<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)(1)
L.A. GEAR, INC.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
501708-10-1
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(CUSIP Number)
M. Sean McMillan, Esq.
Bryan Cave LLP
120 Broadway, Suite 500
Santa Monica, California 90401
(310) 576-2100
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 10, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Continued on following pages)
(Page 1 of 7)
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The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP NO. 501708-10-1 PAGE 2 OF 7 PAGES
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1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
PCH INVESTMENTS, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
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7 SOLE VOTING POWER
NUMBER OF 1,140,356 SHARES OF SERIES B PREFERRED STOCK
SHARES ----------------------------------------------------------------
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING -0-
PERSON WITH ----------------------------------------------------------------
9 SOLE DISPOSITIVE VOTING POWER
1,140,356 SHARES OF SERIES B PREFERRED STOCK
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10 SHARED DISPOSITIVE VOTING POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,161,337 SHARES OF SERIES B PREFERRED STOCK AND 1,000,000
SHARES OF COMMON STOCK
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
45.3%
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14 TYPE OF REPORTING PERSON
00 (LIMITED LIABILITY COMPANY)
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SCHEDULE 13D
CUSIP NO. 501708-10-1 PAGE 3 OF 7 PAGES
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D relates to the common stock, no par value
(the "Common Stock"), of L.A. Gear, Inc., a California corporation (the
"Company"), and the shares of Common Stock issuable upon conversion of the
Series B Preferred Stock, no par value (the "Series B Preferred Stock"), of the
Company.
The Company's principal executive offices are located at 2850 Ocean Park
Boulevard, Santa Monica, California 90405.
ITEM 2. IDENTITY AND BACKGROUND.
The Reporting Person, PCH Investments, LLC ("PCH"), is a California
limited liability company formed for the purpose of acquiring a controlling
interest in the Company. PCH's principal executive offices are located at c/o
Bryan Cave LLP, 120 Broadway, Suite 500, Santa Monica, California 90401.
During the last five years, PCH has not been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
The following information is supplied with respect to the natural
persons who are the members and managers of PCH:
(a) The names of the members and managers of PCH are Richard Hollander
and Steven Jackson.
(b) Mr. Hollander's business address is 10880 Wilshire Boulevard, Suite
2020, Los Angeles, California 90024. Mr. Jackson's business address is 5900
Rodeo Road, P.O. Box 78308, Los Angeles, California 90016.
(c) Mr. Hollander is Chairman and Chief Executive Officer of
Metropolitan West Securities, Inc., a registered investment advisor that manages
over $14 billion of fixed income and equity securities and advises both public
and private institutions. The address of Metropolitan West Securities, Inc., is
set forth in the first sentence of paragraph (b) above. Mr. Jackson is the
President and Chief Executive Officer of Angel-Etts, Inc., which manufactures,
imports and distributes footwear both domestically and internationally. The
address of Angel-Etts, Inc. is set forth in the second sentence of paragraph (b)
above.
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SCHEDULE 13D
CUSIP NO. 501708-10-1 PAGE 4 OF 7 PAGES
(d), (e) Neither Mr. Hollander nor Mr. Jackson has been (i) convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(f) Both Mr. Hollander and Mr. Jackson are United States citizens.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to a Stock Purchase Agreement (the "Agreement") made as of
October 10, 1997 between PCH and Trefoil Capital Investors, L.P., a Delaware
limited partnership ("Trefoil"), PCH purchased 1,140,356 shares of the Series B
Preferred Stock for $230,000. PCH funded such purchase from its available
working capital.
PCH also acquired pursuant to the Agreement an option (the "Option") to
purchase for $20,000 an additional 20,981 shares of Series B Preferred Stock and
1,000,000 shares of Common Stock. The Option may be exercised at any time prior
to April 15, 1998, provided that such exercise does not cause a default under
the Loan and Security Agreement between L.A. Gear California, Inc. and Congress
Financial Corporation (Western). PCH presently anticipates that in the event it
elects to exercise the Option, it will fund the purchase price thereunder from
its available working capital.
ITEM 4. PURPOSE OF TRANSACTION.
PCH has acquired the securities reported herein for the purpose of
acquiring control of Registrant and influencing the management and strategic
direction of Registrant. PCH and Registrant's board of directors and management
are currently evaluating their options with respect to Registrant and its
business, but have not yet selected any courses of action. PCH anticipates that
in order to respond effectively to the adverse results of operations and
financial condition of Registrant, as described in Registrant's Quarterly Report
on Form 10-Q for the quarter ended August 31, 1997, it may be necessary for PCH
and/or Registrant to take actions which relate to or would result in one or more
of the following:
(i) The acquisition by any person of additional securities of
Registrant, or the disposition of securities of Registrant.
(ii) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving Registrant or any of its subsidiaries;
(iii) A sale or transfer of a material amount of assets of Registrant or
of any of its subsidiaries;
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SCHEDULE 13D
CUSIP NO. 501708-10-1 PAGE 5 OF 7 PAGES
(iv) A change in the present board of directors or management of
Registrant, including plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(v) A material change in the present capitalization or dividend policy
of Registrant;
(vi) Another material change in Registrant's business or corporate
structure;
(vii) Changes in Registrant's Restated Articles of Incorporation or
bylaws or other actions which may impede the acquisition of control of
Registrant by any other person;
(viii) Causing a class of securities of Registrant to be delisted from
the securities exchange on which it is currently traded;
(ix) A class of equity securities of Registrant becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(x) An action similar to any of those enumerated in paragraphs (i)
through (ix).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) PCH beneficially owns (i) 1,161,337 shares of Series B Preferred
Stock, which, pursuant to Registrant's Restated Articles of Incorporation, are
presently convertible into 17,204,997 shares of Common Stock, and (ii) 1,000,000
shares of Common Stock (collectively, the "Shares"). The Shares represent, in
the aggregate, approximately 45.3% of Registrant's outstanding Common Stock.
20,981 shares of such Series B Preferred Stock and all of such shares of Common
Stock are deemed to beneficially owned by PCH pursuant to the Option, which,
subject to certain conditions, is presently exercisable. Both Mr. Hollander and
Mr. Jackson disclaim beneficial ownership of the Shares.
(b) PCH has the sole power to vote or direct the vote and dispose or
direct the disposition of the 1,140,356 shares of Series B Preferred Stock
acquired by it pursuant to the Agreement. Trefoil has retained voting and
dispositive power with respect to the shares of Series B Preferred Stock and
shares of Common Stock subject to the Option (the "Optioned Shares"). Following
exercise of the Option, however, PCH will acquire sole voting power and sole
dispositive power with respect to the Optioned Shares. Neither Mr. Hollander nor
Mr. Jackson, in their individual capacities, have any power to vote or dispose
of the Shares.
(c) None.
(d) None, other than with respect to the Optioned Shares, as described
in paragraph (b) above.
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SCHEDULE 13D
CUSIP NO. 501708-10-1 PAGE 6 OF 7 PAGES
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
Other than the Agreement, which is attached as an exhibit hereto and by
this reference is incorporated herein, and the transactions contemplated
thereby, there are no contracts, arrangements, understandings or relationships
among the persons named in Item 2 hereof and between such persons and any other
persons with respect to the Shares or any other securities of Registrant.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Stock Purchase Agreement made as of October 10, 1997 between PCH
Investments, LLC and Trefoil Capital Investors, L.P.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 17, 1997.
PCH INVESTMENTS, LLC
By: /s/ Richard S. Hollander
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ITS: Manager
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SCHEDULE 13D
CUSIP NO. 501708-10-1 PAGE 7 OF 7 PAGES
EXHIBIT INDEX
Exhibit 1 Stock Purchase Agreement made as of October 10, 1997 between PCH
Investments, LLC and Trefoil Capital Investors, L.P.
<PAGE> 8
EXHIBIT 1
STOCK PURCHASE AGREEMENT
This Agreement is made as of October 10, 1997, by and between PCH
Investments, LLC, a California limited liability company ("Buyer") and Trefoil
Capital Investors, L.P., a Delaware limited partnership ("Seller").
WHEREAS, Seller owns beneficially and of record 1,161,337 shares of
Series B Convertible Preferred Stock (the "Series B Stock") and 1,000,000 shares
of Common Stock of L.A. Gear, Inc. (the "Company"); and
WHEREAS, Seller desires to sell and Buyer desires to buy 1,140,356
shares of the Series B Stock (the "Shares");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties hereby agree as follows:
1. Sale and Purchase of Shares. On the date of this Agreement, Seller
hereby sells and Buyer hereby purchases the Shares. Buyer shall pay Seller
$230,000 in cash, or by cashier's check, and Seller shall deliver to Buyer
certificates representing the Shares, which certificates shall be either
endorsed in blank or accompanied by a duly executed stock assignment form, with
the signature of Seller guaranteed by a bank or a member of the New York Stock
Exchange.
2. Seller's Representations. Seller hereby represents to Buyer that:
(a) Seller is a duly and validly existing limited partnership, and
has all necessary power and authority to enter into this Agreement and to sell,
assign, transfer and deliver to Buyer the Shares and the shares subject to the
option described in Section 5 (the "Optioned Shares");
(b) The execution and delivery of this Agreement by Seller, the
performance by Seller of its obligations hereunder and a consummation by Seller
of the transactions contemplated hereby have been duly and validly authorized by
Seller and the general partner of Seller and no other approval or authorization
on the part of Seller and no other person or entity is necessary for the
execution and delivery of this Agreement by Seller, the performance of its
obligations hereunder and the consummation of the transactions contemplated
hereby.
(c) No filing or registration with, no notice to and no permit,
authorization, consent or approval of any public or governmental body or
authority, or any third party, is necessary for the consummation by Seller of
the transactions contemplated by this Agreement;
(d) This Agreement is a legal, valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity;
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EXHIBIT 1, PAGE 2
(e) Neither the execution and delivery of this Agreement by Seller
nor the performance by Seller of its obligations hereunder or the consummation
of the transactions contemplated hereby will constitute a violation of, conflict
with, or result in a default (or give rise to any right of termination,
cancellation or acceleration) under, any note, bond, mortgage, indenture,
license, contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which Seller is a party or by which Seller or its
properties or assets is bound, or any judgment, decree, order, injunction,
statute, rule or regulation applicable to Seller or any of its assets or
properties.
(f) Seller is the record and beneficial owner of the Shares and the
Optioned Shares, free and clear of all liens, claims, encumbrances and security
interests of any kind.
(g) The delivery of the certificates for the Shares and the Optioned
Shares to Buyer pursuant to the provisions of this Agreement will transfer to
Buyer good and valid title to the Shares and the Optioned Shares, free and clear
of all liens, claims, encumbrances and security interests of any kind other than
those created by Buyer.
(h) Seller has delivered to Buyer true and correct copies of the
Indenture dated as of December 24, 1992 between the Company and Chemical Trust
Company of California with respect to the Company's 7:% Convertible Subordinated
Debentures due 2002, and the Loan and Security Agreement between L.A. Gear
California, Inc. and Congress Financial Corporation (Western) (the "Loan
Agreement").
(i) The Series B Stock represents all of the outstanding preferred
stock of the Company.
(j) The shares of the Company's Preferred Stock and Common Stock
referred to in the first Whereas of this Agreement are all of the shares of the
Company's stock that are owned by either Seller or its general partner.
3. Buyer's Representations. Buyer hereby represents to Seller that:
(a) Buyer does not own any shares of Common Stock or Preferred Stock
of the Company.
(b) Buyer shall use its best efforts to cause the Company to
continue its director and officer insurance ("D&O Insurance") and to cause any
D&O Insurance obtained by the Company to continue to insure the directors and
officers of the Company on the date of this Agreement (the "Current Directors
and Officers") so that the Current Directors and Officers are covered by D&O
Insurance for all periods they served as directors and officers of the Company,
with coverage limits at least as extensive as the D&O Insurance in effect as of
the date hereof, and shall otherwise cover the Current Directors and Officers
with such D&O Insurance in the same manner and to the same extent as the then
existing officers and directors.
(c) Buyer has received preliminary results of the Company's third
quarter of fiscal year 1997 and information on the effect such results may have
upon the Company.
<PAGE> 10
EXHIBIT 1, PAGE 3
4. Sophisticated Parties; Absence of Representations and Warranties
Concerning Company.
Buyer and Seller each acknowledge that they may have material
non-public information about the Company that has not been disclosed to the
other party. Each of Buyer and Seller acknowledges that the other party shall
have no liability for the non-disclosure of such information. Buyer acknowledges
that it is a sophisticated investor able to analyze the Company and its
financial condition and results and is relying on its own investigation and not
on any representations or warranties of Seller concerning the financial
condition, operations, business or prospects of the Company.
5. Option. Seller hereby grants Buyer the option to acquire the
remaining 20,981 shares of Series B Stock and the 1,000,000 shares of the
Company's Common Stock (each as adjusted for any stock splits, combinations and
the like) that Seller owns for $20,000. This option may be exercised at any time
prior to April 15, 1998; provided that Buyer agrees that it will not exercise
the option if such exercise would give rise to a default of or a violation under
the Loan Agreement. Buyer shall give Seller five business days' notice of its
intention to exercise this option. On the fifth business day after such notice,
delivery of the Optioned Shares and payment of the price shall occur at the
principal offices of the Company in the manner described in the second sentence
of Paragraph 1 above.
6. Further Agreements.
(a) The respective representations and warranties of Seller and
Buyer contained herein or in any certificates or other documents delivered with
this Agreement shall not be deemed waived or otherwise affected by any
investigation made by any party hereto. Each and every such representation and
warranty shall survive the date of this Agreement indefinitely.
(b) Seller agrees to indemnify, reimburse, defend, and hold harmless
the Buyer and its officers, directors, partners, representatives and successors
in interest ("Indemnified Parties") for, from, and against all demands, claims,
actions or causes of action, assessments, losses, damages, liabilities, costs
and expenses, including without limitation, interest, penalties, reasonable
attorneys' fees, disbursements, and expenses, asserted against, resulting to,
imposed on, or incurred by the Indemnified Parties (directly or indirectly) in
connection with, attributable to, resulting from, or caused by any
misrepresentation or inaccuracy in or breach of, any of Seller's representations
or warranties in this Agreement. The maximum liability of Seller under this
Section 5 shall be $250,000.
7. Miscellaneous.
(a) This Agreement contains the complete agreement among the parties
with respect to the transactions contemplated hereby and supersedes all prior
agreements and understandings among the parties with respect to such
transactions. Section and other headings are for reference purposes only and
shall not affect the interpretation or construction of this Agreement. The
parties hereby have not made any representation or warranty except as expressly
set forth in this Agreement.
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EXHIBIT 1, PAGE 4
(b) This agreement may be executed in counterparts, each of which
when so executed and delivered shall be deemed an original, and such
counterparts together shall constitute only one original.
(c) This Agreement and the rights, interests, and obligations
hereunder shall be binding upon and shall inure to the benefit of the parties
hereto and their heirs, personal representatives, successors, and assigns.
(d) This Agreement shall be construed and enforced in accordance
with the laws of the State of California.
(e) This Agreement may be amended, modified, or supplemented only by
a written instrument executed by the party or parties against which enforcement,
modification or supplementation of the Agreement is sought.
(f) Each party's obligations under this Agreement are unique. If any
party should default in its or his obligations under this Agreement, the parties
each acknowledge that it would be extremely impracticable to measure the
resulting damages; accordingly, the nondefaulting party, in addition to any
other available rights or remedies, may sue in equity for specific performance,
and the parties each expressly waive the defense that a remedy in damages will
be adequate, provided neither party shall be entitled to recover consequential
or special damages.
(g) Neither Seller nor Buyer shall make or issue, or cause to be
made or issued, any public announcement or written statement concerning this
Agreement.
PCH INVESTMENTS, LLC
By:
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Its:
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TREFOIL CAPITAL INVESTORS, L.P.
By: Trefoil Investors, Inc.
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Its: General Partner
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By:
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