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      EXHIBIT
        10.2

       

      SECURITY
        AGREEMENT

      

      1.
        THE
        SECURITY. The undersigned SPORT CHALET, INC., a Delaware corporation, (the
        “Pledgor”)
        hereby
        assigns and grants to BANK OF AMERICA, N.A. (the “Bank”)
        a
        security interest in the following described property now owned or hereafter
        acquired by the Pledgor, wherever located (“Collateral”):

       

      

      (a)
        All
        accounts, contract rights, chattel paper, instruments, deposit accounts,
        letter
        of credit rights, payment intangibles and general intangibles, including
        all
        amounts due to the Pledgor from a factor; rights to payment of money from
        the
        Bank under any Swap Contract (as defined in Paragraph 2 below); and all returned
        or repossessed goods which, on sale or lease, resulted in an account or chattel
        paper.

      

      (b)
        All
        inventory, including all materials, work in process and finished
        goods.

      

      (c)
        All
        machinery, furniture, fixtures and other equipment of every type now owned
        or
        hereafter acquired by the Pledgor, (including, but not limited to, the equipment
        described in the attached Equipment Description, if any).

      

      (d)
        All
        of the Pledgor’s deposit accounts with the Bank. The Collateral shall include
        any renewals or rollovers of the deposit accounts, any successor accounts,
        and
        any general intangibles and choses in action arising therefrom or related
        thereto.

      

      (e)
        All
        instruments, notes, chattel paper, documents, certificates of deposit,
        securities and investment property of every type. The Collateral shall include
        all liens, security agreements, leases and other contracts securing or otherwise
        relating to the foregoing.

      

      (f)
        All
        general intangibles, including, but not limited to, (i) all patents, and
        all
        unpatented or unpatentable inventions; (ii) all trademarks, service marks,
        and
        trade names; (iii) all copyrights and literary rights; (iv) all computer
        software programs; (v) all mask works of semiconductor chip products; (vi)
        all
        trade secrets, proprietary information, customer lists, manufacturing,
        engineering and production plans, drawings, specifications, processes and
        systems. The Collateral shall include all good will connected with or symbolized
        by any of such general intangibles; all contract rights, documents,
        applications, licenses, materials and other matters related to such general
        intangibles; all tangible property embodying or incorporating any such general
        intangibles; and all chattel paper and instruments relating to such general
        intangibles.

      

      (g)
        All
        negotiable and nonnegotiable documents of title covering any
        Collateral.

      

      (h)
        All
        accessions, attachments and other additions to the Collateral, and all tools,
        parts and equipment used in connection with the Collateral.

      

      (i)
        All
        substitutes or replacements for any Collateral, all cash or non-cash proceeds,
        product, rents and profits of any Collateral, all income, benefits and property
        receivable on account of the Collateral, all rights under warranties and
        insurance contracts, letters of credit, guaranties or other supporting
        obligations covering the Collateral, and any causes of action relating to
        the
        Collateral.

       

      
        
          
          

        

        
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      (j)
        All
        books and records pertaining to any Collateral, including but not limited
        to any
        computer-readable memory and any computer hardware or software necessary
        to
        process such memory (“Books
        and Records”).

       

      2.
        THE
        INDEBTEDNESS. The Collateral secures and will secure all Indebtedness of
        the
        Pledgor to the Bank. Each party obligated under any Indebtedness is referred
        to
        in this Agreement as a “Debtor”.
        “Indebtedness”
means
        all debts, obligations or liabilities now or hereafter existing, absolute
        or
        contingent of the Debtor or any one or more of them to the Bank, whether
        voluntary or involuntary, whether due or not due, or whether incurred directly
        or indirectly or acquired by the Bank by assignment or otherwise. Indebtedness
        shall include, without limitation, all obligations of the Debtor arising
        under
        any Swap Contract. “Swap
        Contract”
means
        any interest rate, credit, commodity or equity swap, cap, floor, collar,
        forward
        foreign exchange transaction, currency swap, cross currency rate swap, currency
        option, securities puts, calls, collars, options or forwards or any combination
        of, or option with respect to, these or similar transactions now or hereafter
        entered into between the Debtor and the Bank.

       

      3.
        PLEDGOR’S COVENANTS. The Pledgor represents, covenants and warrants that
 unless
        compliance is waived by the Bank in writing:

      

      (a)
        The
        Pledgor will properly preserve the Collateral; defend the Collateral against
        any
        adverse claims and demands; and keep accurate Books and Records.

      

      (b)
        The
        Pledgor resides (if the Pledgor is an individual), or the Pledgor’s chief
        executive office (if the Pledgor is not an individual) is located, in the
        state
        specified on the signature page hereof. In addition, the Pledgor (if not
        an
        individual or other unregistered entity), is incorporated in or organized
        under
        the laws of the state specified on such signature page. The Pledgor shall
        give
        the Bank at least thirty (30) days notice before changing its residence or
        its
        chief executive office or state of incorporation or organization. The Pledgor
        will notify the Bank in writing prior to any change in the location of any
        Collateral, including the Books and Records.

      

      (c)
        The
        Pledgor will notify the Bank in writing prior to any change in the Pledgor’s
        name, identity or business structure.

      

      (d)
        Unless otherwise agreed, the Pledgor has not granted and will not grant any
        security interest in any of the Collateral except to the Bank, and will keep
        the
        Collateral free of all liens, claims, security interests and encumbrances
        of any
        kind or nature except the security interest of the Bank.

      

      (e)
        The
        Pledgor will promptly notify the Bank in writing of any event which affects
        the
        value of the Collateral, the ability of the Pledgor or the Bank to dispose
        of
        the Collateral, or the rights and remedies of the Bank in relation thereto,
        including, but not limited to, the levy of any legal process against any
        Collateral and the adoption of any marketing order, arrangement or procedure
        affecting the Collateral, whether governmental or otherwise.

      

      (f)
        The
        Pledgor shall pay all costs necessary to preserve, defend, enforce and collect
        the Collateral, including but not limited to taxes, assessments, insurance
        premiums, repairs, rent, storage costs and expenses of sales, and any costs
        to
        perfect the Bank’s security interest (collectively, the “Collateral
        Costs”).
        Without waiving the Pledgor’s default for failure to make any such payment, the
        Bank at its option may pay any such Collateral Costs, and discharge encumbrances
        on the Collateral, and such Collateral Costs payments shall be a part of
        the
        Indebtedness and bear interest at the rate set out in the Indebtedness. The
        Pledgor agrees to reimburse the Bank on demand for any Collateral Costs so
        incurred.

       

      
        
          
          

        

        
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      (g)
        Until
        the Bank exercises its rights to make collection, the Pledgor will diligently
        collect all Collateral.

      

      (h)
        If
        any Collateral is or becomes the subject of any registration certificate,
        certificate of deposit or negotiable document of title, including any warehouse
        receipt or bill of lading, the Pledgor shall immediately deliver such document
        to the Bank, together with any necessary endorsements.

      

      (i)
        The
        Pledgor will not sell, lease, agree to sell or lease, or otherwise dispose
        of
        any Collateral except with the prior written consent of the Bank; provided,
        however, that the Pledgor may (x) sell inventory in the ordinary course of
        business and (y) sell or otherwise dispose of equipment that, in the aggregate
        during any 12 month period, has a fair market or book value (whichever is
        more)
        of $500,000 or less.

      

      (j)
        The
        Pledgor will maintain and keep in force insurance covering the Collateral
        against fire and extended coverages, to the extent that any Collateral is
        of a
        type which can be so insured. Such insurance shall require losses to be paid
        on
        a replacement cost basis, be issued by insurance companies acceptable to
        the
        Bank and include a loss payable endorsement in favor of the Bank in a form
        acceptable to the Bank. Upon the request of the Bank, the Pledgor will deliver
        to the bank a copy of each insurance policy, or, if permitted by the Bank,
        a
        certificate of insurance listing all insurance in force.

      

      (k)
        The
        Pledgor will not attach any Collateral to any real property or fixture in
        a
        manner which might cause such Collateral to become a part thereof unless
        the
        Pledgor first obtains the written consent of any owner, holder of any lien
        on
        the real property or fixture, or other person having an interest in such
        property to the removal by the Bank of the Collateral from such real property
        or
        fixture. Such written consent shall be in form and substance acceptable to
        the
        Bank and shall provide that the Bank has no liability to such owner, holder
        of
        any lien, or any other person.

      

      (n)
        Exhibit A to this Agreement is a complete list of all patents, trademark
        and
        service mark registrations, copyright registrations, mask work registrations,
        and all applications therefor, in which the Pledgor has any right, title,
        or
        interest, throughout the world.
        To the
        extent required by the Bank in its discretion, the
        Pledgor
        will promptly notify the Bank of any acquisition (by adoption and use, purchase,
        license or otherwise) of any patent, trademark or service mark registration,
        copyright registration, mask work registration, and applications therefor,
        and
        unregistered trademarks and service marks and copyrights, throughout the
        world,
        which are granted or filed or acquired after the date hereof or which are
        not
        listed on the Exhibit.
        The
        Pledgor
        authorizes the Bank, without notice to the Pledgor, to modify this Agreement
        by
        amending the Exhibit to include any such Collateral.

      

      (o)
        The
        Pledgor will, at its expense, diligently prosecute all patent, trademark
        or
        service mark or copyright applications pending on or after the date hereof,
        will
        maintain in effect all issued patents and will renew all trademark and service
        mark registrations, including payment of any and all maintenance and renewal
        fees relating thereto, except for such patents, service marks and trademarks
        that are being sold, donated or abandoned by the Pledgor pursuant to the
        terms
        of its intellectual property management program.
        The
        Pledgor
        also will promptly make application on any patentable but unpatented inventions,
        registerable but unregistered trademarks and service marks, and copyrightable
        but uncopyrighted works.
        The
        Pledgor
        will at its expense protect and defend all rights in the Collateral against
        any
        material claims and demands of all persons other than the Bank and will,
        at its
        expense, enforce all rights in the Collateral against any and all infringers
        of
        the Collateral where such infringement would materially impair the value
        or use
        of the Collateral to the Pledgor or the Bank.
        The
        Pledgor
        will not license or transfer any of the Collateral, except for such licenses
        as
        are customary in the ordinary course of the Pledgor’s business, or except with
        the Bank’s prior written consent.

       

      
        
          
          

        

        
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      4.
        ADDITIONAL OPTIONAL REQUIREMENTS.
        The
        Pledgor
        agrees that the Bank  may
        at
        its option at any time, whether or not the Pledgor is in default:

      

      (a)
        Require the Pledgor to deliver to the Bank (i) copies of or extracts from
        the
        Books and Records, and (ii) information on any contracts or other matters
        affecting the Collateral.

      

      (b)
        Examine the Collateral, including the Books and Records, and make copies
        of or
        extracts from the Books and Records, and for such purposes enter at any
        reasonable time upon the property where any Collateral or any Books and Records
        are located.

      

      (c)
        Require the Pledgor to deliver to the Bank any instruments, chattel paper
        or
        letters of credit which are part of the Collateral, and to assign to the
        Bank
        the proceeds of any such letters of credit.

      

      (d)
        Notify any account debtors, any buyers of the Collateral, or any other persons
        of the Bank’s interest in the Collateral.

      

      5.
        DEFAULTS. Any one or more of the following shall be a default
        hereunder:

      

      (a)
        Any
        Indebtedness is not paid when due, or any default occurs under any agreement
        relating to the Indebtedness, after giving effect to any applicable grace
        or
        cure periods.

      

      (b)
        The
        Pledgor
        breaches any term, provision, warranty or representation under this Agreement
        or
        under any other obligation of the Pledgor to the Bank, and such breach remains
        uncured after any applicable cure period.

      

      (c)
        The
        Bank fails to have an enforceable first lien (except for any prior liens
        to
        which the Bank has consented in writing) on or security interest in the
        Collateral.

      

      (d)
        Any
        custodian, receiver or trustee is appointed to take possession, custody or
        control of all or a substantial portion of the property of the Pledgor or
        of any
        guarantor or other party obligated under any Indebtedness.

      

      (e)
        The
        Pledgor
        or any guarantor or other party obligated under any Indebtedness becomes
        insolvent, or is generally not paying or admits in writing its inability
        to pay
        its debts as they become due, fails in business, makes a general assignment
        for
        the benefit of creditors, dies, or commences any case, proceeding or other
        action under any bankruptcy or other law for the relief of, or relating to,
        debtors.

      

      (f)
        Any
        case, proceeding or other action is commenced against the Pledgor or any
        guarantor or other party obligated under any Indebtedness under any bankruptcy
        or other law for the relief of, or relating to, debtors.

       

      
        
          
          

        

        
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      (g)
        Any
        involuntary lien of any kind or character attaches to any Collateral, except
        for
        liens for taxes not yet due.

      

      (h)
        The
        Pledgor has given the Bank any false or misleading information or
        representations.

      

      6.
        BANK’S
        REMEDIES AFTER DEFAULT. In the event of any default, the Bank may do any
        one or
        more of the following:

      

      (a)
        Declare any Indebtedness immediately due and payable, without notice or
        demand.

      

      (b)
        Enforce the security interest given hereunder pursuant to the Uniform Commercial
        Code and any other applicable law.

       

      

      (c)
        Enforce the security interest of the Bank in any deposit account of the Pledgor
        maintained with the Bank by applying such account to the
        Indebtedness.

      

      (d)
        Require the Pledgor to obtain the Bank’s prior written consent to any sale,
        lease, agreement to sell or lease, or other disposition of any Collateral
        consisting of inventory.

      

      (e)
        Require the Pledgor to segregate all collections and proceeds of the Collateral
        so that they are capable of identification and deliver daily such collections
        and proceeds to the Bank in kind.

      

      (f)
        Require the Pledgor to direct all account debtors to forward all payments
        and
        proceeds of the Collateral to a post office box under the Bank’s exclusive
        control.

      

      (g)
        Require the Pledgor to assemble the Collateral, including the Books and Records,
        and make them available to the Bank at a place designated by the
        Bank.

      

      (h)
        Enter
        upon the property where any Collateral, including any Books and Records,
        are
        located and take possession of such Collateral and such Books and Records,
        and
        use such property (including any buildings and facilities) and any of the
        Pledgor’s equipment, if the Bank deems such use necessary or advisable in order
        to take possession of, hold, preserve, process, assemble, prepare for sale
        or
        lease, market for sale or lease, sell or lease, or otherwise dispose of,
        any
        Collateral.

      

      (i)
        Demand and collect any payments on and proceeds of the Collateral. In connection
        therewith the Pledgor irrevocably authorizes the Bank to endorse or sign
        the
        Pledgor’s name on all checks, drafts, collections, receipts and other documents,
        and to take possession of and open the mail addressed to the Pledgor and
        remove
        therefrom any payments and proceeds of the Collateral.

      

      (j)
        Grant
        extensions and compromise or settle claims with respect to the Collateral
        for
        less than face value, all without prior notice to the Pledgor.

       

      
        
          
          

        

        
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      (k)
        Use
        or transfer any of the Pledgor’s rights and interests in any Intellectual
        Property now owned or hereafter acquired by the Pledgor, if the Bank deems
        such
        use or transfer necessary or advisable in order to take possession of, hold,
        preserve, process, assemble, prepare for sale or lease, market for sale or
        lease, sell or lease, or otherwise dispose of, any Collateral.
        The
        Pledgor
        agrees that any such use or transfer shall be without any additional
        consideration to the Pledgor. As used in this paragraph, “Intellectual
        Property”
        includes, but is not limited to, all trade secrets, computer software, service
        marks, trademarks, trade names, trade styles, copyrights, patents, applications
        for any of the foregoing, customer lists, working drawings, instructional
        manuals, and rights in processes for technical manufacturing, packaging and
        labeling, in which the Pledgor has any right or interest, whether by ownership,
        license, contract or otherwise.

      

      (l)
        Have
        a receiver appointed by any court of competent jurisdiction to take possession
        of the Collateral.
        The
        Pledgor
        hereby consents to the appointment of such a receiver and agrees not to oppose
        any such appointment.

      

      (m)
        Take
        such measures as the Bank may deem necessary or advisable to take possession
        of,
        hold, preserve, process, assemble, insure, prepare for sale or lease, market
        for
        sale or lease, sell or lease, or otherwise dispose of, any Collateral, and
        the
        Pledgor hereby irrevocably constitutes and appoints the Bank as the Pledgor’s
        attorney-in-fact to perform all acts and execute all documents in connection
        therewith.

      

      (n)
        Without notice or demand to the Pledgor, set off and apply against any and
        all
        of the Indebtedness any and all deposits (general or special, time or demand,
        provisional or final) and any other indebtedness, at any time held or owing
        by
        the Bank or any of the Bank’s agents or affiliates to or for the credit of the
        account of the Pledgor or any guarantor or endorser of the Pledgor’s
        Indebtedness.

      

      (o)
        Exercise any other remedies available to the Bank at law or in
        equity.

       

       

      7.
        Dispute
        Resolution Provision.
        This
        paragraph, including the subparagraphs below, is referred to as the
“Dispute
        Resolution Provision”.
        This
        Dispute Resolution Provision is a material inducement for the parties entering
        into this agreement.

       

      (a)
        This
        Dispute Resolution Provision concerns the resolution of any controversies
        or
        claims between the parties, whether arising in contract, tort or by statute,
        including but not limited to controversies or claims that arise out of or
        relate
        to: (i) this agreement (including any renewals, extensions or modifications);
        or
        (ii) any document related to this agreement (collectively a “Claim”).
        For
        the purposes of this Dispute Resolution Provision only, the term “parties” shall
        include any parent corporation, subsidiary or affiliate of the Bank involved
        in
        the servicing, management or administration of any obligation described or
        evidenced by this agreement.

       

      (b)
        At
        the request of any party to this agreement, any Claim shall be resolved by
        binding arbitration in accordance with the Federal Arbitration Act (Title
        9,
        U.S. Code) (the “Act”).
        The
        Act will apply even though this agreement provides that it is governed by
        the
        law of a specified state.

       

      (c)
        Arbitration proceedings will be determined in accordance with the Act, the
        then-current rules and procedures for the arbitration of financial services
        disputes of the American Arbitration Association or any successor thereof
        (“AAA”),
        and
        the terms of this Dispute Resolution Provision. In the event of any
        inconsistency, the terms of this Dispute Resolution Provision shall control.
        If
        AAA is unwilling or unable to (i) serve as the provider of arbitration or
        (ii)
        enforce any provision of this arbitration clause, the Bank may designate
        another
        arbitration organization with similar procedures to serve as the provider
        of
        arbitration.

       

      
        
          
          

        

        
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      (d)
        The
        arbitration shall be administered by AAA and conducted, unless otherwise
        required by law, in any U.S. state where real or tangible personal property
        collateral for this credit is located or if there is no such collateral,
        in the
        state specified in the governing law section of this agreement. All Claims
        shall
        be determined by one arbitrator; however, if Claims exceed Five Million Dollars
        ($5,000,000), upon the request of any party, the Claims shall be decided
        by
        three arbitrators. All arbitration hearings shall commence within ninety
        (90)
        days of the demand for arbitration and close within ninety (90) days of
        commencement and the award of the arbitrator(s) shall be issued within thirty
        (30) days of the close of the hearing. However, the arbitrator(s), upon a
        showing of good cause, may extend the commencement of the hearing for up
        to an
        additional sixty (60) days. The arbitrator(s) shall provide a concise written
        statement of reasons for the award. The arbitration award may be submitted
        to
        any court having jurisdiction to be confirmed and have judgment entered and
        enforced.

       

      (e)
        The
        arbitrator(s) will give effect to statutes of limitation in determining any
        Claim and may dismiss the arbitration on the basis that the Claim is barred.
        For
        purposes of the application of any statutes of limitation, the service on
        AAA
        under applicable AAA rules of a notice of Claim is the equivalent of the
        filing
        of a lawsuit. Any dispute concerning this arbitration provision or whether
        a
        Claim is arbitrable shall be determined by the arbitrator(s), except as set
        forth at subparagraph (j) of this Dispute Resolution Provision. The
        arbitrator(s) shall have the power to award legal fees pursuant to the terms
        of
        this agreement.

       

      (f)
        The
        procedure described above will not apply if the Claim, at the time of the
        proposed submission to arbitration, arises from or relates to an obligation
        to
        the Bank secured by real property. In this case, all of the parties to this
        agreement must consent to submission of the Claim to arbitration.

       

      (g)
        To
        the extent any Claims are not arbitrated, to the extent permitted by law
        the
        Claims shall be resolved in court by a judge without a jury, except any Claims
        which are brought in California state court shall be determined by judicial
        reference as described below.

       

      (h)
        Any
        Claim which is not arbitrated and which is brought in California state court
        will be resolved by a general reference to a referee (or a panel of referees)
        as
        provided in California Code of Civil Procedure Section 638. The referee (or
        presiding referee of the panel) shall be a retired Judge or Justice. The
        referee
        (or panel of referees) shall be selected by mutual written agreement of the
        parties. If the parties do not agree, the referee shall be selected by the
        Presiding Judge of the Court (or his or her representative) as provided in
        California Code of Civil Procedure Section 638 and the following related
        sections. The referee shall determine all issues in accordance with existing
        California law and the California rules of evidence and civil procedure.
        The
        referee shall be empowered to enter equitable as well as legal relief, provide
        all temporary or provisional remedies, enter equitable orders that will be
        binding on the parties and rule on any motion which would be authorized in
        a
        trial, including without limitation motions for summary judgment or summary
        adjudication . The award that results from the decision of the referee(s)
        will
        be entered as a judgment in the court that appointed the referee, in accordance
        with the provisions of California Code of Civil Procedure Sections 644(a)
        and
        645. The parties reserve the right to seek appellate review of any judgment
        or
        order, including but not limited to, orders pertaining to class certification,
        to the same extent permitted in a court of law.

       

      
        
          
          

        

        
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      (i)
        This
        Dispute Resolution Provision does not limit the right of any party to: (i)
        exercise self-help remedies, such as but not limited to, setoff; (ii) initiate
        judicial or non-judicial foreclosure against any real or personal property
        collateral; (iii) exercise any judicial or power of sale rights, or (iv)
        act in
        a court of law to obtain an interim remedy, such as but not limited to,
        injunctive relief, writ of possession or appointment of a receiver, or
        additional or supplementary remedies. The filing of a court action is not
        intended to constitute a waiver of the right of any party, including the
        suing
        party, thereafter to require submittal of the Claim to arbitration or judicial
        reference.

       

      (j)
        Any
        arbitration, judicial reference or trial by a judge of any Claim will take
        place
        on an individual basis without resort to any form of class or representative
        action (the “Class
        Action Waiver”).
        Regardless of anything else in this Dispute Resolution Provision, the validity
        and effect of the Class Action Waiver may be determined only by a court or
        referee and not by an arbitrator. The parties to this Agreement acknowledge
        that
        the Class Action Waiver is material and essential to the arbitration of any
        disputes between the parties and is nonseverable from the agreement to arbitrate
        Claims. If the Class Action Waiver is limited, voided or found unenforceable,
        then the parties’ agreement to arbitrate shall be null and void with respect to
        such proceeding, subject to the right to appeal the limitation or invalidation
        of the Class Action Waiver. The
        Parties acknowledge and agree that under no circumstances will a class action
        be
        arbitrated.

       

      (k)
        By
        agreeing to binding arbitration or judicial reference, the parties irrevocably
        and voluntarily waive any right they may have to a trial by jury as permitted
        by
        law in respect of any Claim. Furthermore, without intending in any way to
        limit
        this Dispute Resolution Provision, to the extent any Claim is not arbitrated
        or
        submitted to judicial reference, the parties irrevocably and voluntarily
        waive
        any right they may have to a trial by jury to the extent permitted by law
        in
        respect of such Claim. This waiver of jury trial shall remain in effect even
        if
        the Class Action Waiver is limited, voided or found unenforceable. WHETHER
        THE CLAIM IS DECIDED BY ARBITRATION, BY JUDICIAL REFERENCE, OR BY TRIAL BY
        A
        JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE EFFECT OF THIS AGREEMENT
        IS
        THAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED
        BY
        LAW.

       

      8.
        MISCELLANEOUS.

      

      (a)
        Any
        waiver, express or implied, of any provision hereunder and any delay or failure
        by the Bank to enforce any provision shall not preclude the Bank from enforcing
        any such provision thereafter.

      

      (b)
        The
        Pledgor
        shall, at the request of the Bank, execute such other agreements, documents,
        instruments, or financing statements in connection with this Agreement as
        the
        Bank may reasonably deem necessary.

      

      (c)
        All
        notes, security agreements, subordination agreements and other documents
        executed by the Pledgor or furnished to the Bank in connection with this
        Agreement must be in form and substance satisfactory to the Bank.

      

      (d)
        This
        Agreement shall be governed by and construed according to the laws of the
        State
        of California, to the jurisdiction of which the parties hereto
        submit.

    

    
       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

    

      Dated:
        August 31, 2007.

    

     

    
      	BANK OF AMERICA, N.A.	SPORT
              CHALET, INC.
	 	 
	 	 
	By: \s\ Matthew Koenig	By:\s\ Howard Kaminsky
	Name: Matthew Koenig	Name: Howard Kaminsky
	Title: Senior Vice President	Title: Executive Vice President -
              Finance,
	 	
              Chief
                Financial Officer

            
	 	 
	Address where notices to	Address
              where notices to
	the Bank are to be sent:	the
              Borrower are to be sent:
	 	 
	Bank of America, N.A.	
              Sport
                Chalet, Inc.

            
	333 S. Hope Street, Suite 1300	One Sport Chalet Drive
	Los Angeles, CA 90071	La
              Canada, California 91011 
	Attn: Matthew Koenig	Attention:
              Howard Kaminsky
	Facsimile: (213) 621-3612	Telephone: (818) 949-5300
	 	Facsimile: (818) 949-5301
	 	 
	 	 
	 	 

    

    
      
         

         

        Pledgor’s
          state of incorporation: DELAWARE

         

         

        
          
            
            

          

          
            9Unassociated Document

    Amended
      Line of Credit Agreement

    

    
      	
              Five
                Hundred
                Thousand dollars ($500,000)

            	
              August
                1, 2007

            
	 	
              Fort
                Wayne, Indiana

            

    

    

      Whereas,
        the Borrower and Lender entered into a Line of Credit Agreement on April
        27,
        2007 for a maximum amount of three hundred thousand dollars
        ($300,000);

      

      Where
        as
        the Borrower and Lender desire to amend the Line of Credit Agreement to increase
        the maximum amount of the Line of Credit to five hundred thousand dollars
        ($500,000); 

      

      NOW
        THEREFORE, in consideration of the mutual covenants and agreements herein
        contained, and for other good and valuable consideration, the receipt and
        sufficiency of which is hereby acknowledged, and the Borrower and Lender
        intending to be legally bound, do hereby unconditionally agree as
        follows:

       

    

    Freedom
      Financial Holdings, Inc., (“FFH”) a corporation organized and existing under the
      laws of the State of Maryland, having its principal place of business at 6615
      Brotherhood Way, Fort Wayne, Indiana (the "Borrower") promises to pay to the
      order of Robert Carteaux an individual existing under the laws of the State
      of
      Indiana having its principal residence at 7009 Woodcroft Lane, Fort Wayne,
      Indiana 46804 (the "Lender") at the residence of the Lender or such other place
      as the holder hereof shall designate the amount of principal that has been
      borrowed on this agreed line of credit with a maximum amount of five
      hundred thousand dollars ($500,000).

    

    The
      term
      on this line of Credit will be at an interest rate gain of ten percent (10%).
      Said principal and flat ten percent (10%) will be paid in full upon FFH raising
      $1,500,000 in the anticipated Initial Public Offering (“IPO”) of FFH. In the
      event that FFH raises less than $1,500,000 in the IPO, the principal will
      continue to accrue interest at flat rate of 20% per year and will be paid from
      operations, when available. 

    

    All
      loans
      hereunder and all payments on account of principal hereof shall be recorded
      by
      the Lender and, prior to any transfer hereof, endorsed on the grid attached
      which is part of this Line of Credit agreement, the entries on the records
      of
      the Lender (including any appearing on this Line of Credit) shall be prima
      facie
      evidence of amounts outstanding hereunder.

    

    All
      or
      any part of the aforesaid principal sum and interest may be prepaid at any
      time
      and from time to time without penalty. 

    

    Any
      deposits or other sums at any time credited by or due from the holder to the
      Borrower, or to any endorser or guarantor hereof, and any securities or other
      property of the Borrower or any such endorser or guarantor at any time in the
      possession of the holder may at all times be held and treated as collateral
      for
      the payment of this Line of Credit and any and all other liabilities (direct
      or
      indirect, absolute or contingent, sole, joint or several, secured or unsecured,
      due or to become due, now existing or hereafter arising) of the Borrower to
      the
      holder. Regardless of the adequacy of collateral, the holder may apply or set
      off such deposits or other sums against such liabilities at any time in the
      case
      of the Borrower, but only with respect to matured liabilities in the case of
      endorsers and guarantors.

    

    The
      Borrower and every endorser and guarantor of this Line of Credit hereby waive
      presentment, demand, notice protest and all other demands and notices in
      connection with the delivery, acceptance, performance, default or enforcement
      hereof and consent that no indulgence, and no substitution, release or surrender
      collateral, and no discharge or release of any other party primarily or
      secondarily liable hereon, shall discharge or otherwise affect the liability
      of
      the Borrower or any such endorser or guarantor. No delay or omission on the
      part
      of the holder in exercising any right hereunder shall operate as a waiver of
      such right or any other right hereunder, and a waiver of any such right on
      any
      one occasion shall not be construed as a bar to or waiver of any such right
      on
      any future occasion.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Any
      notice to Borrower provided for in this Line of Credit shall be given by mailing
      such notice by certified mail return receipt requested addressed to Borrower
      at
      the address stated below, or to such other address as Borrower may designate
      by
      notice to the Line of Credit holder. Any notice to the Line of Credit holder
      shall be given by mailing such notice by certified mail, return receipt
      requested, to the Line of Credit holder at the address stated above in this
      Line
      of Credit, or at such other address as may have been designated by notice to
      Borrower.

    

    The
      Borrower and every endorser and guarantor hereof agree to pay on demand all
      costs and expenses (including legal costs and attorneys' fees) incurred or
      paid
      by the holder in enforcing this Line of Credit on default.

    

    This
      Line
      of Credit shall take effect as a sealed instrument and shall be governed by
      the
      laws of the State of Indiana.

     

    

    /s/ 

    
      

    

    Brian
      Kistler

    CEO

    Freedom
      Financial Holdings, Inc

     

    

    /s/

    
      

    

    Robert
      W.
      Carteaux

    7009
      Woodcroft Lane

    Fort
      Wayne, In 46804

     

    GRID

    ADVANCES
      AND PAYMENTS OF PRINCIPAL

     

    
      	
              Date

            	 	
              Amount
                of Loan

            	 	
              Outstanding
                Principal Balance

            	 	
              Notation
                Made By

            	 
	 	 	 	 	 	 	 	 
	
              4/27/07

            	 	
              $

            	
              100,000

            	 	
              $

            	
              100,000

            	 	 	
              BK

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              5/21/07

            	 	
              $

            	
              100,000

            	 	
              $

            	
              200,000

            	 	 	
              BK

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              6/26/07

            	 	
              $

            	
              100,000

            	 	
              $

            	
              300,000

            	 	 	
              BK

            	 
	 	 	 	 	 	 	 	 	 	 	 
	
              8/01/07

            	 	
              $

            	
              100,000

            	 	
              $

            	
              400,000

            	 	
               

            	
              BK

            	 

    

    
      	 	 	 	 	 	 	 	 	 	 	 
	
              8/27/07

            	 	
              $

            	
              100,000

            	 	
              $

            	
              500,000

            	 	
               

            	
              BK

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00129-of-00352.parquet"}]]