EMPLOYMENT AGREEMENT
                              --------------------


         THIS EMPLOYMENT  AGREEMENT is entered into on April 25, 1997, effective
as of April 1, 1997, among Linda K. Bounds (the "Executive"), Bell Sports Corp.,
a Delaware  corporation  (the  "Holding  Company"),  and Bell  Sports,  Inc.,  a
California  corporation (the "Operating  Company").  The Holding Company and the
Operating Company are collectively referred to herein as the "Company."

         WHEREAS, the Company is engaged primarily in the business of designing,
manufacturing,  producing, distributing, marketing, advertising and selling auto
racing  helmets,  bicycles,  bicycle  helmets,  bicycle  accessories and related
products;

         WHEREAS, the Executive serves as Senior Vice President, Chief Financial
Officer,  Treasurer  and  Secretary  of the Holding  Company  and the  Operating
Company;

         WHEREAS,  the  Executive's   abilities  and  services  are  unique  and
essential to the prospects of the Company; and

         WHEREAS,  the  Company  and the  Executive  desire  to enter  into this
Agreement  to provide  for the  continued  employment  of the  Executive  by the
Company upon the terms and subject to the conditions set forth herein.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
agreements contained herein, the parties hereby agree as follows:

         1. Employment; Term.

         The Company  hereby  employs the  Executive  and the  Executive  hereby
agrees  to be  employed  by the  Company  upon  the  terms  and  subject  to the
conditions  contained  in this  Agreement.  The  term of  this  Agreement  shall
commence  as of April 1, 1997 and shall end on March 31,  2000,  unless  earlier
terminated  pursuant to Section 4 hereof.  As used herein,  the term "Employment
Period"  shall mean the period  from April 1, 1997 until the  expiration  of the
term of this Agreement or the earlier termination of the term hereof pursuant to
Section 4 hereof.

         2.  Position;  Duties;  Responsibilities.  The Company shall employ the
Executive as the Senior Vice President,  Chief Financial Officer,  Treasurer and
Secretary of the Holding  Company and the  Operating  Company.  The  Executive's
principal office for the performance of her duties under this Agreement shall be
located in San Jose,  California.  The Executive  shall  faithfully  and loyally
perform to the best of her abilities all the duties  reasonably  assigned to her
hereunder, shall devote such business
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time,  attention  and  effort to the  affairs of the  Company  as is  reasonably
necessary for the proper performance of such duties and shall use her reasonable
best  efforts to promote  the  interests  of the  Company.  Notwithstanding  the
foregoing, the Executive may serve as a director,  officer or paid consultant of
business corporations other than the Company or civic or community organizations
or entities,  provided  that such  activities do not violate the terms of any of
the  covenants  set forth in Section 7 hereof and such  activities  are approved
prior to the  commencement  thereof  by the  Chairman  of the  Board  and  Chief
Executive Officer of the Holding Company (the "Company CEO").

         3. Compensation.

         (a) Base Salary. During the Employment Period, the Company shall pay to
the  Executive an annual base salary at the rate of $160,000 per annum,  payable
in accordance  with the Company's  executive  payroll  policy.  Such base salary
shall be reviewed annually,  commencing April 1, 1998, and may be increased (but
shall not be decreased)  annually,  in the sole  discretion of the Company.  The
Executive's  base  salary,  as  such  base  salary  may  be  increased  annually
hereunder, is referred to herein as the "Base Salary."

         (b) Annual  Performance  Bonus.  (i) The Executive shall be entitled to
receive an annual performance bonus payable in cash for each full fiscal year of
the Company during the term of this  Agreement in accordance  with the Company's
management  incentive  program,  as in effect from time to time.  The  Executive
shall participate in such program at a level which would result in a performance
bonus equal to 50% of her Base Salary if the target  level of  performance  were
achieved.  The  annual  performance  bonus to which the  Executive  is  entitled
pursuant to this Section 3(b) is referred to herein as the "Bonus."

         (ii) The  payment of each Bonus  shall be made within 30 days after the
Company's   independent   accountants   shall  have   certified   the  Company's
consolidated  financial  statements  for the  fiscal  year to which  such  Bonus
relates.

         (iii) If the Company's fiscal year changes, the Executive's opportunity
to earn the Bonus shall not be materially and adversely affected.

         (c) Stock Options. In the discretion of the Company's  Management Stock
Incentive  Committee,  the  Executive  shall be eligible  to receive  options to
purchase shares of Holding Company common stock ("Common Stock") pursuant to the
terms of the Bell Sports Management Stock Incentive Plans.
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<PAGE>
         (d) Perquisites.  During the Employment  Period, the Executive shall be
entitled to a cash automobile allowance in the amount of $400 per month.

         (e)  Reimbursement  of  Expenses.   The  Company  shall  reimburse  the
Executive  for  all  expenses  necessarily  and  reasonably  incurred  by her in
connection  with the  business  of the  Company,  upon  presentation  of  proper
receipts or other proof of expenditure and subject to such reasonable guidelines
or  limitations  provided  to  the  Executive  and  applied  prospectively,   as
established by the Company.

         (f) Vacation.  During the  Employment  Period,  the Executive  shall be
entitled to paid vacation and sick leave in accordance with Company policy.

         (g) Participation in Benefit Plans.  During the Employment  Period, the
Executive  shall  be  entitled  to  participate  in  any  profit  sharing  plan,
retirement  plan,  group life insurance plan or other  insurance plan or medical
expense  plan  maintained  by the Company for its senior  executives  generally,
which  plans shall not differ in value in any manner  materially  adverse to the
Executive from those in which the Executive currently participates.

         4. Termination.

         (a)  Death.  Upon the  death of the  Executive,  this  Agreement  shall
automatically terminate and all rights of the Executive and her heirs, executors
and  administrators  to compensation  and other benefits  hereunder shall cease,
except for (i) Base  Salary  which  shall have  accrued to the date of death and
(ii) the rights to indemnification under Section 5 hereof.

         (b)  Disability.  The  Company  may,  at  its  option,  terminate  this
Agreement  upon written  notice to the  Executive if the  Executive,  because of
physical or mental  incapacity or disability,  fails in any material  respect to
perform the services  required of her hereunder  for a continuous  period of 120
days or any 180 days out of any  12-month  period.  Upon such  termination,  all
obligations  of the Company  hereunder  shall cease,  except for (i) Base Salary
which  shall  have  accrued  to the date of  termination  and (ii) the rights to
indemnification  under Section 5 hereof.  In the event of any dispute  regarding
the  existence  of the  Executive's  incapacity  hereunder,  the matter shall be
resolved by the  determination  of a majority of three  physicians  qualified to
practice medicine in the state of the Executive's residence,  one to be selected
by each of the  Executive  and the  Company and the third to be selected by such
two  designated  physicians.  For this purpose,  the  Executive  shall submit to
appropriate medical examinations.
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<PAGE>
         (c)  Cause.  (i)  The  Company  may,  at  its  option,   terminate  the
Executive's   employment  under  this  Agreement  for  "Cause"  (as  hereinafter
defined).  A  termination  for Cause shall not take effect  until and unless the
Company complies with this Section 4(c)(i). The Executive shall be given written
notice by the Company of the intention to terminate her employment hereunder for
Cause  (the  "Cause  Notice").  The Cause  Notice  shall  state  the  particular
action(s) or  inaction(s)  giving rise to termination  for Cause.  The Executive
shall  have 10 days  after  the  Cause  Notice  is given to cure the  particular
action(s) or inaction(s),  to the extent a cure is possible. If the Executive so
effects a cure,  the Cause Notice shall be deemed  rescinded  and of no force or
effect.

         (ii) As used in this Agreement,  the term "Cause" shall mean any one or
more of the following:

                  (A) the Executive's  refusal to perform specific directives of
         the  Company  CEO or such  other  officer  of the  Company  to whom the
         Executive  reports,  which directives are consistent with the scope and
         nature of the  Executive's  duties  and  responsibilities  as set forth
         herein;

                  (B) the Executive's  admission or conviction of a felony or of
         any crime  involving moral  turpitude,  fraud,  embezzlement,  theft or
         misrepresentation;

                  (C) any gross or willful misconduct of the Executive resulting
         in  substantial  loss  to the  Company  or  substantial  damage  to the
         Company's reputation; or

                  (D)  any  breach  by the  Executive  of any one or more of the
         covenants contained in Section 6 or 7 hereof, other than an inadvertent
         and unintentional breach of a covenant contained in Section 6 having an
         inconsequential  effect  upon  the  Company  or any  of its  controlled
         affiliates.

         (iii)  The  exercise  of the right of the  Company  to  terminate  this
Agreement  pursuant  to this  Section  4(c)  shall not  abrogate  the  rights or
remedies  of  the  Company  in  respect  of  the  breach  giving  rise  to  such
termination.

         (iv) If the Company  terminates the  Executive's  employment for Cause,
she shall be entitled to:

                  (A) accrued Base Salary through the date of the termination of
         her employment;

                  (B) any Bonus owing but not yet paid for any fiscal year ended
         on or before the Executive's termination of employment for Cause;
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<PAGE>
                  (C) any  amounts  owing but not yet paid  pursuant  to Section
         3(e); and

                  (D) other or additional benefits in accordance with applicable
         plans and programs of the Company.

                  (v) Notwithstanding anything to the contrary contained in this
Agreement,  if, following a termination of the Executive's employment for Cause,
a court of competent jurisdiction, in a final determination, determines that the
Executive  was  not  guilty  of the  conduct  that  formed  the  basis  for  the
termination,  the  Executive  shall be entitled to the payments and the economic
equivalent  of the benefits  she would have  received  had her  employment  been
terminated by the Company without Cause.

         (d) Termination  Without Cause. If, during the Employment  Period,  the
Company  terminates  the  employment of the  Executive  hereunder for any reason
other than a reason set forth in Section 4(a), 4(b) or 4(c):

         (i)  concurrent  with such  termination,  the Company  shall pay to the
Executive  an  amount  equal  to her Base  Salary  accrued  through  the date of
termination;

         (ii) the Company  shall  continue to pay the  Executive her Base Salary
and all other  benefits  (excluding  Bonus)  which  would  otherwise  be payable
hereunder for a period of 18 months  following the date of  termination  and the
Executive's  coverage under the medical,  dental, life and long-term  disability
insurance policies  maintained by the Company shall remain in effect during such
period;

         (iii) all of the Executive's  options to purchase Common Stock shall be
immediately 100% exercisable;

         (iv) the  Executive  shall be entitled to any amounts owing but not yet
paid pursuant to Section 3(e); and

         (v) the  Executive  shall be entitled to her rights to  indemnification
under Section 5 hereof.

         (e) Termination for Good Reason.  (i) If, during the Employment Period,
the Executive  terminates  her  employment  hereunder for "Good Reason" (as such
term is defined in Section 4(e)(ii) hereof,  she shall be entitled to all of the
payments and benefits  specified by Sections  4(d)(i)  through  4(d)(v)  hereof,
inclusive.

         (ii) For purposes of this Agreement,  "Good Reason" shall mean, without
the Executive's  express written  consent,  the occurrence of any one or more of
the following events:
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<PAGE>
                  (A) a material breach of this Agreement by the Company;

                  (B) any change in the Executive's  responsibilities  described
         in  Section  2 in  any  respect  which  is  materially  adverse  to the
         Executive;

                  (C) a diminution of any of the Executive's  significant duties
         or the assignment to the Executive of any duties  inconsistent with her
         duties  or the  material  impairment  of  the  Executive's  ability  to
         function in the positions  described in Section 2 hereof,  in each case
         only after the Company shall have had an  opportunity to cure (any such
         cure to be effected within 30 days after appropriate  written notice of
         the basis for Good Reason is given to the Company by the Executive);

                  (D) a material  reduction of any benefit or perquisite enjoyed
         by the  Executive,  unless a plan  providing  a  substantially  similar
         economic opportunity is substituted or all comparable executives suffer
         a substantially similar reduction or failure;

                  (E) the  relocation  of the  Executive's  office to a location
         more than 50 miles from San Jose, California; or

                  (F) the  failure of the  Company to obtain the  assumption  in
         writing of its obligation to perform this Agreement by any successor to
         all or  substantially  all of the assets of the Company  within 15 days
         after a merger, consolidation, sale of assets or similar transaction.

         (f)  Voluntary  Termination.  If,  during the  Employment  Period,  the
Executive  voluntarily  terminates her employment hereunder for any reason other
than Good Reason,  she shall be entitled to the  payments  specified by Sections
4(c)(iv)(A) through 4(c)(iv)(D) hereof, inclusive.

         5.  Indemnification.  To the  fullest  extent  permitted  by  law,  the
Restated Certificate of Incorporation of the Holding Company and the Articles of
Incorporation of the Operating Company, the Executive (and her heirs,  executors
and  administrators)  shall be indemnified by the Company and its successors and
assigns. The obligations of the Company pursuant to this Section 5 shall survive
the termination of the Employment Period, except as otherwise provided herein.

         6.  Confidentiality.  The  Executive  shall  at all  times  during  the
Employment  Period and thereafter  hold in confidence  any and all  Confidential
Information  (as  hereinafter  defined)  that may have come or may come into her
possession or within her knowledge concerning the products, services, processes,
businesses, suppliers, customers and clients of the Company or
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<PAGE>
its controlled affiliates.  The Executive agrees that neither she nor any person
or enterprise controlled by her will for any reason directly or indirectly,  for
herself or any other person,  use or disclose any trade secrets,  proprietary or
confidential information,  inventions,  manufacturing or industrial processes or
procedures,  patents,  trademarks,  trade names,  customer lists, service marks,
service names, copyrights, applications for any of the foregoing, or licenses of
other  rights in respect  thereof  (collectively,  "Confidential  Information"),
owned  or  used  by,  or  licensed  to,  the  Company  or any of its  controlled
affiliates,  provided that the Executive may disclose  Confidential  Information
which has become  generally  available to the public other than as a result of a
breach of this  Agreement by the Executive or pursuant to an order of a court of
competent  jurisdiction or of a governmental  agency,  department or commission.
Upon  termination of her employment  under this  Agreement,  the Executive shall
promptly   surrender  to  the  Company  all  documents   she  believes   contain
Confidential  Information  and that are within her possession or control,  other
than  documents  to which the  Executive is or was a party or that relate to the
Executive  or the  basis,  or  purported  basis,  on which  her  employment  was
terminated.

         7.  Noncompetition  and  Nonsolicitation.  (a) Subject to the following
sentence,  the Executive  agrees that from the date hereof and subsequent to the
termination of her  employment  under this Agreement and continuing for a period
of two years (the "Noncompete Period"), neither she nor any person or enterprise
controlled by her will become a stockholder, lender, director, officer, agent or
employee of a corporation or member of or lender to a  partnership,  engage as a
sole proprietor in any business,  act as a consultant to any of the foregoing or
otherwise engage directly or indirectly in any business,  that is in competition
with  the  business  then  conducted  by the  Company  or any of its  controlled
affiliates  in any state in the United  States or any other country in which the
Company or any of its controlled  affiliates has engaged in such business during
the term of the Executive's employment under this Agreement;  provided, however,
that the foregoing  shall not prohibit the  Executive  from owning less than two
percent  of the  outstanding  securities  of any  class  of  capital  stock of a
corporation the securities of which are regularly traded or quoted on a national
securities exchange or on an inter-dealer quotation system.

         (b) The Executive agrees that during the Noncompete Period, neither she
nor any person or enterprise  controlled by her will (i) solicit for  employment
or employ any person who was  employed by the  Company or any of its  controlled
affiliates  at any  time  within  one  year  prior  to the  time  of the  act of
solicitation or (ii) in any way cause, influence,  induce or attempt to persuade
any person who was employed by the Company or any of its  controlled  affiliates
at any time within one year
                                       35
<PAGE>
prior to the time of such act to terminate her employment  relationship with the
Company or any of its affiliates.

         (c) Relief, Reformation;  Severability. The Executive acknowledges that
there is no adequate  remedy at law for a breach of this Section 7 and that,  in
the event of such a breach or attempted breach, the Company shall be entitled to
injunctive  or other  equitable  relief to prevent  any such  breach,  attempted
breach or continuing breach, without prejudice to any other remedies for damages
or  otherwise.  The  Executive  agrees  that  the  covenants  contained  in this
Agreement  are separate and are  reasonable in their scope and duration and that
the Executive  shall not raise any issue of  reasonableness  as a defense in any
proceeding to enforce any of such covenants.  Notwithstanding the foregoing,  in
the event that a covenant  contained  in this  Agreement  shall be deemed by any
court to be unreasonably broad in any respect,  the parties agree that the court
may modify such covenant for the purpose of making such  covenant  reasonable in
scope and duration.  The validity,  legality or  enforceability of the remaining
provisions of this Agreement shall not be affected by any such modification.

         8.  Inventions.  The Executive hereby assigns to the Company her entire
right, title and interest in and to all discoveries and improvements, patentable
or otherwise,  trade  secrets and ideas,  writings and  copyrightable  material,
which may be conceived  by the  Executive or developed or acquired by her during
the term of her  employment  by the  Company,  which  may  pertain  directly  or
indirectly to the Company's business. The Executive agrees to disclose fully all
such  developments to the Company upon its request,  which  disclosure  shall be
made in writing promptly  following any such request.  The Executive shall, upon
the  Company's  request,  execute,  acknowledge  and  deliver to the Company all
instruments and do all other acts which are necessary or desirable to enable the
Company to file and  prosecute  applications  for, and to acquire,  maintain and
enforce, all patents, trademarks and copyrights in all countries.

         9. Remedies.  The Executive  acknowledges  that any material  breach of
this Agreement will cause  irreparable harm to the Company,  that such harm will
be difficult  if not  impossible  to  ascertain,  and that the Company  shall be
entitled  to  equitable  relief,  including  injunction,  against  any actual or
threatened breach hereof,  without bond and without liability should such relief
be denied, modified or vacated.  Neither the right to obtain such relief nor the
obtaining  of such relief shall be exclusive of or preclude the Company from any
other remedy.

         10.  Insurance.  The Company  may, at its election and for its benefit,
insure  the  Executive  against  disability,  accidental  loss or death  and the
Executive shall submit to such physical examinations and supply such information
as may be required in connection therewith.
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<PAGE>
         11.  Assignment.  The rights and  benefits of the  Executive  hereunder
shall not be  assignable,  whether by voluntary  or  involuntary  assignment  or
transfer. This Agreement shall be binding upon, and inure to the benefit of, the
successors   and  assigns  of  the  Company,   and  the  heirs,   executors  and
administrators  of the Executive,  and shall be assignable by the Company to any
entity  acquiring  substantially  all of the assets of the  Company,  whether by
merger, consolidation, sale of assets or similar transaction.

         12.  Notices.  Any notice  required or permitted to be given under this
Agreement  shall be sufficient if in writing and personally  delivered,  sent by
certified or registered mail or sent by overnight courier service as follows: if
to the Executive, to her address as set forth in the records of the Company, and
if to the Company, to the address of its principal executive offices, attention:
Chief Executive Officer,  with a copy to Larry A. Barden, Esq., Sidley & Austin,
One First  National  Plaza,  Chicago,  Illinois  60603,  or to any other address
designated by any party hereto by notice similarly given.

         13.  Waiver of Breach.  A waiver by the Company or the Executive of any
breach of any  provision of this  Agreement by the other party shall not operate
or be  construed  as a waiver  of any  other or  subsequent  breach by the other
party.

         14. Entire Agreement.  This Agreement  contains the entire agreement of
the parties with respect to the subject  matter  hereof.  This  Agreement may be
modified only by an agreement in writing signed by the parties hereto.

         15. Costs.  In the event that a dispute shall arise between the parties
hereto and such  dispute is resolved by a court of competent  jurisdiction,  all
reasonable  attorneys'  fees and costs of the Company and the  Executive and all
other costs and expenses of the Company and the Executive  associated  with such
dispute shall be borne by the Company;  provided  that if it is determined  that
the claims of the Executive were without reasonable basis, each party shall bear
her or its own attorneys' fees and costs.

         16.  Applicable  Law. The terms of this Agreement  shall be governed by
and construed in  accordance  with the internal laws (as opposed to the conflict
of laws provisions) of the State of Illinois.

         17. Prior  Agreements.  This Agreement  supersedes all prior agreements
between the Executive and the Company concerning the Executive's employment with
the Company, and none of such agreements shall be of any further force or effect
whatsoever.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.
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<PAGE>
                                 BELL SPORTS CORP.


                                 By_________________________________
                                           Terry G. Lee
                                      Chairman of the Board and
                                      Chief Executive Officer



                                 BELL SPORTS, INC.


                                 By_________________________________
                                           Terry G. Lee
                                      Chairman of the Board
                                      and Chief Executive Officer


                                 EXECUTIVE:


                                 -----------------------------------
                                      Linda K. Bounds
                                       38