common Stock as would be necessary, when added to the shares owned by them,
        to
        give them at least 45% (on a fully diluted basis) of the combined voting
        power
        of the Class A Common Stock and the Class B Common Stock following the
        effectiveness of the Amendment and the Dividend (the "Transfer"). On August
        26,
        2005, the parties entered into a memorandum of understanding with respect
        to the
        settlement of this action (the "Settlement"). </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Recapitalization was subsequently consummated by: (i)&#160;the filing of
        the
        Amendment with the Secretary of the State of Delaware on September 20, 2005;
        (ii)&#160;the payment of the Dividend on September 29, 2005 to stockholders
        of
        record on September 22, 2005; and (iii)&#160;the Transfer by The Olberz
        Family
        Trust on September&#160;30, 2005 to Messrs. Levra and Kaminsky of 730,613
        shares
        and 243,537 shares, respectively, of the Company's Class B Common
        Stock.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
        a
        description of the Action, including the allegations and relief sought, and
        the
        principal terms of the proposed Settlement, see the definitive proxy statement
        relating to the 2005 annual meeting of stockholders of the Company filed
        with
        the SEC on September&#160;1, 2005 (the "Definitive Proxy
        Statement").</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
        November&#160;29, 2005, the Court of Chancery of the State of Delaware
        issued
        its final order and judgment (the "Order") approving the Settlement. A summary
        of the Order is provided below, but is qualified in its entirety by reference
        to
        the full text of the Order that is attached as </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exhibit&#160;99.3</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        to this
        Report. The Order:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: -7pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certified
        the Action as a class action on behalf of all record and beneficial holders
        of
        the Company's Common Stock (excluding the defendants in the Action) for the
        period from and including June 28, 2005 through and including September 22,
        2005;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: -8pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certified
        Miriam Gruber as Class representative and appointed the law firms of Prickett,
        Jones &amp; Elliott, P.A. and Schiffirn &amp; Barroway, LLP as plaintiff's
        counsel for the derivative and class claims; </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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        the Settlement and found the terms of the Settlement to be fair, reasonable
        and
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        stockholders. The principal terms of the Settlement require: </font></div>
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            <tr valign="top" style="LINE-HEIGHT: 1.25">
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">certain
                  changes to the Company's Amended and Restated Certificate of
                  Incorporation, which changes were reflected in the Amendment prior
                  to its
                  effectiveness;</font></div>
              </td>
            </tr>

        </table>
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      <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 72pt">&#160;</td>
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
              </td>
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                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">certain
                  restrictions on the acquisition, transfer and voting of Class B
                  Common
                  Stock by Messrs. Levra and Kaminsky as described
                  below;</font></div>
              </td>
            </tr>

        </table>
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      <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 72pt">&#160;</td>
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                  amendment of the proposed form of proxy statement relating to the
                  2005
                  annual meeting of stockholders to describe more clearly the tax
                  and
                  accounting consequences to the Company of the Recapitalization,
                  which
                  amendment was made by the Company prior to the filing and distribution
                  of
                  the Definitive Proxy Statement; and
</font></div>
              </td>
            </tr>

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      <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 72pt">&#160;</td>
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
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              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                  reduction of the annual base salary of Norbert J. Olberz under
                  his
                  employment agreement from $300,000 to $150,000, which reduction
                  of Mr.
                  Olberz' salary will be effected through an amendment to Mr. Olberz's
                  employment agreement as described
                  below.</font></div>
              </td>
            </tr>

        </table>
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      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 45pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 45pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: -7pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dismissed
        the Action with prejudice;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: -7pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        Discharged, settled, released, and dismissed with prejudice any and all claims,
        liabilities, damages, losses, and issues of any kind or nature whatsoever,
        whether known or unknown, related, directly or indirectly, to the Action
        or the
        Recapitalization; and </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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        plaintiff's attorneys fees and expenses in the amount of $480,000.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the terms of the Settlement, on December&#160;9, 2005, the Company entered
        into the Settlement Agreement with Messrs. Levra and Kaminsky, the principal
        terms of which are as follows:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 72pt">&#160;</td>
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Messrs.
                  Levra and Kaminsky agree that, following the Transfer, they will
                  not
                  accept further gifts, bequests or other transfers of Class B Common
                  Stock
                  for less than market price from The Olberz Family Trust or Norbert
                  J.
                  Olberz or his affiliates;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 72pt">&#160;</td>
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                  Company will not issue or sell to Messrs. Levra or Kaminsky any
                  additional
                  Class B Common Stock, or any options to purchase Class B Common
                  Stock
                  (except pursuant to the conversion of existing options), following
                  the
                  effectiveness of the
                  Recapitalization;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 72pt">&#160;</td>
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Messrs.
                  Levra and Kaminsky will not sell stock of the Company at a "Premium
                  to
                  Market Price" (as defined) if the transaction, directly or indirectly,
                  would result in the transfer of 35% or more of the voting power
                  of the
                  Company on a fully diluted basis, unless all stockholders of the
                  Company
                  are offered the same per share consideration as Messrs. Levra and
                  Kaminsky;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 72pt">&#160;</td>
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Messrs.
                  Levra and Kaminsky agree that they will not enter into a voting
                  agreement,
                  voting trust or irrevocable proxy with each other with respect
                  to their
                  shares of stock of the Company;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 72pt">&#160;</td>
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                  Company will not repurchase or otherwise acquire any shares of
                  stock held
                  by Messrs. Levra and Kaminsky at a "Premium to Market Price" (as
                  defined),
                  unless the same per share consideration is offered to all other
                  stockholders of the Company; and</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 108pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 72pt">&#160;</td>
              <td style="WIDTH: 36pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">no
                  change in the Settlement Agreement shall be valid without the unanimous
                  approval of the Board of Directors and the affirmative vote of
                  the holders
                  of a majority of the outstanding Class A Common Stock, voting as
                  a single
                  class.</font></div>
              </td>
            </tr>

        </table>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
        copy of
        the Settlement Agreement is attached as </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exhibit
        99.2</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        to this
        Report.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the terms of the Settlement, on December&#160;9, 2005, the Company and
        Norbert J. Olberz entered into an amendment of his employment agreement which
        reduced his annual base salary thereunder from $300,000 to $150,000. A copy
        of
        the amendment is attached as </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exhibit&#160;99.1</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
        to this
        Report.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
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        <div id="HDR">
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      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 36pt">
              </td>
              <td align="left" style="WIDTH: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)</font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Not
                  applicable.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
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            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 36pt">
              </td>
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                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Not
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              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
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            <tr valign="top" style="LINE-HEIGHT: 1.25">
              <td style="WIDTH: 36pt">
              </td>
              <td align="left" style="WIDTH: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)</font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibits.</font></div>
              </td>
            </tr>

        </table>
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      <div>&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td valign="bottom" width="22%" style="BORDER-BOTTOM: medium none">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Exhibit
                  Number</u></font></div>
              </td>
              <td valign="bottom" width="58%" style="BORDER-BOTTOM: medium none">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Description
                  of Exhibit</u></font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="22%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
              </td>
              <td align="left" valign="top" width="58%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amendment
                  No.&#160;1 to Employment Agreement, dated as of December&#160;9,
                  2005,
                  between Sport Chalet, Inc. and Norbert J. Olberz.</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="22%">&#160;</td>
              <td align="left" valign="top" width="58%">&#160;</td>
            </tr>
            <tr>
              <td valign="top" width="22%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.2</font></div>
              </td>
              <td align="left" valign="top" width="58%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Agreement,
                  dated as of December&#160;9, 2005, among Sport Chalet, Inc.,
                  Craig L.
                  Levra and Howard K. Kaminsky.</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="22%">&#160;</td>
              <td align="left" valign="top" width="58%">&#160;</td>
            </tr>
            <tr>
              <td valign="top" width="22%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.3</font></div>
              </td>
              <td align="left" valign="top" width="58%">
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                  and Final Judgment of the Court of Chancery of the State of Delaware,
                  dated November&#160;29, 2005.</font></div>
              </td>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned hereunto
        duly authorized.</font></div>
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                  December&#160;9, 2005</font></div>
              </td>
              <td colspan="2"><font size="2">SPORT CHALET, INC.</font></td>
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              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:&#160;&#160;</font></td>
              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                Howard K. Kaminsky</font></td>
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                  Vice President-Finance, Chief Financial Officer and Secretary (Principal
                  Financial and Accounting Officer)</font></div>
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{"company-data": {"conformed-name": "SPORT CHALET INC", "cik": "0000892907", "assigned-sic": "5940", "irs-number": "954390071", "state-of-incorporation": "DE", "fiscal-year-end": "0331"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-20736", "film-number": "051255203"}, "business-address": {"street1": "ONE SPORT CHALET DRIVE", "city": "LA CANADA", "state": "CA", "zip": "91101", "phone": "8187902717X256"}, "mail-address": {"street1": "ONE SPORT CHALET DRIVE", "city": "LA CANADA", "state": "CA", "zip": "91011"}}
UNITED
        STATES
SECURITIES
        AND EXCHANGE COMMISSION
Washington,
        D.C. 20549
FORM
        8-K
CURRENT
        REPORT
Pursuant
        to Section 13 or 15(d) of the Securities Exch
a
nge
        Act of 1934
Date
        of
        Report (Date of the earliest event reported): November 29, 2005
SPORT
        CHALET, INC.
(Exact
        name of registrant as specified in its charter)
Delaware
0-20736
95-4390071
(State
                  or other jurisdiction
of
                  incorporation or organization)
(Commission
File
                  Number)
(I.R.S.
                  Employer
Identification
                  No.)
One
        Sport
        Chalet Drive, La Canada, CA 91011
(Address
        of principal executive offices) (Zip Code)
(818)
        949-5300
(Registrant's
        telephone number, including area code)
Check
        the
        appropriate box below if the Form 8-K filing is intended to simultaneously
        satisfy the filing obligation of the registrant under any of the following
        provisions:
o
Written
        communications pursuant to Rule 425 under the Securities Act (17 CFR
        230.425)
o
Soliciting
        material pursuant to Rule 14a-12 under
        the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
        communications pursuant to Rule
        14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement
        communications pursuant to Rule
        13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
        1.01.
Entry
        into a Material Definitive Agreement.
Amendment
        to Employment Agreement
In
        connection with the settlement of certain litigation described in Item 8.01
        below, on December 9, 2005, Sport Chalet, Inc. (the "Company") and
        Norbert
        J. Olberz, the Chairman Emeritus of the Company, entered into an amendment
        of
        his employment agreement which reduced his annual base salary from $300,000
        to
        $150,000. A copy of the amendment is attached as
Exhibit 99.1
to this
        Report.
Settlement
        Agreement
In
        connection with the settlement of certain litigation described in Item 8.01
        below, on December 9, 2005, the Company entered into an Agreement
        (the
        "Settlement Agreement") with Craig L. Levra, the Chairman of the Board,
        President and Chief Executive Officer of the Company, and Howard K. Kaminsky,
        the Executive Vice President- Finance and Chief Financial Officer of the
        Company, under which they agreed to certain restrictions on the acquisition,
        transfer and voting of Class B Common Stock. A copy of the Settlement
        Agreement is attached as
Exhibit 99.2
to this
        Report.
Item
        8.01 Other Events.
Settlement
        of Litigation
On
        July
        22, 2005, a purported stockholder of the Company brought an action (the
        "Action") captioned
Miriam
        Gruber v. Sport Chalet, Inc., Norbert Olberz, Irene Olberz, Craig Levra,
        Howard
        K. Kaminsky, Al D. McCready, Eric S. Olberz, Frederick H. Schneider, John
        R.
        Attwood, Donald H. Howard and Kenneth Olson
in the
        Court of Chancery of the State of Delaware. The Action, which was purportedly
        brought individually, derivatively and as a class action on behalf of the
        public
        stockholders of the Company, challenged the Company's proposed recapitalization
        transaction (the "Recapitalization") involving:: (i) an amendment
        to the
        Company's Amended and Restated Certificate of Incorporation to increase the
        authorized number of shares of the Company's capital stock from 17,000,000
        to
        50,000,000, establish the rights, preferences and privileges of, and the
        restrictions on, the Company's Class A Common Stock and Class B Common Stock
        and
        reclassify each share of the Company's Common Stock as 0.25 shares of Class
        B
        Common Stock (the "Amendment"); (ii) a dividend of seven shares of
        Class A
        Common Stock for each share of Class B Common Stock outstanding on the record
        date for the dividend (the "Dividend"); and (iii) a transfer by The
        Olberz
        Family Trust to Messrs. Levra and Kaminsky of such number of shares of Class
        B
        Common Stock as would be necessary, when added to the shares owned by them,
        to
        give them at least 45% (on a fully diluted basis) of the combined voting
        power
        of the Class A Common Stock and the Class B Common Stock following the
        effectiveness of the Amendment and the Dividend (the "Transfer"). On August
        26,
        2005, the parties entered into a memorandum of understanding with respect
        to the
        settlement of this action (the "Settlement").
The
        Recapitalization was subsequently consummated by: (i) the filing of
        the
        Amendment with the Secretary of the State of Delaware on September 20, 2005;
        (ii) the payment of the Dividend on September 29, 2005 to stockholders
        of
        record on September 22, 2005; and (iii) the Transfer by The Olberz
        Family
        Trust on September 30, 2005 to Messrs. Levra and Kaminsky of 730,613
        shares
        and 243,537 shares, respectively, of the Company's Class B Common
        Stock.
For
        a
        description of the Action, including the allegations and relief sought, and
        the
        principal terms of the proposed Settlement, see the definitive proxy statement
        relating to the 2005 annual meeting of stockholders of the Company filed
        with
        the SEC on September 1, 2005 (the "Definitive Proxy
        Statement").
On
        November 29, 2005, the Court of Chancery of the State of Delaware
        issued
        its final order and judgment (the "Order") approving the Settlement. A summary
        of the Order is provided below, but is qualified in its entirety by reference
        to
        the full text of the Order that is attached as
Exhibit 99.3
to this
        Report. The Order:
1.
Certified
        the Action as a class action on behalf of all record and beneficial holders
        of
        the Company's Common Stock (excluding the defendants in the Action) for the
        period from and including June 28, 2005 through and including September 22,
        2005;
2.
Certified
        Miriam Gruber as Class representative and appointed the law firms of Prickett,
        Jones & Elliott, P.A. and Schiffirn & Barroway, LLP as plaintiff's
        counsel for the derivative and class claims;
3.
Approved
        the Settlement and found the terms of the Settlement to be fair, reasonable
        and
        adequate and in the best interest of the Class, the Company and its
        stockholders. The principal terms of the Settlement require:
·
certain
                  changes to the Company's Amended and Restated Certificate of
                  Incorporation, which changes were reflected in the Amendment prior
                  to its
                  effectiveness;
·
certain
                  restrictions on the acquisition, transfer and voting of Class B
                  Common
                  Stock by Messrs. Levra and Kaminsky as described
                  below;
·
the
                  amendment of the proposed form of proxy statement relating to the
                  2005
                  annual meeting of stockholders to describe more clearly the tax
                  and
                  accounting consequences to the Company of the Recapitalization,
                  which
                  amendment was made by the Company prior to the filing and distribution
                  of
                  the Definitive Proxy Statement; and
·
the
                  reduction of the annual base salary of Norbert J. Olberz under
                  his
                  employment agreement from $300,000 to $150,000, which reduction
                  of Mr.
                  Olberz' salary will be effected through an amendment to Mr. Olberz's
                  employment agreement as described
                  below.
4.
Dismissed
        the Action with prejudice;
5.
Discharged, settled, released, and dismissed with prejudice any and all claims,
        liabilities, damages, losses, and issues of any kind or nature whatsoever,
        whether known or unknown, related, directly or indirectly, to the Action
        or the
        Recapitalization; and
6.
Awarded
        plaintiff's attorneys fees and expenses in the amount of $480,000.
Pursuant
        to the terms of the Settlement, on December 9, 2005, the Company entered
        into the Settlement Agreement with Messrs. Levra and Kaminsky, the principal
        terms of which are as follows:
·
Messrs.
                  Levra and Kaminsky agree that, following the Transfer, they will
                  not
                  accept further gifts, bequests or other transfers of Class B Common
                  Stock
                  for less than market price from The Olberz Family Trust or Norbert
                  J.
                  Olberz or his affiliates;
·
the
                  Company will not issue or sell to Messrs. Levra or Kaminsky any
                  additional
                  Class B Common Stock, or any options to purchase Class B Common
                  Stock
                  (except pursuant to the conversion of existing options), following
                  the
                  effectiveness of the
                  Recapitalization;
·
Messrs.
                  Levra and Kaminsky will not sell stock of the Company at a "Premium
                  to
                  Market Price" (as defined) if the transaction, directly or indirectly,
                  would result in the transfer of 35% or more of the voting power
                  of the
                  Company on a fully diluted basis, unless all stockholders of the
                  Company
                  are offered the same per share consideration as Messrs. Levra and
                  Kaminsky;
·
Messrs.
                  Levra and Kaminsky agree that they will not enter into a voting
                  agreement,
                  voting trust or irrevocable proxy with each other with respect
                  to their
                  shares of stock of the Company;
·
the
                  Company will not repurchase or otherwise acquire any shares of
                  stock held
                  by Messrs. Levra and Kaminsky at a "Premium to Market Price" (as
                  defined),
                  unless the same per share consideration is offered to all other
                  stockholders of the Company; and
·
no
                  change in the Settlement Agreement shall be valid without the unanimous
                  approval of the Board of Directors and the affirmative vote of
                  the holders
                  of a majority of the outstanding Class A Common Stock, voting as
                  a single
                  class.
A
        copy of
        the Settlement Agreement is attached as
Exhibit
        99.2
to this
        Report.
Pursuant
        to the terms of the Settlement, on December 9, 2005, the Company and
        Norbert J. Olberz entered into an amendment of his employment agreement which
        reduced his annual base salary thereunder from $300,000 to $150,000. A copy
        of
        the amendment is attached as
Exhibit 99.1
to this
        Report.
Item
        9.01
Financial
        Statements and Exhibits.
(a)
Not
                  applicable.
(b)
Not
                  applicable.
(c)
Exhibits.
Exhibit
                  Number
Description
                  of Exhibit
99.1
Amendment
                  No. 1 to Employment Agreement, dated as of December 9,
                  2005,
                  between Sport Chalet, Inc. and Norbert J. Olberz.
99.2
Agreement,
                  dated as of December 9, 2005, among Sport Chalet, Inc.,
                  Craig L.
                  Levra and Howard K. Kaminsky.
99.3
Order
                  and Final Judgment of the Court of Chancery of the State of Delaware,
                  dated November 29, 2005.
SIGNATURES
Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned hereunto
        duly authorized.
Date:
                  December 9, 2005
SPORT CHALET, INC.
By:
/s/
                Howard K. Kaminsky
Executive
                  Vice President-Finance, Chief Financial Officer and Secretary (Principal
                  Financial and Accounting Officer)