<PAGE>
                                                                 EXHIBIT 10.6

                                 ASSIGNMENT OF
                          PROCEEDS OF LETTER OF CREDIT

THIS ASSIGNMENT OF PROCEEDS OF LETTER OF CREDIT dated May 21, 1997 is entered
into between L.A. Gear California, Inc. ("Borrower") and Congress Financial
Corporation (Western) ("Congress"), in connection with the Loan and Security
Agreement between Borrower and Congress of even date (the "Loan Agreement").
(Capitalized terms used in this Assignment, which are not defined, shall have
the meanings set forth in the Loan Agreement.  The Loan Agreement and all
present and future documents and agreements executed in connection therewith or
relating thereto are referred to herein collectively as the "Loan Documents".)

     1    ASSIGNMENT OF LETTER OF CREDIT.  To further secure payment and 
performance of all Obligations, Borrower hereby grants to Congress a 
continuing security interest in, a lien upon, and hereby assigns to Congress, 
all proceeds of all letters of credit in favor of Borrower, now existing or 
hereafter arising, and all drafts drawn thereunder (the "Letters of Credit"). 
 Without limiting any of the provisions of the Loan Agreement, the 
"Collateral" (as defined in the Loan Agreement) includes without limitation 
all Letters of Credit and all proceeds thereof and all documents relating 
thereto.

     2    PERFORMANCE OF CONDITIONS.  Borrower agrees to perform all of the 
obligations, and present all drafts and all other documents, necessary to 
draw on the Letters of Credit in strict compliance with all of the terms and 
conditions of the Letters of Credit and prior to their expiration, and 
Borrower agrees to take all such other actions as are necessary to cause the 
drafts drawn on the Letters of Credit to be paid in full directly to Congress 
by the issuers of the Letters of Credit or the banks confirming the Letters 
of Credit.

     3    APPLICATION OF PROCEEDS.  Whether or not any Event of Default has 
occurred, Congress is authorized (but not obligated) to collect all of the 
proceeds of the Letters of Credit.  All such proceeds shall be credited to 
the Payment Account (as set forth in, and subject to the charges set forth 
in, Section 6.1 and 6.2 of the Loan Agreement), and all such proceeds shall 
be applied to the Obligations in such order and manner as Congress shall 
determine.  Any excess of such proceeds over the Obligations shall be 
remitted to the Borrower.

     4    REPRESENTATIONS, WARRANTIES AND COVENANTS.  Borrower represents and 
warrants to Congress that it has not, and shall not, by negotiation of drafts 
or otherwise, assign or grant any security interest in the whole or any part 
of the proceeds of the Letters of Credit or give any other authorization or 
direction to make any payment thereof to any other party other than Congress. 
Borrower shall pay all costs and expenses in connection with this Agreement. 
Borrower shall not agree to any amendments or modifications to the Letters of 
Credit without the prior written consent of Congress, which shall not be 
unreasonably withheld.  Borrower shall not cancel or substitute for the 
Letters of Credit.  Borrower shall provide Congress with copies of all 
correspondence relating to the Letters of Credit within one business day 
after the same is sent or received by Borrower, and Borrower shall keep 
Congress advised as to the status of all matters relating to the Letters of 
Credit.  No receipt of such correspondence or information by Congress shall 
be deemed to be an acquiescence therein or consent thereto or to waive or 
vary any of the provisions of this Agreement.

     5    GENERAL.  This Assignment is a supplement to the Loan Agreement, 
and all rights and remedies hereunder and thereunder are cumulative.  This 
Assignment, the Loan Agreement and the other Loan Documents set forth in full 
all of the representations and agreements of the parties with respect to the 
subject matter hereof and supersede all prior oral discussions, 
representations, agreements and understandings between the parties.  This 
Assignment may not



<PAGE>
                                   Assignment of Proceeds of Letters of Credit
------------------------------------------------------------------------------

be modified or amended, nor may any rights hereunder be waived, except in a 
writing signed by the parties hereto.  Borrower agrees to take all further 
actions and execute all further documents from time to time as may be 
reasonably necessary to carry out the purposes of this Assignment.  This 
Assignment is being entered into, and shall be governed by the laws of the 
State of California.

     6    JURY WAIVER.  BORROWER AND CONGRESS EACH HEREBY WAIVES ANY RIGHT TO 
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING 
UNDER THIS ASSIGNMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR (ii) IN ANY WAY 
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO 
IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE 
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR 
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.  
BORROWER AND CONGRESS EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, 
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A 
JURY AND THAT BORROWER OR CONGRESS MAY FILE AN ORIGINAL COUNTERPART OF A COPY 
OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE 
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Borrower:

L.A. Gear California, Inc.



By   /s/ [Illegible]
   -----------------------------
     Vice President & CFO

By   /s/ [Illegible]
   -----------------------------
     Secretary




Congress:

Congress Financial Corporation (Western)



By  /s/ DONALD A. MCLEOD
   -----------------------------
Title  SENIOR VICE PRESIDENT
       --------------------------