SPCHB (MM)

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This proxy statement contains “forward-looking statements” that involve significant risks and uncertainties. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including: any statements regarding the anticipated timing of filings and approvals relating to the Offer and the Merger; any statements regarding the expected timing of the completion of the Offer and the Merger; any statements regarding the ability to complete the Offer or the Merger considering the various closing conditions, including that Purchaser must have accepted for payment all shares of Company common stock that Purchaser becomes obligated to purchase pursuant to the Offer; any statements of expectation or belief; any statement regarding the future financial performance of the Company; and any statements of assumptions underlying any of the foregoing. These statements reflect management’s expectations, estimates and assumptions, based on current and available information at the time the document was prepared. The words “anticipate,” “believe,” “estimate,” “target,” “expect,” “predict,” “plan,” “possible,” “project,” “intend,” “likely,” “will,” “should,” “could,” “may,” “foreseeable,” “would” and similar expressions are intended to identify forward-looking statements. Investors and holders of shares of Company common stock are cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause actual performance or achievements to be materially different from any future results, performance or achievements expressed or implied by those statements. Risks and uncertainties that could cause results to differ from expectations include: uncertainties as to the timing of the Offer and the Merger; uncertainties as to how many of the holders of shares of Company common stock will tender their shares of Company common stock into the Offer; the possibility that various closing conditions for the Offer or the Merger may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the Offer or the Merger; the effects of disruption from the Offer and the Merger making it more difficult for the Company to maintain relationships with employees (including potential difficulties in employee retention), collaboration parties, other business partners or governmental entities; risks that members of Company management will depart prior to completion of the Offer or the Merger; legal proceedings that may be instituted against the Company and others following announcement of the definitive agreement entered into with Parent; other business effects, including the effects of industrial, economic or political conditions outside of the Company’s control; transaction costs; actual or contingent liabilities; and other risks and uncertainties discussed in this proxy statement and other documents filed with the SEC by the Company, as well as the Schedule TO filed with the SEC by Parent and Purchaser. All of the materials related to the Offer and the Merger (and all other offer documents filed with the SEC) are available at no charge from the SEC through its website at www.sec.gov. Holders of shares of Company common stock may also obtain free copies of the documents filed with the SEC, through the website maintained by the SEC at www.sec.gov. Copies of the documents filed with the SEC by the Company will be available free of charge on the Company’s website at www.sportchalet.com under the heading “SEC Filings” in the “Investor Relations” portion of the Company’s website. The Company does not undertake any obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as expressly required by law.

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PARTIES TO THE MERGER

The Company

Sport Chalet, Inc.

One Sport Chalet Drive

La Cañada, CA 91011

(818) 949-5300

Sport Chalet, Inc . is a premier, full-service specialty sporting goods retailer offering a broad assortment of brand name sporting goods equipment, apparel, and footwear. As of June 29, 2014, the Company operated 50 stores, including 34 locations in Southern California, seven in Northern California, six in Arizona, two in Nevada, and one in Utah, comprising a total of over two million square feet of retail space. These stores average approximately 41,000 square feet in size. In addition, the Company has a Team Sales Division and an online store at sportchalet.com. Originally the Company was incorporated in California, and it reincorporated as a Delaware corporation in 1992. For more information about the Company, please visit our website at http://www.sportchalet.com . Our website address is provided as an inactive textual reference only. The information contained on our website is not incorporated into, and does not form a part of, this proxy statement or any other report or document on file with or furnished to the SEC. See also “Where You Can Find More Information” beginning on page 108. Company common stock is publicly traded on the Nasdaq Global Select Market under the symbols “SPCHA” and “SPCHB.”

Purchaser

Everest Merger Sub, Inc.

2929 Arch Street

Cira Center

Philadelphia, Pennsylvania 19104-7324

(215) 609-3400

Everest Merger Sub, Inc., or Purchaser, is a Delaware corporation and an indirect wholly-owned subsidiary of Vestis that was formed by Vestis solely for the purpose of facilitating the acquisition of the Company. To date, Purchaser has not carried on any activities other than those related to its formation, completing the transactions contemplated by the Merger Agreement and arranging the related financing. Upon completion of the Merger, Purchaser will cease to exist.

Parent

Vestis Retail Group, LLC

2929 Arch Street

Cira Center

Philadelphia, Pennsylvania 19104-7324

(215) 609-3400

Vestis Retail Group, LLC , or Vestis or Parent, is a Delaware limited liability company that was formed by Versa Capital Management, LLC. Vestis is a holding company that conducts retail operations through its wholly-owned subsidiaries, Eastern Mountain Sports LLC and Bob’s Stores, LLC. Eastern Mountain Sports LLC operates Eastern Mountain Sports stores and is a retailer of top-quality outdoor gear and apparel concentrated on the East Coast of the United States. Bob’s Stores, LLC is a family apparel and footwear retailer concentrated in the northeastern United States. Upon completion of the Merger, the Company will be a wholly-owned subsidiary of Parent.

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THE SPECIAL MEETING

Time, Place and Purpose of the Special Meeting

This proxy statement is being furnished to our stockholders as part of the solicitation of proxies by the board of directors for use at the special meeting to be held on [ — ], 2014, starting at [ — ] a.m., California time, at the Company’s executive offices located at One Sport Chalet Drive, La Cañada Flintridge, California 91011, or at any postponement or adjournment thereof. At the special meeting, holders of Company common stock will be asked to approve the proposal to adopt the Merger Agreement, to approve the proposal to adjourn the special meeting, if necessary or appropriate, for the purpose of soliciting additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the Merger Agreement, and to approve a non-binding advisory proposal to approve certain compensation arrangements for Sport Chalet’s executive officers in connection with the Merger.

Our stockholders must approve the proposal to adopt the Merger Agreement in order for the Merger to occur. If our stockholders fail to approve the proposal to adopt the Merger Agreement, the Merger will not occur. A copy of the Merger Agreement is attached as Annex A to this proxy statement, which we encourage you to read carefully in its entirety.

Record Date and Quorum

We have fixed the close of business on [ — ], 2014 as the record date for determination of stockholders entitled to notice of and to vote at the special meeting, and only holders of record of Company common stock on the record date are entitled to vote at the special meeting. You are entitled to receive notice of, and to vote at, the special meeting if you owned shares of Company common stock at the close of business on the record date. On the record date, there were [ — ] shares of Class A Common Stock and [ — ] shares of Class B Common Stock outstanding and entitled to vote. Each share of Class A Common Stock entitles its holder to 1/20 ^th of one vote on all matters properly coming before the special meeting and each share of Class B Common Stock entitles its holders to one vote on all matters properly coming before the special meeting.

One-third of the shares of Company common stock issued and outstanding and entitled to vote at the special meeting, present either in person or by proxy, constitutes a quorum for the conduct of business at the special meeting. Shares of Company common stock represented at the special meeting but not voted, including shares of Company common stock for which a stockholder directs an “abstention” from voting, as well as “broker non-votes”, will be counted for purposes of establishing a quorum. A quorum is necessary to transact business at the special meeting. Once a share of Company common stock is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date is set for the adjourned special meeting, then a new quorum will have to be established. In the event that a quorum is not present at the special meeting, it is expected that the special meeting will be adjourned or postponed.

Attendance

Only stockholders of record or their duly authorized proxies have the right to attend the special meeting. To gain admittance, you must present a valid photo identification, such as a driver’s license or passport. If your shares of Company common stock are held through a bank, brokerage firm or other nominee, please bring to the special meeting a copy of your brokerage statement evidencing your beneficial ownership of Company common stock and a valid photo identification. If you are the representative of a corporate or institutional stockholder, you must present valid photo identification along with proof that you are the representative of such stockholder. Please note that cameras, recording devices and other electronic devices will not be permitted at the special meeting.

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Vote Required

The adoption of the Merger Agreement requires the affirmative vote of the holders of a majority in voting power of the outstanding shares of Company common stock, voting as a single class. For the proposal to adopt the Merger Agreement, you may vote FOR , AGAINST or ABSTAIN . Abstentions will not be counted as votes cast in favor of the proposal to adopt the Merger Agreement but will count for the purpose of determining whether a quorum is present. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, it will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement.

If your shares of Company common stock are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares of Company common stock, the “stockholder of record.” This proxy statement and proxy card have been sent directly to you by the Company.

If your shares of Company common stock are held through a bank, brokerage firm or other nominee, you are considered the “beneficial owner” of shares of Company common stock held in street name. In that case, this proxy statement has been forwarded to you by your bank, brokerage firm or other nominee who is considered, with respect to those shares of Company common stock, the stockholder of record. As the beneficial owner, you have the right to direct your bank, brokerage firm or other nominee how to vote your shares by following their instructions for voting.

Under Nasdaq rules, banks, brokerage firms or other nominees who hold shares in street name for customers have the authority to vote only on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokerage firms or other nominees are precluded from exercising their voting discretion with respect to approving non-routine matters, such as the proposal to adopt the Merger Agreement, and, as a result, absent specific instructions from the beneficial owner of such shares of Company common stock, banks, brokerage firms or other nominees are not empowered to vote those shares of Company common stock on non-routine matters, which we refer to generally as broker non-votes. These broker non-votes will be counted for purposes of determining a quorum, but will have the same effect as a vote “AGAINST” the proposal to adopt the Merger Agreement.

The proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of the holders of a majority in voting power of the shares of Company common stock present in person or represented by proxy and entitled to vote on the matter at the special meeting. For the proposal to adjourn the special meeting, if necessary or appropriate, you may vote FOR , AGAINST or ABSTAIN . For purposes of this proposal, if your shares of Company common stock are present at the special meeting but you have abstained on this proposal, this will have the same effect as if you voted “ AGAINST ” the proposal. If you fail to submit a proxy or vote in person at the special meeting, or there are broker non-votes on the issue, as applicable, the shares of Company common stock not voted, will not be counted in respect of, and will not have an effect on, the proposal to adjourn the special meeting.

The non-binding advisory proposal to approve certain compensation arrangements for Sport Chalet’s executive officers in connection with the Merger requires the affirmative vote of the holders of a majority in voting power of the shares of Company common stock present in person or represented by proxy and entitled to vote on the matter at the special meeting. For the non-binding advisory proposal to approve certain compensation arrangements for Sport Chalet’s executive officers in connection with the Merger, you may vote FOR , AGAINST or ABSTAIN . For purposes of this proposal, if your shares of Company common stock are present at the special meeting but you have abstained on this proposal, this will have the same effect as if you voted “ AGAINST ” the proposal. If you fail to submit a proxy or vote in person at the special meeting, or there are broker non-votes on the issue, as applicable, the shares of Company common stock not voted will not be counted in respect of, and will not have an effect on, the proposal to adjourn the special meeting.

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If you are a stockholder of record, you may have your shares of Company common stock voted on matters presented at the special meeting in any of the following ways:

Telephone: You may submit your proxy by calling the toll-free telephone number indicated on your proxy card. Please follow the voice prompts that allow you to submit your proxy and confirm that your instructions have been properly recorded.

Internet: You may submit your proxy by logging on to the website indicated on your proxy card. Please follow the website prompts that allow you to submit your proxy and confirm that your instructions have been properly recorded.

Return Your Proxy Card By Mail: You may submit your proxy by completing, dating, signing and returning the proxy card in the postage-paid envelope provided with this proxy statement. The proxy holders will vote your shares of Company common stock according to your directions. If you sign, date and return your proxy card without specifying choices, your shares of Company common stock will be voted by the persons named in the proxy in accordance with the recommendations of the board of directors as set forth in this proxy statement.

Vote at the Meeting: You may cast your vote in person at the special meeting. Written ballots will be passed out to stockholders or legal proxies who want to vote in person at the meeting.

If you are a beneficial owner, you will receive instructions from your bank, brokerage firm or other nominee that you must follow in order to have your shares of Company common stock voted. Those instructions will identify how you may have your shares voted. Please note that if you are a beneficial owner and wish to vote in person at the special meeting, you must provide a legal proxy from your bank, brokerage firm or other nominee.

Please refer to the instructions on your proxy or voting instruction card to determine the deadlines for voting over the Internet or by telephone. If you choose to vote by mailing a proxy card, your proxy card must be filed with our Secretary by the time the special meeting begins. Please do not send in your stock certificates with your proxy card. When the Merger is completed, a separate letter of transmittal will be mailed to you that will enable you to receive the per share merger consideration in exchange for your stock certificates.

If you vote by proxy, regardless of the method you choose to vote, the individuals named on the enclosed proxy card, and each of them, with full power of substitution, or your proxies, will vote your shares of Company common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of Company common stock should be voted FOR or AGAINST or to abstain from voting on all, some or none of the specific items of business to come before the special meeting.

If you have any questions or need assistance voting your Shares, please call [ — ] toll-free at [ — ].

IT IS IMPORTANT THAT YOU SUBMIT YOUR PROXY PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PREPAID REPLY ENVELOPE, OR SUBMIT YOUR PROXY BY TELEPHONE OR THE INTERNET. STOCKHOLDERS WHO ATTEND THE SPECIAL MEETING MAY REVOKE THEIR PROXIES BY VOTING IN PERSON.

As of [ — ], 2014, the record date, the directors and executive officers of the Company beneficially owned and were entitled to vote, in the aggregate, [ — ] shares of Class A Common Stock of the Company and [ — ] shares of Class B Common Stock of the Company (excluding any shares of Company common stock deliverable upon exercise or conversion of any options or restricted stock units), representing [ — ]% and[ — ]% of the outstanding voting power of the outstanding Company common stock on the record date. The directors and executive officers have informed the Company that they currently intend to vote all of their shares of Company common stock “ FOR ” the proposal to adopt the Merger Agreement, “ FOR ” the proposal to adjourn the special meeting, if

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necessary or appropriate, to solicit additional proxies, and “ FOR ” the non-binding advisory proposal to approve certain compensation arrangements for Sport Chalet’s executive officers in connection with the Merger.

The Olberz Family, Mr. Levra and Mr. Kaminsky, collectively, have sufficient voting power to cause the approval of each of the proposals to be presented at the special meeting. In accordance with agreements entered into in connection with the Merger Agreement, each of the Olberz Family, Mr. Levra and Mr. Kaminsky are obligated to vote “ FOR ” approval of the adoption of the Merger Agreement. In addition, each of the Olberz Family, Mr. Levra and Mr. Kaminsky have informed us that they intend to vote “ FOR ” each of the proposals to be presented at the special meeting. In the event the special meeting is held after the Stock Purchase Agreement (as defined below) and the Offer are consummated, Parent and Purchaser will hold sufficient voting power to cause the approval of each of the proposals to be presented at the special meeting, and Parent and Purchaser have committed to vote “ FOR ” approval of the adoption of the Merger Agreement and each other proposal presented for stockholder vote at the special meeting

Voting Rights

Each stockholder is entitled to 1/20th of one vote, in person or by proxy, for each share of Class A Common Stock, and one vote, in person or by proxy, for each share of Class B Common Stock, standing in his or her name on the books of the Company at the close of business on the record date on each matter on which shares of such class of Common Stock are entitled to vote at the special meeting.

Of the shares of Company common stock outstanding on [ — ], 2014, the record date for the special meeting, [ — ] shares of Class A Common Stock (or approximately [ — ]% of the issued and outstanding shares of Class A Common Stock) and [ — ] shares of Class B Common Stock (or approximately [ — ]% of the issued and outstanding shares of Class B Common Stock), representing approximately [ — ]% of the total voting power of the Class A Common Stock and the Class B Common Stock, were owned indirectly by the Olberz Family. In addition, on the record cate, Craig L. Levra, the Company’s Chairman of the Board, President and Chief Executive Officer, and Howard K. Kaminsky, the Company’s Executive Vice President—Finance, Chief Financial Officer and Secretary, owned [ — ] and [ — ] shares, respectively, of Class A Common Stock (or approximately [ — ]% of the issued and outstanding shares of Class A Common Stock), and [ — ] and [ — ] shares, respectively, of Class B Common Stock (or approximately [ — ]% of the issued and outstanding shares of Class B Common Stock), representing approximately [ — ]% of the total voting power of the Class A Common Stock and the Class B Common Stock. See “General Information—Security Ownership of Principal Stockholders and Management” and “Proposal 1: Election of Directors—Certain Relationships and Related Transactions.” As a result, the Olberz Family, and Messrs. Levra and Kaminsky will have the power to determine the outcome of any matter submitted to the stockholders. The Olberz Family and Messrs. Levra and Kaminsky have informed the Company that they intend to vote all shares owned by them “ FOR ” each of the proposals submitted for stockholder approval at the special meeting. In addition, pursuant to agreements entered into in connection with the Merger Agreement, each of the Olberz Family, Mr. Levra, and Mr. Kaminsky are contractually required to vote in favor of the adoption of the Merger Agreement. As a result of the Support Agreements described below, as of July 3, 2014 Purchaser and Parent beneficially owned 7,948,483 shares of Class A Common Stock (or approximately 64.0% of the issued and outstanding shares of Class A Common Stock and 1,069,436 shares of Class B Common Stock (or approximately 60.2% of the issued and outstanding shares of Class B Common Stock), representing approximately 61.2% of the total voting power of the Class A Common Stock and the Class B Common Stock. In addition, following consummation of the transactions contemplated by the Stock Purchase Agreement and consummation of the Offer, Parent and Purchaser will own significantly more shares. Parent and Purchaser have committed to vote all of their shares of Company common stock “ FOR ” adoption of the Merger Agreement and “ FOR ” each of the other proposals voted upon at the special meeting.

Tender and Support Agreements

Substantially simultaneously with the execution and delivery of the Merger Agreement, each of Craig L. Levra, the Company’s Chairman of the Board and Chief Executive Officer, Howard K. Kaminsky, the

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Company’s Executive Vice-President—Finance, Chief Financial Officer and Secretary, and Dennis Trausch, the Company’s Executive Vice President—Growth and Development, who collectively own approximately 3% of the outstanding shares of Class A Common Stock and 53% of the outstanding shares of Class B Common Stock, have separately entered into a Tender and Support Agreement (each a “ Support Agreement ”) with Parent and Purchaser, providing that they shall (i) tender the shares of Common Stock owned by them into the Offer, and (ii) otherwise support the Merger Agreement, the Offer, the Merger and the other transactions contemplated by the Merger Agreement in accordance with the terms of the Support Agreement. In the event that the Company’s board of directors changes its recommendation, the number of shares subject to the Support Agreements will be reduced on a pro rata basis to a number such that all shares subject to the Support Agreements, together with the shares owned by the Olberz Family, represents 35% of the voting power of the Company.

Stock Purchase Agreement

Substantially simultaneously with the execution and delivery of the Merger Agreement, The Olberz Family Trust dated 05/06/1997, Eric S. Olberz and Irene M. Olberz (collectively, the “ Olberz Family ”) entered into a Stock Purchase Agreement (the “ Stock Purchase Agreement ”) with Parent, Purchaser and, solely with respect to certain provisions, the Company. The Stock Purchase Agreement provides that the Olberz Family shall (i) sell to Purchaser all of the Company common stock owned by them immediately following (and contingent upon) the consummation of the Offer at a price equal to $0.75 per share (subject to certain adjustments set forth in the Stock Purchase Agreement), and (ii) support the Merger Agreement, the Offer, the Merger and the other transactions contemplated by the Merger Agreement in accordance with the terms of the Stock Purchase Agreement. As of June 30, 2014, the Olberz Family collectively owned approximately 61% of the outstanding shares of Class A Common Stock and approximately 7% of the outstanding shares of Class B Common Stock. Parent and Purchaser has committed to vote any shares of Company common stock acquired by it prior to the record date “ FOR ” each of the proposals to be considered at the special meeting.

Proxies and Revocation

Any stockholder of record entitled to vote at the special meeting may submit a proxy by telephone, over the Internet, or by returning the enclosed proxy card in the accompanying prepaid reply envelope, or may vote in person at the special meeting. If your shares of Company common stock are held in “street name” by your bank, brokerage firm or other nominee, you should instruct your bank, brokerage firm or other nominee on how to vote your shares of Company common stock using the instructions provided by your bank, brokerage firm or other nominee. If you fail to submit a proxy or vote in person at the special meeting, or abstain, or do not provide your bank, brokerage firm or other nominee with voting instructions, as applicable, your shares of Company common stock will not be voted on the proposal to adopt the Merger Agreement, which will have the same effect as a vote “ AGAINST ” the proposal to adopt the Merger Agreement and will have no effect on the proposal to adjourn the special meeting and on the non-binding advisory proposal to approve certain compensation arrangements for our executive officers in connection with the Merger.

If you are a stockholder of record, you have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is voted at the special meeting by:

If you hold your shares in street name, you may submit new voting instructions by contacting your bank, brokerage firm or other nominee. You may also vote in person at the special meeting if you obtain a legal proxy from your bank, brokerage firm or other nominee.

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Adjournments and Postponements

Although it is not currently expected, the special meeting may be adjourned or postponed, including for the purpose of soliciting additional proxies, if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the Merger Agreement or if a quorum is not present at the special meeting. Other than an announcement to be made at the special meeting of the time, date and place of an adjourned meeting, an adjournment generally may be made without notice. Any adjournment or postponement of the special meeting for the purpose of soliciting additional proxies will allow the Company’s stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned or postponed.

Anticipated Date of Completion of the Merger

We are working towards completing the Merger as soon as possible. If the Merger is approved at the special meeting, then, assuming timely satisfaction of the other necessary closing conditions, we anticipate that the Merger will be completed promptly thereafter.

Rights of Stockholders Who Seek Appraisal

Stockholders that do not vote for the adoption of the Merger Agreement are entitled to demand appraisal rights under the DGCL in connection with the Merger. This means that you are entitled to have the fair value of your shares of Company common stock determined by the Delaware Court of Chancery and to receive payment based on that valuation in lieu of the right to receive $1.04 per share of Company common stock in cash, without interest and less any required withholding taxes. The ultimate amount you receive in an appraisal proceeding may be less than, equal to or more than the amount you would have received under the Merger Agreement.

To exercise your appraisal rights, you must submit a written demand for appraisal to the Company before the vote is taken on the Merger Agreement and you must not vote in favor of the proposal to adopt the Merger Agreement. Your failure to follow exactly the procedures specified under the DGCL may result in the loss of your appraisal rights. See “Appraisal Rights” beginning on page 103 and the text of the Delaware appraisal rights statute, Section 262 of the DGCL, reproduced in its entirety as Annex C to this proxy statement. If you hold your shares of Company common stock through a bank, brokerage firm or other nominee and you wish to exercise appraisal rights, you should consult with your bank, brokerage firm or other nominee to determine the appropriate procedures for the making of a demand for appraisal by your bank, brokerage firm or nominee. In view of the complexity of the DGCL, stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors.

Payment of Solicitation Expenses

The Company may reimburse brokers, banks and other custodians, nominees and fiduciaries representing beneficial owners of shares of Company common stock for their expenses in forwarding soliciting materials to beneficial owners of Company common stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

[ — ] will act as proxy solicitor in connection with the special meeting and will receive customary compensation in connection therewith.

Questions and Additional Information

If you have more questions about the Merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please call [ — ] toll-free at [ — ].

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THE MERGER

Background of the Merger

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. The following chronology does not purport to catalogue every conversation among the board of directors (the “Board”), a special committee of the Board consisting of four outside directors (the “Committee”) or the representatives of the Company and other parties.

As part of its ongoing evaluation of the Company’s business, the Board, together with senior management, continually reviews and assesses opportunities to improve the Company’s operations and financial results and to achieve the Company’s long-term business plan. Periodically, prior to July 2013, the Company’s management team had informal conversations with representatives of various specialty sporting goods retailers, online retailers and private equity firms regarding a variety of potential transactions with the Company. None of these conversations proceeded beyond the informal stage. The Company’s management team and the Board also periodically met with representatives of investment banking firms to discuss their views on the sporting goods retail industry, current economic conditions in general and in the Company’s markets in particular, and the Company’s performance and market valuation relative to its key competitors.

Similar to its competitors, the Company experienced a downturn in its operations and financial results due to the adverse economic conditions in the United States during fiscal years 2009 and 2010. Beginning in 2011, a number of the Company’s competitors started to recognize improved operations and financial results. Unlike these competitors, the Company’s operations and financial results through the second quarter of fiscal year 2014 remained below its expectations and the performance of its competitors. Throughout this period, the Company’s management team and the Board focused on potential operating changes and the implementation of new initiatives to improve the Company’s operations and financial results.

On May 1, 2013, Craig L. Levra, the Company’s Chairman of the Board and Chief Executive Officer, held a discussion with an investment banking firm which focused on leading sporting goods retailers headquartered in Europe, referred to as “ Party A ” and “ Party D ,” and a number of other potential strategic partners. The conversation surrounded the likelihood as to whether any or all would be interested in a US presence or would want to visit the US and pursue further discussions.

On June 7, 2013, Mr. Levra followed up with an investment banking representative and held discussions with regard to Party A and Party D. Mr. Levra and the investment banking representative discussed overall operations of the Company, steps that management was taking to improve the business, the sports retail landscape and changes with competitors.

On July 16, 2013, Howard K. Kaminsky, the Company’s Executive Vice President—Finance, Chief Financial Officer and Secretary, held an introductory conference call with representatives of Party A and a prospective investment bank. The group reviewed Party A’s latest financial performance, strategy and ongoing operational initiatives.

On July 19, 2013, Mr. Levra held an in-person meeting with a representative from “ Party C ,” a sporting goods retailer, to discuss strategic alternatives.

In July 2013, the Company’s senior management provided representatives from three investment banking firms, including Cappello Capital Corp., with a general overview of the Company and requested proposals on each bank’s capabilities and proposed scope and terms of engagement.

On July 31, 2013, the Board held a special meeting, with representatives from the Company’s corporate counsel Sheppard Mullin Richter & Hampton LLP (“ Sheppard ”) in attendance, at which meeting the Board discussed the Company’s strategy and performance prior to the economic downturn commencing in 2008, the Company’s strategy and performance from 2008 to the present, the short and mid-term anticipated

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macroeconomic conditions in the Company’s principal markets, the effect of such conditions on retail sales generally and on sporting goods retailers in particular, the performance of the Company’s principal competitors, the prospects for improvement in the economy generally and in the performance of the Company’s stores by market, revenue enhancement measures and cost reductions by functional area being considered by management, the evolution of retailing (including the role of e-commerce and social media), strategic initiatives being contemplated by management, management’s recommendation that the Company retain an investment banker to assist in assessing strategic alternatives, the identity and strengths of each of the current investment banking candidates, and the terms of each candidate’s proposal.

On August 7, 2013, the Board held a regularly scheduled meeting, with representatives of Sheppard in attendance. In addition to considering routine matters, the Board received a presentation by representatives of Cappello Capital Corp. regarding the following: the position of the Company in its industry; the challenges and opportunities facing the Company; the strategic alternatives available to the Company; process considerations for each strategic alternative; potential strategic and financial investors and important considerations in selecting the same; the qualifications of Cappello Capital Corp. to advise the Company on its strategic alternatives, including selected advisory engagements undertaken; the proposed terms of engagement; an overview of the Company’s current valuation and multiples and the Company’s relative stock price performance, valuation and financial performance compared to other sporting goods companies; and illustrative uses of additional capital. After an extensive discussion of the Company’s potential strategic alternatives, the capabilities of each potential financial advisor, and the proposed engagement letter of Cappello Capital Corp., the Board authorized management to negotiate the terms of the engagement of Cappello Capital Corp. In addition, Mr. Levra held a conference with representatives from Party C and a prospective investment bank.

On August 12, 2013, the Board approved by unanimous written consent the engagement of Cappello Capital Corp. as the Company’s exclusive financial advisor, and effective as of August 13, 2013, the Company and Cappello Capital Corp. executed the engagement letter.

On August 15, 2013, the Board held a special meeting, with representatives of Sheppard in attendance, at which meeting the Board discussed the next steps to be undertaken by Cappello Capital Corp., the results of a survey of potential strategic initiatives and the anticipated business impact and cost of each, an analysis of inventory turnover, and the Company’s brand positioning and messaging.

On August 28, 2013, an investment banking firm contacted Mr. Levra and advised him that Party A was interested in a potential transaction with the Company. On the next day, Mr. Levra, and representatives of that investment banking firm, Party A and Cappello Capital Corp. toured several stores operated by the Company in the Los Angeles area and discussed a potential transaction between the Company and Party A. During the tours, there were multiple discussions with respect to price points and merchandise selection, with compare and contrast dialogue on Party A’s business platform in Europe.

On September 4, 2013, Mr. Levra held a telephone conversation with a representative from an investment banking firm who noted that Party A was interested in an in-person meeting.

On September 23, 2013, the Company issued a press release announcing the engagement of Cappello Capital Corp. as the Company’s exclusive financial advisor in exploring strategic alternatives.

On September 24, 2013, Cappello Capital Corp. received an unsolicited call from a representative of Versa regarding a potential transaction with the Company. Versa advised that they had looked at the Company several years ago and do not believe it makes sense for the Company to be a public company. Versa explained that they own Bob’s Stores Corp. (“ Bob’s Stores ”) and Eastern Mountain Sports (“ EMS ”), provided a verbal overview of both companies and explained that while the Company was large enough for Versa to hold them as a separate portfolio company, there could be benefits from shared resources across the three companies. In addition, Versa provided overview information regarding their fund as well as their investment types, parameters and equity returns expectations on transactions.

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On September 25, 2013, an investment banking firm contacted Cappello Capital Corp. and advised them that a private equity fund, referred to herein as “ Party B ,” was interested in a potential transaction with the Company. On the next day, representatives of that investment banking firm, Party B and Cappello Capital Corp. held a telephone conference regarding Party B’s investment strategy, operating experience and interest in a potential transaction.

On October 1, 2013, Mr. Levra and representatives of Cappello Capital Corp. and Party C, held a meeting regarding the Company’s press release concerning the engagement of Cappello Capital Corp. and suggested arranging a tour of the Company’s new downtown Los Angeles store as well as a discussion of Party C’s interest in a potential transaction.

On October 8, 2013, Mr. Levra and representatives of Cappello Capital Corp. and Party B toured several stores operated by the Company in the Los Angeles area and discussed the Company’s business strategies.

On October 21, 2013, Mr. Levra contacted a representative of Party D regarding its interest in a potential transaction with the Company.

On October 22, 2013, Mr. Levra contacted a representative of a leading online sporting goods retailer, referred to herein as “ Party E ,” regarding its interest in a potential transaction with the Company.

On October 23, 2013, representatives of Cappello Capital Corp. and Party B had a meeting to discuss a potential transaction between Party B and the Company.

On October 24, 2013, Cappello Capital Corp. provided a proposed form of nondisclosure agreement to Party B, and on October 28, 2013, Party B executed and delivered the nondisclosure agreement.

On October 24, 2013, Mr. Levra had a meeting with representatives of Party C regarding a potential transaction between Party C and the Company.

On October 25, 2013, representatives of Cappello Capital Corp. and Party B had a telephone conference regarding Party B’s interest in a potential transaction with the Company. Party B requested a potential transaction structure as they were planning to meet with key limited partners during the following week. The group discussed both majority and minority investments, and Party B indicated that it was flexible as to structure as long as they were able to make their target threshold returns.

On October 29, 2013, Cappello Capital Corp. provided a proposed form of nondisclosure agreement to Party A and Party D.

On November 4 and 5, 2013, Mr. Levra and representatives of Cappello Capital Corp. and Party B toured several stores operated by the Company and its competitors in the Los Angeles area.

On November 5, 2013, the Board held a special meeting, with representatives of Sheppard in attendance, at which meeting Cappello Capital Corp. discussed actions taken to date (including the status of the marketing process), potential strategic and financial partners, potential strategic initiatives to be undertaken by the Company and the estimated funding required to implement and the payback of each, the anticipated revenue contribution and EBITDA contribution of each, the anticipated uses of capital for each year in the five year period ending March 31, 2018, and potential transaction structures, process and timing.

On November 5 and 20, 2013, Cappello Capital Corp. received emails from a representative of Versa reaffirming interest in exploring a potential transaction with the Company and inquiring as to the timing of the availability of marketing materials with respect to the Company.

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On November 6, 2013, Party A executed and delivered the Company’s proposed form of nondisclosure agreement, and on November 8, 2013, Party C executed and delivered a revised form of the Company’s nondisclosure agreement.

On November 10, 2013, Cappello Capital Corp. provided a confidential memorandum describing the Company’s business and materials describing the transaction process to Party A and Party D.

On November 11, 2013, Cappello Capital Corp. provided a confidential memorandum describing the Company’s business and materials describing the transaction process to Party C.

On November 11, 2013, the Company issued a press release announcing its financial results, and filed with the SEC a Quarterly Report on Form 10-Q, for the quarterly period ended September 30, 2013.

On November 11 and 12, 2013, Mr. Levra and representatives of Cappello Capital Corp. had a meeting with representatives of Party A.

On November 13 and 14, 2013, Mr. Levra and representatives of Cappello Capital Corp. had a meeting with representatives of Party D and toured several stores operated by Party D in Europe.

On November 19, 2013, representatives of Cappello Capital Corp. had a meeting over dinner with representatives of Party D regarding key points of the Company’s confidential memorandum as well as how to proceed regarding a potential transaction.

On November 20, 2013, Mr. Levra and representatives of Party C toured the Company’s new concept store in downtown Los Angeles which opened in July 2013. Mr. Levra had dinner with a representative from Party C to discuss the next day’s agenda and likely outcomes. Mr. Levra and the representative also discussed prior experience and issues with Party C’s current online infrastructure.

On November 20, 2013, the Company received notice from the Nasdaq Stock Market (“ Nasdaq ”) that the Company was not in compliance with Rule 5450 of the Nasdaq Listing Rules which requires the Company to maintain a minimum of $10 million in stockholders’ equity for continued listing on the Nasdaq Global Market. On November 26, 2013, the Company filed with the SEC a Current Report on Form 8-K disclosing this Nasdaq notice.

On November 21, 2013, Mr. Levra, Mr. Kaminsky, representatives of Cappello Capital Corp. and Party C had a meeting to discuss the Company’s business strategy and a potential transaction between the Company and Party C. Company management and Cappello Capital Corp. presented an abbreviated overview of the confidential memorandum. The group held an in-depth discussion of merchandising strategy, online strengths and weaknesses of both parties, value-added services, Party C’s holiday marketing plan and posture, and desire to focus on services and challenge competitors.

On November 23, 2013, Cappello Capital Corp. provided a confidential memorandum describing the Company’s business and materials relating to the transaction process to Party C.

On November 25, 2013, Cappello Capital Corp. sent a confidential memorandum describing the Company’s business and materials relating to the transaction process to Party A, Party B and Party D.

On December 6, 2013, Mr. Levra contacted representatives of Party D to determine their interest in pursuing a transaction with the Company.

On December 9, 2013, representatives of Cappello Capital Corp. contacted representatives of Party C to discuss the due diligence process and transaction timetable. The representatives of Cappello Capital Corp. suggested a three step diligence process to protect sensitive information of both parties, primary categories for

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preliminary diligence and a timeline covering due diligence to completion of transaction documentation. On the next day, representatives of Party C contacted representatives of Cappello Capital Corp. to discuss retaining an independent third party to analyze certain combination synergies to maintain the confidentiality of the Company and Party C’s information.

On December 10, 2013, Party E executed and delivered a nondisclosure agreement.

On December 11, 2013, representatives of Cappello Capital Corp., Mr. Levra and representatives of Party E toured one of the Company’s stores and had discussions regarding a potential transaction.

On December 12, 2013, representatives of Party D advised Mr. Levra that they had presented a potential transaction structure to Party D’s board of directors. On December 13, 2013, Party B notified Cappello Capital Corp. that they were in the process of closing other transactions and could not allocate adequate time to considering a transaction with the Company at that time. Party B believed there was significant execution risk, uncertainty as to the successfulness of the new store prototype and concern that they would not be able to properly allocate assets to ensure a value-add impact to the Company’s operations.

On December 15, 2013, Cappello Capital Corp. contacted Party A to provide an update regarding the Company’s recent strong Thanksgiving holiday performance and a suggested process to reach a transaction with the Company. Representatives of Cappello Capital Corp. suggested a three step diligence process to protect sensitive information of both parties, primary categories for preliminary diligence and a timeline covering due diligence timing to completion of transaction documentation.

On December 18, 2013, Mr. Levra had discussions with representatives of Party E regarding the potential synergies available to Party E in a potential transaction.

On December 26, 2013, Cappello Capital Corp. contacted Party A’s investment banking representative to determine Party A’s interest in pursuing a transaction with the Company. The representative noted that he would be contacting Party A prior to the New Year and would assess the level of interest.

During November and December 2013, representatives of Cappello Capital Corp. contacted on behalf of the Company four financial parties regarding interest in extending a subordinated loan to the Company. In December 2013, the Company received a term sheet from four financial parties in connection with a subordinated loan, one of which was Crystal Financial, LLC (“ Crystal Financial ”). From December 2013 until January 2014, the Company and Crystal Financial circulated multiple draft term sheets regarding a subordinated loan of up to $15,000,000. However, at the February 4, 2014 meeting of the Board, the Board determined to not proceed with a subordinated loan at that time and to continue to evaluate the strategic alternatives available to the Company.

On January 1, 2014, Mr. Levra had a telephone discussion with representatives of Party E regarding a potential transaction with the Company.

On January 6, 2014, Cappello Capital Corp. received a telephone call from a representative of Versa requesting marketing material concerning the Company. Cappello Capital Corp. provided Versa with a proposed form of nondisclosure agreement.

On January 7, 2014, Versa executed and delivered to Cappello Capital Corp. a nondisclosure agreement. On January 10, 2014, Cappello Capital Corp. countersigned the nondisclosure agreement, and provided Versa a confidential memorandum describing the Company and materials relating to the transaction process.

On January 8, 2014, Cappello Capital Corp. provided Party C and its representatives access to the Company’s virtual data room to supplement preliminary diligence in addition to analyses being performed by an independent third party.

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On January 12, 2014, Mr. Levra had a meeting with representatives of Party D to discuss the Company’s business strategy and a potential transaction.

On January 13, 2014, representatives of Cappello Capital Corp. and Versa had a telephone conference in which the representative from Versa noted Versa’s high level consideration of a potential reverse merger of Vestis into Sport Chalet along with consolidation of the Class A Common Stock and the Class B Common Stock. The representatives of Versa also noted that Versa’s key retail operator would be in Los Angeles during the following week and would like to set up a store walkthrough and informal management meeting.

On January 14, 2014, Mr. Levra and representatives of Party D toured retail stores in New York City and discussed the Company’s business strategy and a potential transaction.

On January 15, 2014, representatives of Cappello Capital Corp. and Party C held a conference to discuss combination strategy and process. It was additionally discussed that a term sheet could be prepared and submitted by the end of the month.

On January 16, 2014, Mr. Levra held a conference with a representative from Party C and reviewed Party C’s holiday results, comparative initiatives, along with the mutual desire between Party C and the Company to move forward with next steps.

On January 17, 2014, Mr. Levra and representatives of Cappello Capital Corp. and Party C held a conference to discuss combination strategy and process.

On January 20, 2014, Mr. Levra, Mark Walsh, Versa’s Managing Director, Operations, former CEO of Bob’s Stores and current Chairman and CEO of Vestis Retail Group, LLC, the holding company of Bob’s Stores and EMS, and representatives of Cappello Capital Corp. toured several stores operated by the Company in the Los Angeles area.

On January 22, 2014, Mr. Levra contacted representatives of Party B to discuss the Company’s recent strong holiday performance. Representatives of Cappello Capital Corp. and Party C discussed the process and timetable of a potential transaction.

On January 28, 2014, Versa advised Cappello Capital Corp. that Versa was interested in obtaining exclusivity for a potential merger. Versa stated that it would begin formulating an initial list of preliminary diligence items to better understand the Company.

On January 29, 2014, Cappello Capital Corp. provided Versa and its representatives access to the Company’s virtual data room.

On February 3, 2014, the Company and Party C executed and delivered an agreement appointing an independent third party to analyze certain combination synergies to maintain the confidentiality of the Company and Party C’s information.

On February 4, 2014, the Board held a regularly scheduled meeting, with representatives of Sheppard in attendance. In addition to discussing routine matters, the Board received a presentation by representatives of Cappello Capital Corp. regarding the status of the Company’s efforts to identify a strategic partner, including the parties contacted, nondisclosure agreements signed and discussions held.

On February 5 and 6, 2014, Mr. Levra, Mr. Kaminsky, representatives of Cappello Capital Corp. and Party C had a meeting to discuss the process and timetable of a potential transaction. The group reviewed the Company’s consolidated income statement as well as every individual store’s performance for both the Company and Party C for all overlapping market areas in the four states of mutual competition. The group discussed rebranding select stores in specified markets on a store-by-store basis. The group also reviewed a third-party’s findings on customer rewards membership overlap, expenses, specialty brands and value-added services.

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On February 5, 2014, the Company issued a press release announcing its results of operations, and filed with the SEC a Quarterly Report on Form 10-Q, for the quarterly period ended December 30, 2013.

On February 7, 2014, Mr. Levra and representatives of Cappello Capital Corp. had an in-person meeting with Party E, at Party E’s corporate headquarters, to discuss a potential transaction between the companies.

On February 10, 2014, Party A advised Cappello Capital Corp. that they would not pursue a transaction with the Company and planned to focus on European markets.

On February 11, 2014, the Board held a special meeting, with representatives of Sheppard in attendance, to consider the establishment of a special committee with respect to a potential transaction and determined that it was advisable and in the best interests of the Company and its stockholders to form the Committee, consisting of directors who were not and are not directly or indirectly affiliated with members of the Company’s management or the Company’s significant stockholders to oversee the ongoing strategic process and to consider and address potential conflicts of interest of management or otherwise, if any. Accordingly, the Board appointed Kevin Ventrudo, Randall Scoville, Rachel Glaser and Donald Howard to the Committee. The Committee was granted all the power and authority of the Board, to the fullest extent permitted by law, to take actions with respect to any potential transaction or alternative thereto and any review, discussion, consideration, deliberation, examination, investigation, analysis, assessment, evaluation, exploration, response, negotiation, termination, rejection, approval and/or authorization on behalf of the Company in connection therewith;  provided ,  however , that the Committee shall not have authority to approve (a) the execution and delivery of any definitive agreement evidencing the terms pursuant to which the potential transaction or any alternative thereto will be completed that are, by the terms thereof, binding on the Company, but rather shall submit the Committee’s recommendation with respect thereto to the Board, or (b) any other agreement required under applicable law to be approved by the Board. The Board resolved not to recommend any potential transaction for approval by the Company’s stockholders without a prior favorable recommendation by the Committee.

On February 12, 2014, the Committee held a telephonic meeting to address organizational matters. The Committee retained Richards, Layton & Finger, P.A. (“ RLF ”) as independent legal counsel to the Committee and appointed Mr. Ventrudo as Chair of the Committee. The Committee then considered the retention of a financial advisor to assist the Committee in fulfilling its fiduciary duties. At the meeting, RLF discussed the role of the Committee and the fiduciary duties of directors in considering the strategic alternatives available to the Company, including their fiduciary duties in connection with a potential sale of the Company. At this meeting, representatives of Cappello Capital Corp. updated the Committee on the status of the Company’s strategic review process and the process participants.

From its retention on August 12, 2013 until the formation of the Committee, Cappello Capital Corp. contacted 84 financial parties and 35 strategic parties to participate in the Company’s strategic review process. Of the parties contacted by Cappello Capital Corp., 44 parties entered into a confidentiality and non-disclosure agreement and Cappello Capital Corp. sent confidential information memorandums to 45 process participants. During this time period, representatives of Cappello Capital Corp. and Company management engaged in in-person meetings, conducted facility tours, and engaged in substantive discussions with seven parties (other than Parties A-E), consisting of two strategic parties and five financial parties. However, all seven of these parties determined to not proceed with their review of the Company or submit a proposal.

On February 14, 2014, the Committee convened a telephonic meeting at which representatives of RLF and Cappello Capital Corp. were present. At the meeting representatives of Cappello Capital Corp. updated the Committee on the efforts undertaken by Cappello Capital Corp., in conjunction with the Board, in connection with the Company’s strategic review process. Cappello Capital Corp. advised that the Company and Cappello Capital Corp. had explored alternatives, including, but not limited to, subordinated debt financing, equity infusions, joint ventures, divestitures and a sale of the Company. Cappello Capital Corp. reviewed with the Committee the strategic and financial parties Cappello Capital Corp. had contacted on behalf of the Company regarding a potential transaction, the factors used to determine potential process participants and the status of the

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strategic review process. After a discussion of Cappello Capital Corp.’s qualifications, experience and independence, and taking into account the terms of its engagement, extensive involvement in the strategic process to date as well as the likely cost of retaining another financial advisor for the Committee, the Committee determined that Cappello Capital Corp. was independent of the Company and the Company’s senior management and determined to engage Cappello Capital Corp. as financial advisor to the Committee. The Committee confirmed the broad mandate of Cappello Capital Corp. with respect to the Company’s search for strategic alternatives. Also at the meeting, RLF reviewed with the Committee its fiduciary duties and matters of Delaware law in connection with the retention of a financial advisor and the consideration of strategic alternatives.

On February 14, 2014, the Board met to receive a report from Cappello Capital Corp. on the status of its efforts to identify a strategic partner.

On February 18, 2014, the engagement letter between the Company and Cappello Capital Corp. was terminated, and, on February 19, 2014, the Company entered into an engagement letter on substantially the same terms with Cappello Global, LLC and Niagara International Capital Limited (together, “ Cappello Global ”) as exclusive financial advisor to the Committee.

On February 20, 2014, Party D advised Cappello Global that they would not pursue a transaction with the Company.

On February 20, 2014, Messrs. Levra and Kaminsky and representatives of Cappello Global had dinner with representatives of Versa. Between February 21, 2014 and February 24, 2014, Messrs. Levra and Kaminsky and representatives of Cappello Global met with Versa to discuss the synergies and structure of a potential transaction. The group discussed both parties’ financial performance. In addition, the group discussed the potential purchasing savings from the combination and cost savings in overhead, systems and other related areas. The group discussed process timing and other requirements to completing a transaction.

On March 1, 2014, Mr. Levra contacted representatives of Party B to determine its interest in re-engaging to pursue a transaction with the Company.

On March 4 and 5, 2014, Messrs. Levra and Kaminsky and representatives of Cappello Global and Party B toured several stores operated by the Company in the Los Angeles area and discussed the structure and timetable of a potential transaction. The group discussed potential “bolt-on” acquisitions as well as the financial and Nasdaq de-listing issues of the Company. Party B verbally provided an investment structure that they denoted would be provided in writing on the following day.

On March 6, 2014, Party B submitted to Cappello Global a term sheet for a potential transaction with the Company. The term sheet provided that Party B would raise $5 million of equity financing for the Company within 120 days of the signing of definitive documents, that Party B would bring additional funding partners to the Company, and an officer of Party B would serve as Chairman of the Board. In return, Party B would receive 2,000,000 shares of Company stock (which would vest quarterly over a 12 month period), two seats on the Board, options to purchase up to 2,000,000 shares of Company common stock, and two warrants for each dollar transacted for acquisitions or equity transactions at the deal strike price. The term sheet did not provide any assurance of funding for the Company and was contingent upon Party B being able to raise the necessary funds.

On March 7, 2014, Mr. Levra and representatives of Cappello Global and Party B toured the facilities of the Company’s Team Sales Division.

On March 7, 2014, the Committee held a telephonic meeting at which representatives of RLF and Cappello Global were present to receive an update on the strategic review process and to consider other matters. At the meeting, representatives of Cappello Global reviewed with the Committee the strategic review process, including the status of Party B, Party C and Versa. At the meeting the Committee discussed with its advisors the strategic

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alternatives available to the Company, including an equity infusion, debt financing or a business combination transaction. The Committee discussed the effect a potential equity infusion would have on the Company and the required amount and proposed uses of an equity infusion. The Committee authorized Cappello Global and senior management to meet with Versa to discuss the Company’s business and a potential transaction. Cappello Global advised the Committee that an all-cash proposal to acquire the Company was anticipated to be received from Party C. The Committee also discussed the letter of intent submitted by Party B and, after discussion with Cappello Global, directed Cappello Global to advise Party B that its proposal was unacceptable.

On March 12 and 13, 2014, Messrs. Levra and Kaminsky met with representatives of Cappello Global and Versa in Philadelphia to discuss a potential transaction with the Company, including various process and potential transaction structure considerations as well as the possibility of combining Sport Chalet with Bob’s Stores and EMS.

On March 13, 2014, Versa delivered to Cappello Global a draft non-binding term sheet providing for a business combination between the Company and a subsidiary of Versa, Vestis. In the proposed merger the Company’s stockholders would receive stock of the surviving entity equal to 10-20% of the outstanding stock of the combined entity. Versa would fund up to $50 million into the combined company consisting of $20-30 million funded at the closing and, at the discretion of Versa, up to an additional $20-30 million in exchange for a combination of common stock and preferred stock of the combined company. The draft term sheet provided for the possibility of a roll-over by members of management and the Olberz Family, the holders of approximately 63% of the outstanding shares of Class A Common Stock and approximately 59% of the outstanding shares of Class B Common Stock. The draft term sheet also provided for a binding 60 day exclusivity period, subject to an extension of thirty days if Versa is negotiating in good faith towards a potential transaction.

On March 14, 2014, the representatives of the private equity fund which owns Party C contacted Cappello Global to discuss the status of the proposed transaction with the Company.

On March 16, 2014, Mr. Levra contacted representatives of Party E to discuss that party’s interest in a potential transaction with the Company. Following that discussion, on March 18, 2014, Party E advised representatives of Cappello Global that it had decided to withdraw from the Company’s strategic review process.

On March 18, 2014, the Committee held a telephonic meeting at which representatives of RLF, Cappello Global, Sheppard, and the Company’s senior management were present to receive an update on the strategic review process and to consider Versa’s proposed term sheet. At the meeting, representatives of Cappello Global reviewed with the Committee the status of the strategic review process and Cappello Global’s and management’s interactions with the process participants. Members of management reviewed with the Committee the Company’s budget and operating results and discussed the effect that the foregoing would have on the strategic review process and operations of the business. The Committee discussed with its advisors the draft term sheet from Versa, including the exclusivity provision, the possibility of a roll-over by members of management and the Olberz Family of their stock and the value of the consideration that the Company’s stockholders would receive in the proposed transaction. Cappello Global also advised that Versa was not interested in a cash-out transaction for all of the Company’s stockholders. The Committee met with representatives of RLF in executive session.

On March 21, 2014, Cappello Global provided Versa with the Committee’s initial feedback on the proposed term sheet, including its preference for a transaction in which all of the Company’s stockholders are treated equally. From March 24, 2014 until April 16, 2014 the Committee and Versa through their legal counsel exchanged multiple drafts of the term sheet.

On March 24, 2014, representatives of Cappello Global and Party B discussed the proposed transaction structure.

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On March 28, 2014, both the Board and the Committee held in-person meetings at which representatives of RLF and Cappello Global were present to receive an update on the strategic review process and to consider other matters. At the meeting of the Board, representatives of Cappello Global reviewed with the Board the status of the strategic review process and Cappello Global’s and management’s interactions with the process participants. The Board also discussed the Company’s budget, liquidity issues, need for financing and financial condition. Representatives of Cappello Global reviewed with the Board and the Committee certain financial analysis relating to the proposed transaction with Versa. At the meetings, the Board and the Committee discussed the draft term sheet with Versa, including the relative value of the consideration received by the Company’s stockholders in the proposed transaction, certain governance issues of the combined entity and the capitalization of the combined entity. Cappello Global also discussed the status of a proposal from Party C and advised that a proposal would be forthcoming shortly, but that they now understood that it would not be an all-cash offer to acquire the Company. The Committee discussed the strategic process and various aspects of Versa’s proposal, including relative valuation, potential roll-over by management and the Olberz Family and exclusivity. The Committee authorized Cappello Global and Mr. Levra to meet with Versa to discuss the Company’s business, the businesses owned by Vestis and strategic fit and the possibility of a transaction.

On April 3, 2014, Party C submitted a term sheet to Cappello Global. The term sheet provided that Party C would purchase five of the Company’s locations for $4.1 million and would purchase shares of 12% Redeemable Convertible Preferred Stock representing 19.7% of the outstanding common stock of the Company on an as converted basis for $4.25 million. The 12% Redeemable Convertible Preferred Stock would pay a 12% dividend per year and would be redeemable by the Company. Party C also requested that the Company enter into an exclusivity agreement.

On April 3 and 4, 2014, Mr. Levra and representatives of Cappello Global and Versa met in Philadelphia to discuss the proposed transaction.

On April 5, 2014, Versa and Party B submitted revised term sheets to Cappello Global. The term sheet submitted by Versa provided for a combination of the operations of Vestis and the Company through an “up-C-corp.” merger structure, whereby the stockholders of the Company would receive shares in a newly formed Delaware corporation, the sole asset of which would be a 20% interest in a Delaware limited liability company which would hold the assets of the Company and Vestis. In connection with the merger transaction, Versa would fund up to $50 million into the limited liability company, $25 million of which would be funded at closing. The Versa term sheet also provided for a 60 day exclusivity period, subject to an extension of 30 days if Versa is proceeding in good faith toward a transaction. The revised term sheet submitted by Party B provided for an initial investment in the Company of $15 million in exchange for newly issued shares representing 43% of the Company’s equity. A second investment of an additional $15 million to be made when the trailing 12 month EBITDA of the Company exceeds $9 million would be made in exchange for newly issued shares representing 27% of the Company’s equity at that time. The stock issued in connection with each investment would be convertible preferred stock with a 4% coupon that would be convertible by either the Company or the investor at any time after the trailing 12 month EBITDA of the Company exceeds $12 million. The revised term sheet also provided for certain transaction fees payable to Party B and the issuance of warrants representing in the aggregate 3 million shares of Company stock. Additionally, an officer of Party B would become the Chairman of the Board.

On April 6, 2014, the Committee held a telephonic meeting, at which representatives of RLF, Cappello Global, Sheppard and the Company’s senior management were present, to receive an update on the strategic review process and to consider other matters. At the meeting the Company’s management updated the Committee on the Company’s difficult financial condition, including the Company’s relationship with its vendors and with Bank of America, N.A., the Company’s lender (“ BofA ”), as well as the Company’s cash flow forecasts. At the meeting, representatives of Cappello Global gave a financial presentation to the Committee which included a comparative analysis of the proposals received by the Company from Versa, Party B and Party C. After discussion with RLF and Cappello Global, the Committee determined that the term sheet submitted by

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Versa was more favorable to the Company’s stockholders than the term sheets submitted by Party B and Party C and that the Committee would continue to negotiate with Versa. Among other things, the Committee discussed the lack of certainty as to whether Party B had the funds to complete the transaction. The Committee met with representatives of RLF and Cappello Global in executive session.

On April 8, 2014, the Committee held a telephonic meeting at which representatives of RLF, Cappello Global, Sheppard and the Company’s senior management were present to receive an update on the strategic review process and to consider other matters. The Committee discussed with its advisors the term sheet proposed by Versa, including the proposed transaction structure and the rights of the Company’s stockholders following the closing of the transaction, as well as the fact that improved terms were not forthcoming from Party B and Party C. The Committee also discussed with its advisors a proposed response to Versa’s term sheet, including eliminating the roll-over provisions for any stockholders, providing that any second tranche of equity funding by Versa would be at the option of a special committee and proposing changes to the terms of the exclusivity provision. Representatives of Company management updated the Committee on the Company’s financial condition and the ability of the Company to meet its obligations under the Company’s credit documents. The Committee met with representatives of RLF in executive session. The Committee directed Cappello Global to provide a revised term sheet to Versa following the meeting and directed representatives of Sheppard, Cappello Global and senior management to meet with Olberz Family representatives and Wedbush Inc. (“ Wedbush ”) to determine their position with respect to a potential transaction.

On April 8, 2014, Cappello Global provided a revised term sheet to Versa, which included, among other things, changes to clarify the structure of a transaction with the Company.

On April 9, 2014, representatives of Versa and Cappello Global discussed open issues on the term sheet.

On April 10, 2014, Sullivan & Cromwell LLP (“ S&C ”), counsel to Versa, Sheppard and RLF had an introductory conference call. Later that day, S&C provided a revised draft of the term sheet to RLF and Sheppard.

Between April 9, 2014 and April 11, 2014, representatives of the Company’s senior management, Sheppard and Cappello Global engaged in discussions with the Olberz Family regarding the family’s willingness to engage in a potential transaction and be bound by an exclusivity provision. Discussions also took place with Wedbush as to its willingness to support the proposed transaction. During such discussions, the Olberz Family expressed its preference for a cash transaction and concerns as to the proposed transaction structure, including its complexity and the securities to be received in such transaction and, while supportive of the proposed transaction, expressed a preference for cash consideration including the possibility of accepting a discount to the public stockholders in any such transaction so long as the amount of cash consideration would satisfy its margin loan with Wedbush.

On April 11, 2014, the Committee held a telephonic meeting at which representatives of RLF, Cappello Global, Sheppard and the Company’s senior management were present to receive an update on the strategic review process and to consider other matters. Representatives of Company management updated the Committee on the Company’s cash flow projections and the communications that representatives of management had with BofA regarding the Company’s compliance with the operating covenants in its credit facility with BofA. Representatives of Cappello Global reviewed with the Committee certain financial analysis relating to the proposed transaction with Versa, including a contribution analysis of the proposed transaction, the proposed synergies of the combined company, and the capitalization of the combined company. The Committee also considered certain matters of the term sheet, including (i) Vestis’ cash investment in the combined company and (ii) the exclusivity provision. Cappello Global advised the Committee that Vestis was unwilling to pursue the transaction and costs associated with diligence without a grant of exclusivity and discussed the lack of viable alternatives to a transaction with Vestis. The Committee met with representatives of RLF in executive session, discussed the terms of the proposed transaction, including the exclusivity provision, and authorized RLF to negotiate to finalize the term sheet.

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Between April 11, 2014 and April 12, 2014, S&C and RLF continued to negotiate the term sheet and exchanged revised drafts reflecting such negotiations.

Between April 15, 2014 and April 16, 2014, Sheppard, S&C and Clark & Trevithick, counsel to the Olberz Family, exchanged markups of the term sheet.

On April 16, 2014, the Company, the Olberz Family, Messrs. Levra and Kaminsky in their capacities as stockholders, Versa and Vestis entered into a non-binding term sheet. The term sheet provided for an “up-C-corp” structure whereby the Company’s stockholders would receive shares of stock in a new corporation, the sole asset of which would be 20% of the equity in a limited liability company, which would also hold assets, in particular EMS and Bob’s Stores, contributed by Vestis. In connection with the transaction, Versa would fund $25 million into the combined entity. The term sheet provided for a 30 day exclusivity period, subject to an extension of 15 days if Versa is proceeding in good faith towards a transaction, which exclusivity provision was binding upon the Company, Messrs. Levra and Kaminsky and the Olberz Family. On the same day, Cappello Global provided S&C and other third-party service providers engaged by Versa with access to a virtual data room containing financial information and other due diligence materials regarding the Company.

From April 16, 2014 to April 23, 2014, Versa directed its third-party services providers to conduct a due diligence review of the Company by reviewing materials provided in the virtual data room.

On April 23, 2014, the Committee held a telephonic meeting at which representatives of RLF, Cappello Global, Sheppard and the Company’s senior management were present to receive an update on the strategic review process and to consider other matters. The Committee discussed with its advisors making a proposal to Versa for a change in the structure of the transaction to an all-cash transaction in light of concerns as to the timing, cost and complexity of the “up-C-corp.” structure, particularly in light of the Company’s financial condition. In addition, the Committee was concerned as to the possibility of the post transaction corporation not meeting the listing requirements of Nasdaq and believed that the willingness of the Olberz Family to accept a discount relative to other stockholders may induce Vestis to consider agreeing to an all-cash transaction. Representatives of management updated the Committee on the Company’s financial condition and the ability of the Company to meet its obligations under the Company’s credit documents, including that the Company’s 13 week cash flow projections would soon show a covenant shortfall in August 2014 with respect to the Company’s credit facility with BofA. The Committee met with representatives of RLF in executive session and determined to authorize Cappello Global to contact Versa regarding a change to an all-cash structure, which would provide for a premium to the Company’s stockholders except the Olberz Family, who would receive a discount.

On April 25, 2014, Sheppard provided a draft of a transaction agreement to S&C. The transaction agreement set forth the terms and conditions of the transaction described in the term sheet, including the steps to effect the holding company reorganization and the “up-C-corp” structure. On the same day, representatives of Cappello Global and representatives of Versa continued to discuss the issues regarding the “up-C-corp” structure and the Committee’s request for an alternative transaction structure.

On April 28, 2014, the Committee held a telephonic meeting with representatives of RLF, Cappello Global, Sheppard and Company management to receive an update on the strategic review process and to consider other matters. At the meeting the Committee received an update from its advisors as to the negotiation of the transaction with Versa and the diligence efforts undertaken by Versa. The Committee also received an update from Company management as to the financial condition of the Company, including the Company’s cash flow issues. The Committee also considered at the meeting reengaging with subordinated lenders for a loan in order to fund the Company and to reduce vendor payables and retaining a restructuring advisor to assist the Company. The Committee met with representatives of RLF in executive session.

On April 29, 2014, representatives of Cappello Global had an in-person meeting in Philadelphia with representatives of Versa to negotiate the terms of amendments to the current term sheet to provide for an all-cash transaction which included a cash premium for the Company’s stockholders and $0.72 per share for the Olberz

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Family (an amount believed to be sufficient to pay off the Olberz Family’s margin loan). Following the meeting, Cappello Global received an amended and restated term sheet from Versa that provided for a cash transaction whereby Versa would in a two-step merger via a tender offer acquire the outstanding shares of the Company’s stock (other than the shares held by the Olberz Family) for $1.17 per share and Versa would acquire the shares of stock owned by the Olberz Family in a stock purchase for $0.72 per share. The term sheet also provided that Messrs. Levra, Kaminsky and Trausch and Wedbush would each roll-over a portion of their shares into the combined company and, along with the Olberz Family, enter into support agreements.

From April 29, 2014 through June 5, 2014, the Committee and Versa exchanged multiple drafts of the amended and restated term sheet.

On April 30, 2014, the Committee held a telephonic meeting at which representatives of RLF and Cappello Global were present to discuss the revised term sheet received from Versa and the revisions sent back to Versa earlier in the day by the Committee’s advisors, including (i) deletion of the $1.17 pricing, (ii) deletion of certain conditions to the tender offer, (iii) deletion of the roll-over provisions for senior management and Wedbush, (iv) deletion of provisions extending the tender and support agreements past a recommendation change as to the transaction by the Board, and (v) not extending the existing exclusivity period past its expiration on May 31, 2014. The Committee also considered the likelihood that the Company’s fourth quarter results would have a significant negative effect on the Company’s market price and the likelihood of the Company receiving a going concern qualification from its auditors.

On May 1, 2014, a representative of Cappello Global sent an e-mail to Mr. Halpern with a summary of the principal open issues on the term sheet raised by the Committee. On the same day, representatives of Cappello Global and representatives of Versa had a telephone conference regarding these issues and the version of the term sheet sent by RLF the previous day. Also on the same day, Mr. Levra and Mr. Quinn met and toured Sport Chalet’s distribution center and five additional Sport Chalet stores in the Los Angeles area.

On May 2, 2014, Versa indicated to Cappello Global that it was suspending its due diligence review efforts pending resolution of the revised term sheet.

On May 3, 2014, the Committee held a telephonic meeting at which representatives of RLF, Cappello Global, Sheppard and the Company’s senior management were present to receive an update on the strategic review process and to consider other matters. The Committee discussed with its advisors that Versa had reacted negatively to the Committee’s prior term sheet and temporarily ceased negotiations, but subsequently provided a revised term sheet, which included, among other things, (i) a proposed two tier pricing structure, with a higher price if the transaction could be consummated via a short-form merger and a lower price if it was necessary for Versa to call a meeting of stockholders in order to consummate the merger following a successful closing of the tender offer, (ii) a proposed termination fee of 2% of the Company’s equity value plus reimbursement of Versa’s expenses, (iii) agreements between Vestis and Messrs. Levra, Kaminsky and Trausch and the Olberz Family which provided for a 12 month tail provision following termination of the merger agreement during which such stockholders could not approve an alternative transaction and for such stockholders to pay 90% of the upside of any alternative transaction above the Versa transaction price to Versa, (iv) a new 45 day exclusivity provision from the date of signing the term sheet, (v) an agreement by Messrs. Levra and Kaminsky to waive any change in control severance payments due under their employment agreements and (vi) a reinvestment by Messrs. Levra, Kaminsky and Trausch and Wedbush of any merger proceeds into the surviving entity. The Committee discussed the Company’s financial condition, liquidity issues, poor upcoming earnings and the possibility of receipt of a going concern qualification from its auditors and determined to send a revised draft of the term sheet to Versa which, among other things, shortened its exclusivity period to 35 days, deleted the reinvestment provisions, eliminated the tail provision in the tender and support agreements which would prohibit Messrs. Levra, Kaminsky and Trausch and the Olberz Family from supporting an alternative transaction for 12 months after the termination of the merger agreement and reduced the upside payment payable by Messrs. Levra, Kaminsky and Trausch and the Olberz Family in connection with an alternative transaction entered into by the Company during

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the 12 month period following the termination of the merger agreement from 90% to 50%. Following the Committee meeting, on May 4, 2014, RLF sent a revised term sheet to Versa’s attorneys.

On May 4, 2014, RLF provided a revised term sheet to S&C.

On May 5, 2014, representatives of Cappello Global and representatives of Versa had a telephone conference regarding open issues in the revised term sheet. Versa indicated on the call that it would direct its third-party service providers to re-commence the due diligence review process that had been put on hold previously.

On May 6, 2014, S&C provided a revised term sheet to RLF and Sheppard.

On May 8, 2014, the Committee held a telephonic meeting at which representatives of RLF, Cappello Global, Sheppard and the Company’s senior management were present to provide an update as to the financial condition of the business, including cash flow forecasts, past due payables and employee departures, and to discuss the revised term sheet received from Versa on May 6, 2014. The terms of the term sheet included (i) a 20 day period of exclusivity from the date of signing the term sheet with two additional 15 day periods of extension, (ii) the sale of the shares held by the Olberz Family at the time of the offer closing for $0.72 per share, (iii) two tier pricing with the top tier, payable if sufficient shares are tendered in the tender off for Vestis’ to effect a short-form merger, being 110% of the 10 day trailing average market price (up to a maximum of $1.30) and the bottom tier, payable if Vestis is unable to effect a short-form merger, being 85% of the top tier, (iv) a termination fee of 2% of the enterprise value plus reimbursement of expenses payable to Vestis upon termination of the merger agreement in certain instances, (v) tender and support agreements between Vestis and Messrs. Levra, Kaminsky and Trausch and a stock purchase agreement between Vestis and the Olberz Family which, in each case, provided for a 12 month tail provision from the date of termination of the merger agreement during which such stockholders would have to pay to Versa 90% of the upside received in any alternative transaction relative to the price to be paid in the Versa transaction, and (vi) a new 45 day exclusivity provision. The Committee determined that it was advisable to continue to pursue an all cash transaction and authorized its advisors to send a revised draft of the term sheet to Versa which, among other things, (i) accepted the two tier pricing but rejected the market-based approach in view of the thin trading in the Company’s stock and likelihood of a drop in the Company’s stock price due to earnings and other financial difficulties, and provided for a fixed price of $1.20 for the top tier and $1.08 for the bottom tier, (ii) shortened the exclusivity period to a maximum of 35 additional days, (iii) decreased the termination fee to 2% of the equity value plus reimbursement of Vestis’ expenses and (iv) reduced the upside payments to be owed by Messrs. Levra, Kaminsky and Trausch and the Olberz Family to Versa upon entering into an alternative transaction during the 12 month period following the termination of the merger agreement from 90% to 50%.

On May 9, 2014, S&C, Sheppard and RLF held a conference call to discuss the most recent draft of the revised term sheet.

On May 10, 2014, S&C had a telephone conference with Sheppard regarding the structure of the stock purchase from the Olberz Family. On the same day, representatives of Versa had a telephone conference with representatives of Cappello Global to discuss open issues regarding the revised term sheet. That evening, Versa provided a revised term sheet to Cappello Global.

On May 12, 2014, the Committee held a telephonic meeting at which representatives of RLF, Cappello Global, Sheppard and the Company’s senior management were present to receive an update on the strategic review process and to consider other matters. The Committee discussed with its advisors the terms of the revised term sheet received from Versa, including open issues relating to limitations on sales of the Olberz Family stock following the execution of the merger agreement, the amount of the termination fee and termination fee triggers and Versa’s request for 50 additional days of exclusivity from the date of signing the revised term sheet. Representatives of Cappello Global updated the Committee on the status of Versa’s diligence and discussed the possibility of the Company seeking a subordinated loan to provide liquidity for the Company. The Committee met with representatives of RLF in executive session.

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On May 13, 2013, representatives of Sheppard, S&C, and Littler Mendelson P.C. (“Littler”), counsel to Versa, and Mr. Kaminsky held a telephone conference regarding current and historic litigation involving Sport Chalet and its employees. On the same day, Mr. Walsh received an e-mail from Mr. Levra providing an update on due diligence.

On May 14, 2014, Cappello Global provided Versa with a summary of the Committee’s position on open issues remaining in the term sheet.

On May 15, 2014, Messrs. Halpern, Quinn and Levra and representatives of Cappello Global had a telephone conference regarding principal open issues on the term sheet. On the same day, S&C provided notice of the extension of the exclusivity period under the term sheet to May 31, 2014.

On May 15, 2014, the Committee held a telephonic meeting at which representatives of RLF and Sheppard were present to receive an update on negotiations with Versa and other matters. The Committee discussed with its advisors the correspondence between Cappello Global and Versa during the prior days, including the Committee’s position regarding the termination fee, certain termination triggers, the timing for signing definitive documentation, and limitations on the sale of Olberz Family stock. The Committee considered the retention by the Company of a restructuring advisor and discussed the conversations in the preceding days between members of the Committee and potential restructuring advisors. The Committee also determined that in order to sustain the Company’s business in the absence of a transaction with Versa (and, depending on the financial condition of the Company, in conjunction with a transaction), the Company should re-open discussions with a Crystal Financial with respect to providing the Company with a subordinated loan.

Between May 16, 2014 and May 25, 2014, representatives of Versa and Cappello Global continued to discuss open issues regarding the revised term sheet and the structure of a potential transaction.

On May 20, 2014, representatives of S&C had a telephone conference with Mr. Kaminsky and representatives of Cappello Global to discuss additional matters raised during the course of S&C’s due diligence review.

On May 23, 2014, the Committee and the Board each held in-person meetings. At the meeting of the Board, the Board authorized the retention of Kibel Green to act as a restructuring advisor to the Company and authorized the commencement of discussions with Crystal Financial with respect to a $15 million subordinated loan. At the Committee meeting, the Committee and its advisors discussed the status of negotiations with Versa and authorized the transmission of a term sheet back to Versa containing similar provisions to its term sheet sent on May 8, 2014, but with an extension of exclusivity until June 20, 2014 and a corresponding date for execution of definitive documents. The Committee also discussed that the Olberz Family was now interested in receiving $0.83 per share, to cover additional costs of the transaction, but also to provide further upside for the Olberz Family. RLF reviewed with the Committee their fiduciary duties in connection with the consideration of the term sheet and a potential sale of the Company and certain matters of Delaware law relating to the proposed transaction.

On May 26, 2014, S&C sent a revised term sheet to Sheppard and RLF, which Versa also provided to Cappello Global. The revised term sheet provided alternative structures for a transaction between Sport Chalet and Vestis, which Vestis could select from at its option. On the same day, representatives of S&C, Littler and Versa had a telephone conference with members of management of Sport Chalet and representatives of Cappello Global to discuss additional due diligence matters.

On May 27, 2014, the Committee held two telephonic meetings, one at which representatives of RLF were present, and one at which representatives of RLF, Cappello Global and the Company’s senior management were present, to discuss a response to the most recent term sheet received from Versa on May 26, 2014, which, among other things provided for greater optionality for Versa with respect to the structure of the transaction as well as

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provided for the possibility of Versa purchasing the Olberz Family margin loan. The Committee discussed the Company’s financial condition, liquidity issues and the possibility of a bankruptcy filing. After discussion with its advisors, the Committee authorized its advisors to send a revised term sheet to Versa with respect to a possible transaction while pursuing a parallel path with Crystal Financial with respect to a $15 million subordinated loan.

On May 29, 2014, Versa sent Cappello Global a letter requesting an extension of the exclusivity period under the original term sheet to June 6, 2014. Later that evening, Cappello Global provided Versa with a revised term sheet reflecting a transaction structure whereby Vestis would enter into share purchase agreements with the Olberz Family and Messrs. Levra and Kaminsky, and a merger agreement with Sport Chalet providing for a single-step merger.

On May 30, 2014, Messrs. Halpern, Quinn, and Levra and representatives of Cappello Global had a telephone conference to discuss open issues on the term sheet and potential in-person meetings in Los Angeles.

Effective May 31, 2014, the Company and Versa entered into an agreement to extend the exclusivity period until June 4, 2014, contingent upon Versa submitting a revised term sheet to the Committee.

On June 2, 2014, the Company entered into a term sheet with Crystal Financial for a $15,000,000 subordinated loan.

Between June 1, 2014 and June 4, 2014, the parties exchanged multiple drafts of the term sheet and continued to negotiate and discuss the open issues, including the reduced offer price for the other Shares in the event that Vestis is not able to effect a “short form” merger pursuant to Section 253 of the DGCL following consummation of the tender offer.

On June 3, 2014, the Committee held a telephonic meeting at which representatives of RLF, Cappello, Sheppard and the Company’s senior management were present to discuss the revised term sheet received from Versa on June 2, 2014. The Committee considered several matters relating to the revised term sheet, including (i) the per share purchase price of $1.20 for the top tier pricing, but the reduction from $1.08 to $1.04 for the bottom tier pricing in order to accommodate an increase in the purchase price of the Olberz Family stock from $0.72 to $0.75 per share, (ii) a request from Versa for the ability to terminate lease arrangements between the Company and affiliates of the Olberz Family following the closing of the merger, (iii) a termination right for Versa if Wedbush sells more than a specified number of shares of Olberz Family stock following execution of the merger agreement, and (iv) the extension of the exclusivity period. After discussion, the Committee authorized its advisors to send a revised term sheet to Versa which accepted the proposed pricing, but made certain changes to termination rights and termination fee triggers in addition to modifications to the right of Versa to terminate the Olberz Family lease agreements, which had been requested by the Olberz Family. The Committee authorized its advisors to negotiate to finalize the revised term sheet.

On June 5, 2014, the Company and Vestis entered into a non-binding term sheet. Pursuant to the term sheet, Vestis would acquire the Company through a stock purchase agreement with the Olberz Family and a two-step merger via tender offer, whereby the merger agreement would provide for two-tiered pricing equal to $1.20 per share if Versa was able to consummate the merger via a short form merger under Delaware law, and $1.04 per share in the event that a meeting of stockholders was necessary to approve the consummation of the merger. The stock purchase agreement would provide that Vestis would purchase, for $0.75 per share, all of the shares owned by the Olberz Family upon the consummation of the tender offer. Additionally, Mr. Levra, Mr. Kaminsky and Mr. Trausch would enter into tender and support agreements with Vestis pursuant to which they would agree to tender all of their shares in the tender offer (subject to a reduction if the Board changes its recommendation). The term sheet also provided for an extension of the exclusivity period until June 25, 2014.

On June 5, 2014, the Committee held a telephonic meeting at which representatives of RLF, Sheppard and Kibel Green were present to receive an update from Kibel Green on its analysis of the Company’s financial condition and restructuring possibilities, including a discussion of cash flow and revenue projections provided by

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the Company’s senior management. The Committee also discussed the retention of a financial advisor with respect to rendering a fairness opinion and discussed the fee quotes and capabilities of Duff & Phelps, LLC (“ Duff & Phelps ”), Cappello Global and one other financial advisor to perform this service. After discussion, the Committee approved the retention of Duff & Phelps and authorized RLF to negotiate and finalize the terms of the retention of Duff & Phelps.

On June 9, 2014, the Committee held a telephonic meeting at which representatives of RLF and Cappello Global were present to receive an update on the negotiations with Versa and to consider other matters. The Committee discussed Versa’s offer to lend money on similar terms offered by Crystal Financial and the status of the negotiations of the loan from Crystal Financial.

On June 10, 2014, Sheppard circulated a draft merger agreement to S&C. Also on June 10, 2014, Duff & Phelps was retained to serve as an independent financial advisor to the Committee to provide a fairness opinion with respect to the transaction with Versa.

On June 11, 2014, S&C circulated a draft tender and support agreement and a draft stock purchase agreement to Sheppard.

From June 11, 2014 to June 30, 2014, the parties discussed the terms, and exchanged multiple drafts, of the merger agreement, the stock purchase agreement, the tender and support agreement and the related transaction documents, and Versa continued its due diligence.

On June 11, 2014, representatives of Versa called Cappello Global to discuss Versa’s desire to lend the Company money on similar terms as those offered by Crystal Financial.

On June 16, 2014, Versa sent to the Company a term sheet for a $15 million subordinated loan.

From June 16, 2014 to June 30, 2014, the parties continued to discuss the terms and exchange drafts of the merger agreement and related transaction documents.

On June 18, 2014, the Committee held a telephonic meeting at which representatives of RLF, Sheppard, Duff & Phelps, Kibel Green and Cappello Global were present to receive an update on the negotiations with Versa and to consider other matters. Representatives of Kibel Green discussed with the Committee the restructuring alternatives available to the Company. Representatives of Duff & Phelps updated the Committee on its review of the Company and the fairness opinion process. Representatives of Sheppard and RLF reviewed with the Committee the terms of the draft merger agreement, including (i) the definitions of acquisition proposal and a superior proposal, (ii) the definition of material adverse effect, (iii) the ability of Vestis to extend the tender offer and the conditions to Vestis’ obligation to close the tender offer, (iv) the terms of Vestis’ top-up option, (v) the representations and warranties to be given by the Company and Vestis, (vi) Vestis’ ability to terminate the merger agreement and (vii) the ability of the Board to change its recommendation. The Committee also discussed the term sheet received by the Company from Versa for a $15 million subordinated loan.

On June 22, 2014, the Committee held a telephonic meeting at which representatives of RLF, Cappello Global, Sheppard and the Company’s senior management were present to receive an update on the negotiations with Versa. Company management updated the Committee on Versa’s diligence efforts in connection with the proposed transaction. Representatives of RLF and Sheppard reviewed with the Committee the terms of the draft merger agreement received from Versa, including a discussion of open issues in the merger agreement. Representatives of RLF and Sheppard also reviewed with the Committee the draft tender and support agreements and draft stock purchase agreement. The Committee discussed the financial condition of the Company and the status of negotiation of the subordinated loan from Crystal Financial.

On June 24, 2014, the Committee held a telephonic meeting at which representatives of RLF, Sheppard, Cappello Global and the other members of the Board were present to receive an update on the strategic review process. Representatives of RLF reviewed with the Committee the terms of the draft merger agreement and the

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open issues in the transaction with Versa, including with respect to the definition of material adverse effect. The Committee also considered the request of the Olberz Family for indemnification against costs and expenses arising from any litigation as a result of the transaction with Vestis.

On June 24, 2014, the Board held a regularly scheduled meeting, with which representatives of Sheppard in attendance, at which meeting the Board, among other things, (i) reviewed in detail the Company’s results of operations for the three months and the twelve months ended March 30, 2014, (ii) received the report of representatives of the Company’s independent registered public accounting firm as to the audit of the Company’s financial statements for the fiscal year ended March 30, 2014, and (iii) reviewed and approved the Annual Report on Form 10-K for fiscal year 2014.

On June 27, 2014, the Company executed definitive documentation with respect to the Crystal Financial subordinated loan.

On June 29, 2014, the Committee held a telephonic meeting at which representatives of RLF, and for a portion of the meeting, Sheppard, Cappello Global and Duff & Phelps were present to discuss the draft of the merger agreement with Vestis. Representatives of RLF and Sheppard reviewed the material terms of the merger agreement, tender and support agreements, stock purchase agreement and indemnification agreement between the Company and the Olberz Family. A copy of the proposed revised merger agreement, tender and support agreement, stock purchase agreement and indemnification agreement was sent to the directors prior to the meeting. Representatives of RLF reviewed the Committee’s fiduciary duties in connection with the proposed transaction with Versa. Representatives of Duff & Phelps reviewed with the Committee its financial analysis of the merger consideration and rendered its oral opinion, which was confirmed by delivery of a written opinion, dated June 29, 2014, that, as of that date, and based upon and subject to the various assumptions made, matters considered and qualifications and limitations on the scope of review undertaken as set forth in such opinion, each of the $1.04 merger consideration and the $1.20 merger consideration to be received by the stockholders of the Company, other than the excluded stockholders, pursuant to the merger agreement are fair from a financial point of view to the stockholders of the Class A Common Stock and Class B Common Stock of the Company other than the excluded stockholders (without giving effect to any impact of the proposed transaction on any particular stockholder other than in its capacity as a stockholder). The Committee then discussed a variety of factors relating to its consideration of the proposed transaction with Versa.

After discussion, the Committee unanimously (i) determined that the proposed merger agreement, the tender and support agreements, the stock purchase agreement and the indemnification agreement, and the transactions contemplated thereby (including, without limitation, the merger) were advisable, and in the best interests of the Company and its stockholders; (ii) recommended that the Board (A) approve and declare advisable the merger agreement, the stock purchase agreement and the indemnification agreement and the transactions contemplated thereby, (B) declare that it is in the best interests of the Company and its stockholders that the Company enter into the merger agreement and consummate the transactions contemplated thereby on the terms and subject to the conditions set forth in the merger agreement, (C) submit the merger agreement to the Company’s stockholders for adoption, if required, (D) recommend that the stockholders adopt the merger agreement and the transactions contemplated thereby; (iii) for purposes of Section 203 of the DGCL, approved the merger, the stockholder agreements and the tender and support agreements; and (iv) approved the merger agreement, the merger and the offer and the other transactions contemplated by the merger agreement for purposes of Section 4 of the Company’s bylaws.

Following the meeting of the Committee, the Board met to consider the proposed transaction with Vestis. A representative of the Committee provided a summary of the Committee’s mandate, proceedings and recommendations. Sheppard then provided a summary of the principal transaction documents.

After discussion, the Board unanimously (i) determined that the proposed merger agreement, the tender and support agreements, the stock purchase agreement and the indemnification agreement, and the transactions contemplated thereby (including, without limitation, the merger) were advisable, and in the best interests of the

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Company and its stockholders; (ii) (A) approved and declared advisable the merger agreement, the stock purchase agreement and the indemnification agreement and the transactions contemplated thereby, (B) declared that it is in the best interests of the Company and its stockholders that the Company enter into the merger agreement and consummate the transactions contemplated thereby on the terms and subject to the conditions set forth in the merger agreement, (C) determined to submit the merger agreement to the Company’s stockholders for adoption, if required, (D) recommended that its stockholders adopt the merger agreement and the transactions contemplated thereby if submitted to them; (iii) for purposes of Section 203 of the DGCL, approved the merger, the stock purchase agreement and the tender and support agreements; and (iv) approved the merger agreement, the merger and the offer and the other transactions contemplated by the merger agreement for purposes of Section 4 of the Company’s bylaws.

On June 30, 2014, the Company filed with the SEC an Annual Report on Form 10-K for the fiscal year ended March 30, 2014.

On June 30, 2014, after the close of trading on the NASDAQ Stock Market, the parties executed and delivered the merger agreement, the tender and support agreements, the stock purchase agreement, the indemnification agreement and the other agreements referred to therein. The parties then issued a joint press release announcing the entry into the Merger Agreement.

On July 3, 2014, the Offer commenced. The Purchaser and Parent filed a Tender Offer Statement on Schedule TO with the SEC, and the Company filed a Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC.

Between July 9 and July 15, 2014, four plaintiffs filed purported class action lawsuits against Sport Chalet, its directors, Parent and Purchaser in connection with the proposed acquisition of the publicly owned shares of Sport Chalet by Parent and Purchaser in the Superior Court of the State of California for the County of Los Angeles, captioned Barry Lieberman v. Sport Chalet, Inc. et al., Case No. BC551232 (July 9, 2014), Enrique Grossmann v. Sport Chalet, Inc. et al., Case No. BC551440 (July 11, 2014), David Stec v. Sport Chalet, Inc. et al., Case No. BC551574 (July 14, 2014), and Graeco Inc. v. Sport Chalet, Inc. et al., Case No. BC551746 (July 15, 2014). Versa Capital Management, LLC was also named as a defendant by the plaintiffs in the Barry Lieberman, David Stec and Graeco Inc. cases.

On August 1, 2014, the Company announced that Howard K. Kaminsky resigned as its Executive Vice President-Finance, Chief Financial Officer and Secretary, effective August 8, 2014 and that Laura E. Hensley, the Company’s Director of Accounting and Controller, was appointed to be Vice President-Finance, Secretary and principal financial and accounting officer of the Company, effective August 8, 2014.

On August 3, 2014, the Company, Parent and Purchaser entered into Amendment No. 1 to the Merger Agreement pursuant to which the definition of “Initial Expiration Time” was changed from 12:00 a.m. midnight, New York City time, at the end of August 1, 2014 to 12:00 a.m. midnight, New York City time, at the end of August 15, 2014.

On August 4, 2014, Parent and Purchaser announced the extension of the Offer at $1.20 per share until 12:00 a.m. midnight, New York City time, at the end of August 15, 2014.

Reasons for the Board’s Recommendation

In evaluating the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, the Committee and the Board held several meetings and consulted with Sport Chalet’s management, financial advisors and legal counsel, and reviewed, evaluated and considered numerous factors and a significant amount of information and data, including the following:

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The Committee and the Board have also carefully considered and discussed a number of risks, uncertainties and other countervailing factors in its deliberations relating to the Merger Agreement, the Offer, and the Merger, including without limitation, the following factors and not in any particular order:

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The foregoing discussion of information and factors considered and given weight by the Committee and the Board is not intended to be exhaustive, but is believed to include all of the material factors considered by the Committee and the Board. In view of the variety of factors considered in connection with its evaluation of the Offer and the Merger, the Committee and the Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations. In addition, individual members of the Committee and the Board may have given different weights to different factors. In arriving at its recommendation, the Committee and the Board was aware of and took into consideration the interests of executive officers and directors of Sport Chalet as described in the section entitled “The Merger—Interests of Certain Persons in the Merger” beginning on page 63.

To the Company’s knowledge, after making reasonable inquiry, all of the Company’s executive officers, directors and affiliates currently intend to tender or cause to be tendered all shares of Company common stock held of record or beneficially by them pursuant to the Offer (other than shares of Company common stock as to which such holder does not have discretionary authority, shares of Company common stock which may be retained in order to facilitate estate and tax planning dispositions and shares underlying outstanding options) and, if necessary, to vote such shares in favor of the adoption of the Merger Agreement. Certain of the Company’s executive officers are contractually obligated to tender their shares of Company common stock into the Offer or vote such shares in favor of the adoption of the Merger Agreement pursuant to the Support Agreements described elsewhere herein.

In considering the recommendation of the board of directors with respect to the proposal to adopt the Merger Agreement, you should be aware that our directors and executive officers may have interests in the Merger that are different from, or in addition to, yours. See the section entitled “The Merger—Golden Parachute Compensation” beginning on page 68. The Committee and the board of directors were aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement and the Merger, and in recommending that the Merger Agreement be adopted by the stockholders of the Company.

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Duff & Phelps Financial Analyses and Opinion

Pursuant to an engagement letter dated June 10, 2014 (the “ Duff & Phelps Engagement Letter ”), the Special Committee of the Company’s board of directors retained Duff & Phelps to act as its independent financial advisor to provide an opinion in connection with the proposed transaction. The Committee retained Duff & Phelps based on Duff & Phelps’ qualifications, reputation, experience in the valuation of businesses and their securities, and its experience in valuing companies in the retail industry. Duff & Phelps is a premier global valuation and corporate finance advisor that is regularly engaged to provide financial advisory services, including fairness opinions and valuation advice in connection with mergers and acquisitions, leveraged buyouts and recapitalization transactions.

On June 29, 2014, Duff & Phelps delivered a written presentation and its oral opinion, which was subsequently confirmed in writing, to the Committee that, as of that date, and based upon and subject to the assumptions, limitations and qualifications contained in its opinion, the $1.20 per Share to be received by stockholders of the Company in the event the Price Reduction Trigger is not triggered (the “ Short-Form Merger Consideration ”), or the $1.04 per Share to be received by public stockholders of the Company in the event the Price Reduction Trigger is triggered (the “ Long-Form Merger Consideration ”) to be received by the stockholders of the Company, other than the shares held by the Olberz Family Trust, Eric Olberz and Irene Olberz, Craig Levra, the Company’s Chairman of the Board and Chief Executive Officer, and Howard Kaminsky, the Company’s Chief Financial Officer (collectively, the “ Excluded Stockholders ”), pursuant to the Merger Agreement was fair from a financial point of view to the stockholders of the Class A Common Stock and Class B Common Stock of the Company other than the Excluded Stockholders (without giving effect to any impact of the Transactions on any particular stockholder other than in its capacity as a stockholder). Duff & Phelps has provided its written consent to the reproduction of Duff & Phelps’ opinion in this proxy statement.

The full text of Duff & Phelps’ written opinion, dated June 29, 2014, which sets forth, among other things, certain assumptions made, certain matters considered, and certain limitations on the review undertaken in connection with the opinion, is attached as Annex A and is incorporated herein by reference. The opinion expressed by Duff & Phelps was provided for the information and assistance of the Committee in connection with its consideration of the Offer, and such opinion does not constitute a recommendation as to any action that any stockholder of Sport Chalet should take in connection with the Offer and is not a recommendation as to whether or not any stockholder should tender their shares in connection with the Offer or how any stockholder otherwise should act in connection with the Offer. We urge you to read that opinion carefully and in its entirety for the assumptions made, procedures followed, other matters considered and limits of the review undertaken in arriving at that opinion.

Duff & Phelps’ written opinion and written presentation (i) do not address the merits of the underlying business decision to enter into the Transactions versus any alternative strategy or transaction; (ii) do not address any term of the Merger Agreement other than the Short-Form Merger Consideration or Long-Form Consideration to be received by the stockholders other than the Excluded Stockholders; (iii) do not address the consideration to be received by the Excluded Stockholders; (iv) do not address the process through which the Company has chosen to consider the Transactions versus any alternative transaction; (v) do not address any transaction related to the Transactions (other than the Offer and the Merger); (vi) is not a recommendation as to how the Committee, the Board or any stockholder should vote or act with respect to any matters relating to the Transactions, or whether to proceed with the Transactions or any related transaction, and (vii) do not indicate that the Short–Form Merger Consideration or Long-Form Consideration to be received by the stockholders of the Company, other than the Excluded Stockholders pursuant to the Merger Agreement, is the best possibly attainable under any circumstances; instead, it merely states whether such consideration is within a range suggested by certain financial analyses. The decision as to whether to proceed with the Transactions or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which Duff & Phelps’ opinion is based.

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Duff & Phelps’ opinion was only one of many factors taken into consideration by the Committee in making its determination with respect to the Transactions. Duff & Phelps’ opinion should not be construed as creating any fiduciary duty on the part of Duff & Phelps to any party. Duff & Phelps has not undertaken, and is under no obligation, to update, revise, reaffirm or withdraw the opinion, or otherwise comment on or consider events occurring or coming to its attention after the date of its opinion.

The information set forth below summarizes the material financial and comparative analyses performed by Duff & Phelps, but does not purport to be a complete description of the financial analyses performed by Duff & Phelps or the data considered by it in connection with its opinion. The preparation of a financial opinion involves various subjective determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods to particular circumstances. In arriving at its opinion, Duff & Phelps utilized a number of analytical methodologies. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the strengths and weaknesses of any particular technique. While the conclusions reached in connection with each analysis were considered carefully by Duff & Phelps in arriving at its opinion, Duff & Phelps did not consider it practicable to, nor did it attempt to, assign relative weights to the individual analyses and specific factors considered in reaching its opinion. The conclusion reached by Duff & Phelps was based on all analyses and factors taken, as a whole, and also on application of Duff & Phelps’ own experience and judgment. No one method of analysis should be regarded as critical to the overall conclusion. Accordingly, Duff & Phelps believes that its analyses must be considered as a whole, and that selecting portions of its analyses and of the factors considered by it, without considering all analyses and factors, could create a misleading or incomplete view of the evaluation process underlying its opinion.

In connection with its opinion, Duff & Phelps has made such reviews, analyses and inquiries as it deemed necessary and appropriate under the circumstances. Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Duff & Phelps’ procedures, investigations, and financial analyses with respect to the preparation of its opinion included, but were not limited to, the items summarized below:

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No limits were placed on Duff & Phelps by Sport Chalet in terms of the information to which it had access or the matters it could consider.

In performing its analyses and rendering its opinion with respect to the Transactions, Duff & Phelps, with the consent of the Committee:

In Duff & Phelps’ analysis and in connection with the preparation of its opinion, Duff & Phelps also made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Transactions. To the extent that any of the foregoing assumptions or any of the facts on which Duff & Phelps’ opinion is based prove to be untrue in any material respect, its opinion cannot and should not be relied upon.

Duff & Phelps prepared its opinion effective as of June 29, 2014. Duff & Phelps’ opinion is necessarily based upon market, economic, financial and other conditions as they exist and can be evaluated as of that date, and Duff & Phelps disclaims any undertaking or obligation to advise any person of any change in any fact or

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matter affecting its opinion which may come or be brought to the attention of Duff & Phelps after June 29, 2014. In the event of any such change prior to the completion of the Transactions, Duff & Phelps reserves the right to change, modify or withdraw its opinion.

In rendering its opinion, Duff & Phelps is not expressing any opinion with respect to the amount or nature of any compensation to any of the Company’s officers, directors, or employees, or any class of such persons, relative to the Short-Form Merger Consideration or Long-Form Merger Consideration to be received by the public stockholders of the Company in the Transactions, or with respect to the fairness of any such compensation.

Although these paragraphs include some information in tabular format, those tables are not intended to stand alone and must be read together with the full text of each summary and the limitations and qualifications in the opinion.

Valuation Analysis

Among other matters considered, Duff & Phelps’ analysis included a valuation analysis of Sport Chalet using generally accepted valuation methodologies.

Duff & Phelps performed a discounted cash flow analysis and market approach using Sport Chalet’s budget and projections compiled and adopted by Sport Chalet management for fiscal years 2015 through 2017. Adjusted EBITDA used throughout the analysis included (i) an adjustment to reflect cash rent expense vs. straight-line rent expense, (ii) addbacks for estimated public company costs, reflecting a change of control transaction that would take the company private, and (iii) adjustments for non-recurring expenses. Each of the adjustments described above were provided by Sport Chalet management. The table below summarizes the historical financial performance, the financial projections prepared by Sport Chalet management and the adjustments to EBITDA for each period.

NA refers to Not Available

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Discounted Cash Flow Analysis

Duff & Phelps performed a discounted cash flow (“ DCF ”) analysis using Sport Chalet’s financial projections for fiscal years 2015 through 2017, as described above, to derive indications of total equity value. A discounted cash flow analysis is designed to provide insight into the intrinsic value of a business based on its projected earnings and capital requirements as well as the net present value of projected free cash flows.

In its analysis, Duff & Phelps first calculated the projected adjusted net income for each of the fiscal years 2015 through 2017 by subtracting estimated non-recurring expenses, net interest expense, depreciation, and taxes from adjusted EBITDA. Duff & Phelps then calculated adjusted equity cash flows by adding depreciation to adjusted net income, and subtracting capital expenditures and changes in working capital. All of the assumptions and estimates used to determine the Company’s equity cash flows were provided by Sport Chalet management.

Over the past few years, the Company has generated net operating losses that could be used to offset future taxable income. These tax benefits would be significantly limited in a change of control transaction and were therefore not included as incremental value for the Company in our analysis. The discounted cash flow analysis, however, does include a separate value for the estimated net operating losses of $2.5 million generated in the stub period of the discounted cash flow analysis from June 1, 2014 through March 31, 2015.

Duff & Phelps calculated a terminal value for Sport Chalet by capitalizing the expected normalized cash flows after fiscal 2017 based on long-term annual growth estimated at 2.0% based on discussions with Company management.

Duff & Phelps then discounted the sum of the projected equity cash flows for fiscal year 2015 through 2017 and the terminal value for Sport Chalet by the cost of equity ranging from 25.0% to 35.0%. Fiscal 2015 cash flows were adjusted to include only the stub period from June 1, 2014 through March 31, 2015.

Sport Chalet’s cost of equity was based on the Capital Asset Pricing Model using information derived from the companies in the selected public company analysis and Sport Chalet’s current capital structure. The cost of equity reflected the relative risk associated with the projected cash flows, Sport Chalet’s current highly leveraged capital structure, as well as the rates of return that security holders could expect to realize on alternative investment opportunities.

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The discounted cash flow analysis resulted in an estimated total equity value ranging from $3.8 million to $4.8 million. Adding the value of Sport Chalet’s outstanding average monthly debt balance for the latest 12 months ended May 31, 2014 of $54.1 million resulted in an estimated total enterprise value range of $57.9 million to $58.9 million.

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The DCF analysis, like each other analytical technique used by Duff & Phelps, has inherent strengths and weaknesses. The range of valuation indications resulting from any particular technique, including the DCF analysis, should not be taken in isolation to be Duff & Phelps’s view of the valuation for Sport Chalet. Accordingly, the valuation range derived from the DCF analysis is not necessarily indicative of Sport Chalet’s present or future value.

Market Approach

Duff & Phelps also used a market approach, which consisted of applying valuation multiples to certain levels of profitability for Sport Chalet, using multiples based on valuation metrics derived from an analysis of selected public companies.

Selected Public Company Analysis . Duff & Phelps selected 9 publicly traded companies that operate in the sporting goods retail and specialty retail industries. The 9 companies consisted of (i) Big 5 Sporting Goods Corp., (ii) Cabela’s Incorporated, (iii) Dick’s Sporting Goods Inc., (iv) Finish Line Inc., (v) Foot Locker, Inc., (vi) Hibbett Sports, Inc., (vii) Sports Direct International plc, (viii) Sportsman’s Warehouse Holdings, Inc., and (ix) Zumiez, Inc. No company considered in this analysis is identical to Sport Chalet. The selected public company analysis involves complex and subjective considerations and judgments. Mathematical analysis alone, such as determining the mean or median, is not in itself a meaningful method of using selected public company data.

In selecting multiples, Duff & Phelps reviewed the selected public companies taken as a group. When selecting appropriate multiples to apply to the financial performance of Sport Chalet, Duff & Phelps used a qualitative and quantitative assessment of Sport Chalet relative to the selected public companies based on historical financial performance, expected future performance, financial strength, size, the competitive nature of the industry, and markets served, among other factors. Duff & Phelps noted that Sport Chalet is significantly smaller in size relative to the selected public companies, with generally weaker profitability, higher leverage, and weaker growth prospects, as illustrated in the tables below.

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Duff & Phelps did not apply multiples to either fiscal 2014 or projected fiscal 2015 financial metrics for Sport Chalet. The Company generated operating losses in 2014 resulting in a negative EBITDA and net losses. Furthermore, the Company’s projected 2015 adjusted EBITDA and adjusted net income, while stronger than 2014 levels, were still relatively depressed and would not result in meaningful valuation indications for the Company’s equity. Therefore, projected 2016 adjusted EBITDA and projected 2016 adjusted net income metrics were used.

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Based on the risk analysis described above, Duff & Phelps selected multiples near the bottom of the range of the selected public companies due to Sport Chalet’s smaller size, weaker profitability, higher leverage and lower growth rates. The range of multiples selected to apply to Sport Chalet’s projected adjusted 2016 EBITDA was 4.5x to 5.0x, and the range of multiples selected to apply to the projected adjusted 2016 net income was 8.0x to 10.0x.

The tables below summarizes certain valuation metrics for the selected public companies relative to Sport Chalet which were analyzed by Duff & Phelps.

Note: EBITDA and Net Income are adjusted to reflect cash rent expense vs. straight-line rent expense. Where March 31 ^st  estimates were not available fiscal year estimates were used.

Application of Selected Multiples . Duff & Phelps applied the selected range of adjusted EBITDA multiples of 4.5x to 5.0x to the Company’s projected fiscal 2016 adjusted EBITDA of $8.8 million. This resulted in an indication of enterprise value for Sport Chalet ranging from $39.6 million to $43.9 million.

Duff & Phelps determined 2016 projected adjusted net income to capitalize by deducting $3.3 million in interest expense, $4.4 million in depreciation expense and $400,000 in taxes from the projected $8.8 million in adjusted EBITDA. This resulted in a projected adjusted net income for 2016 of $600,000. Applying the selected range of price to earnings multiples of 8.0x to 10.0x to the $600,000 resulted in equity valuation indications of $4.8 million to $6 million. To determine the estimated enterprise value of the Company, average monthly debt balance for the latest twelve months ended May 31, 2014 of $54.1 million was added, resulting in indications of enterprise value ranging from $58.9 million to $60.1 million.

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The market analysis, like each other analytical technique used by Duff & Phelps, has inherent strengths and weaknesses. The range of valuation indications resulting from any particular technique, including the market analysis, should not be taken in isolation to be Duff & Phelps’ view of the valuation for Sport Chalet. Accordingly, the valuation range derived from the market analysis is not necessarily indicative of Sport Chalet’s present or future value or results.

Selected Transactions Analysis . Duff & Phelps identified 31 relevant sporting goods retail and specialty retail industry transactions announced since January 1, 2011 for which adequate information was available to derive trailing valuation multiples. No transaction utilized in these precedent transactions analysis was identical to the Transactions, including timing or size, nor was any target company identical to Sport Chalet. An analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning Sport Chalet’s financial and operating characteristics and other factors that would affect the acquisition value of companies to which Sport Chalet is being compared. Mathematical analysis (such as determining the mean or median) is not in itself a meaningful method of using precedent transaction data.

Duff & Phelps noted that it did not derive a valuation estimate directly from the selected M&A transactions analysis, as Sport Chalet’s 2014 adjusted EBITDA was negative and the company generated net losses, therefore these results could not be capitalized using the trailing multiples observed in the selected transactions.

Historical Stock Trading and Premium Analysis

Historical Stock Trading Analysis . Duff & Phelps reviewed the historical trading prices and volume of Sport Chalet’s Class A Common Stock and Class B Common Stock between January 1, 2014 and June 20, 2014.

Limited Liquidity and Small Public Float.  Duff & Phelps observed that Sport Chalet’s Class A and Class B Common Stock have limited liquidity, with sporadic trading activity. Based on the limited public float and liquidity in Sport Chalet’s Class A and Class B Common Stock, the absence of analyst coverage, and the lack of institutional investor support, Duff & Phelps observed that Sport Chalet’s market price may not necessarily reflect the underlying intrinsic value of Sport Chalet.

Poor Financial Results for 4 ^th  Quarter not yet Public.  Sport Chalet’s financial results for 4 ^th  quarter fiscal year 2015 ended March 31, 2014 had not been made public as of the date Duff & Phelps delivered its opinion on June 29, 2014. The Company experienced a very poor fourth quarter, resulting in a net loss for the year of $10.1 million versus a loss of $3.3 million in the prior fiscal year. Furthermore, the Company continued to experience losses in the month ended April 30, 2014 and well as the month ended May 31, 2014. The trading prices analyzed did not yet incorporate this information regarding the Company’s poor recent financial performance.

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Premium/Discount over Short-Form and Long-Form Merger Consideration.  The closing price for the Class A Common Stock was $1.03 on June 20, 2014, implying a 16.5% premium over the Short-Form Merger Consideration of $1.20 and a 0.97% premium over the Long-Form Merger Consideration of $1.04. The closing price for the Class B Common Stock was $1.09 on June 20, 2014, implying a 10.09% premium over the Short-Form Merger Consideration of $1.20 and a 4.59% discount to the Long-Form Merger Consideration of $1.04.

Premium/Discount Analysis Not Relevant.  The trading price of both the Class A Common Stock and Class B Common Stock did not reflect the impact of the Company’s poor results for the fourth quarter ended March 30, 2014, nor the continued poor results and continued losses in April and May 2014. If this information had been publicly available, it likely would have resulted in a lower stock price for both the Class A and Class B Common Stock. For this reason, a premium paid analysis was not considered relevant in the analysis performed by Duff & Phelps.

Same Price Paid for Both Class A and Class B Shares . Pursuant to the Company’s Restated Certificate of Incorporation, “The holders of Class A Common Stock shall be entitled to receive the same amount and form of consideration per share as the per share consideration, if any, received by any holder of the Class B Common Stock in any merger, business combination or consolidation of the Corporation (whether or not the Corporation is the surviving entity) or any subsidiary of the Corporation, or any sale, lease or exchange of assets of the Corporation or any subsidiary of the Corporation.” Therefore, even though the Class B Shares have typically traded at a premium to the Class A Shares due to their superior voting rights, in a sale transaction, both classes of stock are treated the same.

Valuation Analysis Conclusions

Duff & Phelps’ valuation analysis, as summarized in the table below, resulted in indications of Sport Chalet’s total enterprise value ranging from approximately $53.5 million to $55.5 million. After deducting the value of the Company’s 12 month average debt, net of cash, Duff & Phelps concluded a range of common equity value for Sport Chalet of approximately $3.8 million to $5.8 million. Based on 12.4 million shares of Class A Stock and 1.8 million shares of Class B Stock outstanding, Duff & Phelps’ analysis implied a range of values from $0.27 per share to $0.41 per share, as compared with the Short-Form Merger Consideration of $1.20 per share and the Long-Form Merger Consideration of $1.04 per share. In addition, Duff & Phelps noted that the consideration received by the Olberz Family members and the Olberz Trust was $0.75 per share, representing a 27.9% discount to the Long-Form Merger Consideration and a 37.5% discount to the Short-Form Merger Consideration. Duff & Phelps observed that its analysis supported a determination of fairness from a financial point of view.

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Other

The issuance of Duff & Phelps’s opinion was approved by its fairness opinion review committee.

Prior to this engagement, Duff & Phelps was the investment banker to EMS and represented that company in its sale in 2012 to Versa, the parent company of Vestis. Furthermore, Duff & Phelps was engaged to render a solvency opinion for a portfolio company of Versa. Duff & Phelps will receive customary fees, expense reimbursement, and indemnification on this engagement. Other than these engagements, during the two years preceding the date of this Opinion, Duff & Phelps has not had any material relationship with any party to the Transactions for which compensation has been received or is intended to be received, nor is any such material relationship or related compensation mutually understood to be contemplated.

Fees and Expenses

Pursuant to the Duff & Phelps Engagement Letter, the Company paid Duff & Phelps a cash retainer fee of $100,000. The Company also agreed to pay Duff & Phelps a cash fee of $150,000 upon notification from Duff & Phelps that it was prepared to deliver a fairness opinion, and cash fees based upon Duff & Phelps’ standard hourly rates for certain additional services that Duff & Phelps might be called upon to perform. As of the date hereof, Duff & Phelps had not performed and has not been paid for any such additional services. The Company also agreed to reimburse Duff & Phelps for its reasonable out-of-pocket expenses incurred in connection with its engagement and to indemnify Duff & Phelps, its affiliates, and each of their respective directors, officers, attorneys and other agents, stockholders, employees and controlling persons against certain liabilities, including liabilities under the federal securities laws, relating to or arising out of Duff & Phelps’ engagement. No portion of Duff & Phelps’ compensation is contingent upon the consummation of the Merger.

Projections

The Company does not as a matter of course make public projections as to future performance, earnings or other results due to the unpredictability of the underlying assumptions and estimates. The Company provided to potential bidders, in connection with their due diligence review and subject to a nondisclosure agreement, its long-term business plan. Subsequently, in connection with obtaining the term loan from Crystal Financial, management prepared for internal planning purposes three-year standalone financial projections (the “ Projections ”) and subsequently provided the Projections to Parent. The Company has included below a summary of the Projections. The Company also provided the Projections to the Committee and the Board as well as to Duff & Phelps for its use in connection with the rendering of its opinion to the Committee and performing its related financial analysis, as described under “ Duff & Phelps Financial Analyses and Opinion .” The Company believes that the Projections reflect the current long-term business plan for the Company on a go-forward standalone basis.

The Projections have been prepared by, and are the responsibility of, the Company’s management. The Projections were not prepared with a view toward public disclosure; and, accordingly, do not necessarily comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or accounting principles generally accepted in the United States (“ GAAP ”). Moss Adams LLP, the Company’s independent registered public accounting firm, has not audited, compiled or performed any procedures with respect to the Projections and does not express an opinion or any form of assurance related thereto. The summary of the Projections is not being included herein to influence a stockholder’s decision whether to tender shares of Company Common Stock in the Offer, but is being included because the Projections were provided to Parent and Duff & Phelps.

The Projections, while presented with numerical specificity, necessarily were based on numerous variables and assumptions that are inherently uncertain and many of which are beyond the control of the Company’s management. Because the Projections cover multiple years, by their nature, they become subject to greater uncertainty with each successive year. The assumptions upon which the Projections were based necessarily involve judgments with respect to, among other things, future economic, competitive and financial market

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conditions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. The Projections also reflect assumptions as to certain business decisions that are subject to change. In addition, the Projections may be affected by the Company’s ability to successfully implement a number of initiatives to improve its operations and financial performance. The Projections also may be affected by the Company’s ability to achieve strategic goals, objectives and targets over the applicable periods.

Accordingly, there can be no assurance that the Projections will be realized, and actual results may vary materially from those shown. The inclusion of the Projections herein should not be regarded as an indication that the Company or any of its affiliates, advisors, officers, directors or representatives considered or consider the Projections to be predictive of actual future events, and the Projections should not be relied upon as such. Neither the Company nor any of its affiliates, advisors, officers, directors or representatives can give any assurance that actual results will not differ from the Projections, and none of them undertakes any obligation to update or otherwise revise or reconcile the Projections to reflect circumstances existing after the date the Projections were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the Projections are shown to be in error. The Company does not intend to make publicly available any update or other revision to the Projections, except as otherwise required by law. Neither the Company nor any of its affiliates, advisors, officers, directors or representatives has made or makes any representation to any stockholder of the Company or other person regarding the ultimate performance of the Company compared to the information contained in the Projections or that the Projections will be achieved. The Company has made no representation to Parent, Purchaser or their affiliates, in the Merger Agreement or otherwise, concerning the Projections.

In light of the foregoing factors and the uncertainties inherent in the Projections, stockholders are cautioned not to place undue, if any, reliance on the Projections.

The Projections are forward-looking statements. For more information on factors that may cause the Company’s future financial results to materially vary, see “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 20.

The following is a summary of the Projections (dollars in thousands):

The Projections should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding the Company contained elsewhere herein, in the offer to purchase and in the Company’s public filings with the SEC.

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Except as set forth above, neither the Company nor any person acting on its behalf has or currently intends to directly or indirectly employ, retain or compensate any person to make solicitations or recommendations on its behalf with respect to the Offer.

Financing of the Merger

All of the funds required to complete the Merger will be provided by Parent. Parent expects to fund such cash requirements through contributions from its affiliated funds, Versa Capital Fund II, L.P. and Versa Capital Fund II-A, L.P. Neither the Offer nor the Merger is subject to any financing condition.

Closing and Effective Time of Merger

If the Merger is approved at the stockholders meeting then, assuming timely satisfaction of the other necessary closing conditions, we anticipate that the Merger will be completed promptly thereafter. The effective time of the Merger will occur as soon as practicable following the closing of the Merger upon the filing of a certificate of merger with the Secretary of State of the State of Delaware (or at such later date as we and Parent may agree and specify in the certificate of merger).

Payment of Merger Consideration and Surrender of Stock Certificates

Each record holder of shares of Company common stock (other than holders of solely the excluded shares) will be sent a letter of transmittal describing how such holder may exchange its shares of Company common stock for the per share merger consideration promptly, and in any event within five business days, after the completion of the Merger.

You should not return your stock certificates with the enclosed proxy card, and you should not forward your stock certificates to the Paying Agent without a letter of transmittal.

You will not be entitled to receive the per share merger consideration until you deliver a duly completed and executed letter of transmittal to the Paying Agent. If your shares are certificated, you must also surrender your stock certificate or certificates to the Paying Agent. If ownership of your shares is not registered in the transfer records of the Company, a check for any cash to be delivered will only be issued if the applicable letter of transmittal is accompanied by all documents reasonably required by the Company to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid or are not applicable.

Interests of Certain Persons in the Merger

Certain of the Company’s executive officers and directors have interests in the transactions contemplated by the Merger Agreement, including the Offer and the Merger (the “ Transactions ”), that are different from, or in addition to, the interests of holders of Shares generally. The Board was aware of these interests and considered them, among other matters, in evaluating and negotiating the Merger Agreement and in reaching its decision to approve the Merger Agreement and the Transactions, as more fully discussed below.

Effect of the Offer and the Merger on Outstanding Shares and Equity Awards Held by the Current Executive Officers and Directors of the Company

Cash Consideration Payable for Shares Tendered Pursuant to the Offer

Executive officers, former executive officers, and directors who own Shares will receive the same cash consideration on the same terms and conditions (whether in the Offer or in the Merger) as other Sport Chalet stockholders in the Merger. As of June 24, 2014, the executive officers and directors of Sport Chalet beneficially owned, in the aggregate, 468,039 shares of Class A Common Stock and 941,956 shares of Class B Common Stock, excluding Shares issuable upon the vesting and exercise of stock options as of such date. The executive

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officers, former executive officers and directors of Sport Chalet will receive an aggregate amount of approximately $1,466,394, either in the Offer or in the Merger, based on the per share merger consideration of $1.04 per share, in each case, without interest thereon, less any required withholding taxes.

The following table sets forth the number of Shares beneficially owned as of June 24, 2014 by each of the Company’s executive officers and directors, excluding Shares issuable upon the vesting and exercise of stock options as of such date, and the aggregate merger consideration that would be payable for such Shares.

Treatment of Equity-Based Awards under the Merger Agreement

Holders of outstanding stock options will be entitled to accelerated vesting and a 20 business day notice period during which they may exercise the stock options, with such accelerated vesting and exercise contingent on the closing of the Merger. While most of the stock options held by the Company’s executive officers and directors are not “in the money,” one director holds a stock option that will have value based on the Offer Price. The following table sets forth the options held by executive officers and directors with an exercise price below the Offer Price, along with the net proceeds that would become payable in respect of such stock options pursuant to the terms of the Merger Agreement.

Change in Control Severance Benefits Agreements with Named Executive Officers

The Company has entered into employment agreements with its Chief Executive Officer and its two other most highly compensated executive officers for fiscal year 2014 (collectively such persons are the “ Named Executive Officers ”). The initial term of each employment agreement commenced on December 23, 2008 and ended on December 23, 2009 and each agreement automatically renews for an additional twelve months at the end of the initial term or any renewal term unless notice of termination is given by either party at least 30 days prior to the end of the term.