SEVERANCE AGREEMENT


                  THIS  AGREEMENT is entered into as of the 1st day of December,
1997 among Bell Sports  Corp.,  a Delaware  corporation  (the  "Company"),  Bell
Sports,  Inc., a California  corporation  and a  wholly-owned  subsidiary of the
Company (the "Subsidiary"), and William Bracy (the "Executive").

                               W I T N E S S E T H

                  WHEREAS,  the  Executive  currently  serves as the U.S.  Group
President of Bell Sports,  Inc. and his services and  knowledge  are valuable to
the  Company  and the  Subsidiary  in  connection  with  the  management  of the
operating  facilities,  divisions and departments of the U.S. Group Divisions of
Bell Sports, Inc.; and

                  WHEREAS,  the Board (as  defined in Section 1) has  determined
that it is in the best interests of the Company and its  stockholders  to secure
the  Executive's  continued  services  and to ensure the  Executive's  continued
dedication  and  objectivity  in the event of any  threat or  occurrence  of, or
negotiation or other action that could lead to, or create the  possibility of, a
Change in Control (as defined in Section 1) of the Company,  without  concern as
to  whether  the   Executive   might  be  hindered  or  distracted  by  personal
uncertainties  and risks created by any such possible Change in Control,  and to
encourage the  Executive's  full  attention and  dedication to the Company,  the
Board has authorized the Company to enter into this Agreement.

                  NOW,  THEREFORE,  for and in consideration of the premises and
the  mutual  covenants  and  agreements  herein  contained,   the  Company,  the
Subsidiary and the Executive hereby agree as follows:

                  1. Definitions. As used in this Agreement, the following terms
shall have the respective meanings set forth below:

                  (a) "Board" means the Board of Directors of the Company.

                  (b) "Cause"  means (1) a material  breach by the  Executive of
those duties and  responsibilities  of the Executive  which do not differ in any
material  respect from the duties and  responsibilities  of the Executive during
the 90-day  period  immediately  prior to a Change in Control  (other  than as a
result of incapacity due to physical or mental  illness)  which is  demonstrably
willful and deliberate on the Executive's  part, which is committed in bad faith
or without  reasonable  belief that such breach is in the best  interests of the
Company and which is not remedied in a reasonable  period of time after  receipt
of written notice from the Company  specifying such breach or (2) the commission
by the Executive of a felony involving moral turpitude.

                  (c) "Change in Control" means:
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                  (1) the  acquisition  by any  individual,  entity  or group (a
"Person"),  including  any  "person"  within the meaning of Section  13(d)(3) or
14(d)(2) of the  Securities  Exchange  Act of 1934,  as amended  (the  "Exchange
Act"),  of  beneficial  ownership  within the meaning of Rule 13d-3  promulgated
under the Exchange Act, of 20% or more of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding  Company Common Stock") or (ii)
the combined  voting  power of the then  outstanding  securities  of the Company
entitled to vote  generally  in the  election  of  directors  (the  "Outstanding
Company Voting Securities");  provided, however, that the following acquisitions
shall not constitute a Change in Control:  (A) any acquisition directly from the
Company  (excluding any acquisition  resulting from the exercise of a conversion
or exchange  privilege in respect of  outstanding  convertible  or  exchangeable
securities),  (B) any  acquisition  by the Company,  (C) any  acquisition  by an
employee  benefit plan (or related trust) sponsored or maintained by the Company
or any  corporation  controlled  by the  Company,  (D)  any  acquisition  by any
corporation pursuant to a reorganization,  merger or consolidation involving the
Company,  if,  immediately after such  reorganization,  merger or consolidation,
each of the  conditions  described in clauses (i),  (ii) and (iii) of subsection
(3) of this Section  (1)(c) shall be satisfied;  and provided  further that, for
purposes of clause (B),  if any Person  (other than the Company or any  employee
benefit plan (or related  trust)  sponsored or  maintained by the Company or any
corporation  controlled by the Company) shall become the beneficial owner of 20%
or  more  of  the  Outstanding  Company  Common  Stock  or 20%  or  more  of the
Outstanding Company Voting Securities by reason of an acquisition by the Company
and such  Person  shall,  after  such  acquisition  by the  Company,  become the
beneficial  owner of any  additional  shares of the  Outstanding  Company Common
Stock or any  additional  Outstanding  Voting  Securities  and  such  beneficial
ownership is publicly  announced,  such  additional  beneficial  ownership shall
constitute a Change in Control;

                  (2)  individuals  who, as of the date hereof,  constitute  the
Board  (the  "Incumbent  Board")  cease for any  reason to  constitute  at least
66-2/3% of such Board;  provided,  however,  that any  individual  who becomes a
director  of the  Company  subsequent  to the date  hereof  whose  election,  or
nomination for election by the Company's stockholders,  was approved by the vote
of at least 66-2/3% of the directors then  comprising the Incumbent  Board shall
be deemed to have been a member of the Incumbent  Board;  and provided  further,
that no individual  who was initially  elected as a director of the Company as a
result of an actual or threatened  election  contest,  as such terms are used in
Rule 14a-11 of Regulation 14A  promulgated  under the Exchange Act, or any other
actual or threatened  solicitation of proxies or consents by or on behalf of any
Person  other  than the  Board  shall be  deemed  to have  been a member  of the
Incumbent Board;

                  (3)  approval  by  the   stockholders  of  the  Company  of  a
reorganization,  merger or consolidation  unless, in any such case,  immediately
after such  reorganization,  merger or  consolidation,  (i) more than 60% of the
then outstanding  shares of common stock of the corporation  resulting from such
reorganization, merger or consolidation and more than 60% of the combined voting
power of the then outstanding  securities of such  corporation  entitled to vote
generally in the election of directors is then beneficially  owned,  directly or
indirectly,  by all or substantially all of the individuals or entities who were
the beneficial owners, respectively, of the 
                                      -2-
<PAGE>
Outstanding  Company Common Stock and the Outstanding  Company Voting Securities
immediately  prior  to  such  reorganization,  merger  or  consolidation  and in
substantially  the same  proportions  relative to each other as their ownership,
immediately  prior  to such  reorganization,  merger  or  consolidation,  of the
Outstanding  Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (ii) no Person (other than the Company, any employee benefit
plan  (or  related  trust)  sponsored  or  maintained  by  the  Company  or  the
corporation resulting from such reorganization,  merger or consolidation (or any
corporation  controlled by the Company) and any Person which beneficially owned,
immediately prior to such reorganization,  merger or consolidation,  directly or
indirectly,  20%  or  more  of  the  Outstanding  Company  Common  Stock  or the
Outstanding  Company Voting  Securities,  as the case may be) beneficially owns,
directly or  indirectly,  20% or more of the then  outstanding  shares of common
stock of such  corporation  or 20% or more of the  combined  voting power of the
then outstanding  securities of such  corporation  entitled to vote generally in
the election of directors and (iii) at least 66-2/3% of the members of the board
of directors of the corporation  resulting from such  reorganization,  merger or
consolidation  were members of the Incumbent  Board at the time of the execution
of  the  initial   agreement  or  action  of  the  Board   providing   for  such
reorganization, merger or consolidation; or

                  (4) approval by the  stockholders of the Company of (i) a plan
of complete  liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially  all of the assets of the Company other than
to a  corporation  with respect to which,  immediately  after such sale or other
disposition,  (A) more than 60% of the then  outstanding  shares of common stock
thereof and more than 60% of the combined  voting power of the then  outstanding
securities  thereof  entitled to vote  generally in the election of directors is
then beneficially owned, directly or indirectly,  by all or substantially all of
the individuals and entities who were the beneficial  owners,  respectively,  of
the  Outstanding  Company  Common  Stock  and  the  Outstanding  Company  Voting
Securities   immediately  prior  to  such  sale  or  other  disposition  and  in
substantially  the same  proportions  relative to each other as their ownership,
immediately prior to such sale or other disposition,  of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities,  as the case may be,
(B) no Person  (other than the Company,  any  employee  benefit plan (or related
trust)  sponsored  or  maintained  by the  Company or such  corporation  (or any
corporation  controlled by the Company) and any Person which beneficially owned,
immediately prior to such sale or other disposition, directly or indirectly, 20%
or more of the  Outstanding  Company  Common  Stock or the  Outstanding  Company
Voting  Securities,   as  the  case  may  be)  beneficially  owns,  directly  or
indirectly,  20% or more of the then outstanding  shares of common stock thereof
or 20% or more of the combined voting power of the then  outstanding  securities
thereof entitled to vote generally in the election of directors and (C) at least
66-2/3% of the members of the board of  directors  thereof  were  members of the
Incumbent Board at the time of the execution of the initial  agreement or action
of the Board providing for such sale or other disposition.

                  (d)  "Code"  means  the  Internal  Revenue  Code of  1986,  as
amended.
                                      -3-
<PAGE>
                  (e)  "Date of  Termination"  means (1) the  effective  date on
which the Executive's  employment by the Company or the Subsidiary terminates as
specified in a prior written notice by the Company or the Executive, as the case
may be, to the other, delivered pursuant to Section 11 or (2) if the Executive's
employment by the Company and the Subsidiary  terminates by reason of death, the
date of death of the Executive.

                  (f) "Exchange Act" means the Securities  Exchange Act of 1934,
as amended.

                  (g) "Good  Reason"  means,  without  the  Executive's  express
written consent, the occurrence of any of the following events after a Change in
Control:

                  (1) any of (i) the  assignment  to the Executive of any duties
inconsistent in any material respect with the Executive's  position(s),  duties,
responsibilities or status with the Company or the Subsidiary  immediately prior
to  such  Change  in  Control,  (ii)  a  change  in  the  Executive's  reporting
responsibilities,  titles or offices  with the Company or the  Subsidiary  as in
effect  immediately  prior to such  Change  in  Control,  (iii) any  removal  or
involuntary  termination  of the  Executive  from the Company or the  Subsidiary
otherwise  than as  expressly  permitted  by this  Agreement  or any  failure to
re-elect the Executive to any position with the Company or the  Subsidiary  held
by the Executive  immediately prior to such Change in Control or (iv) any breach
by the Company or the Subsidiary of any employment  agreement  among the Company
and/or the Subsidiary and the Executive then in effect;

                  (2) a  reduction  by  the  Company  or the  Subsidiary  in the
Executive's  rate of annual base salary as in effect  immediately  prior to such
Change in Control or as the same may be increased from time to time thereafter;

                  (3) any  requirement of the Company or the Subsidiary that the
Executive be based  anywhere  other than at the facility  where the Executive is
located at the time of the Change in Control;

                  (4)  the  failure  of the  Company  or the  Subsidiary  to (i)
continue in effect any employee  benefit plan or compensation  plan in which the
Executive is participating  immediately prior to such Change in Control,  unless
the Executive is permitted to participate in other plans providing the Executive
with  substantially  comparable  benefits,  or the  taking of any  action by the
Company  or  the  Subsidiary   which  would  adversely  affect  the  Executive's
participation  in or materially  reduce the Executive's  benefits under any such
plan, (ii) provide the Executive and the Executive's dependents welfare benefits
(including,  without  limitation,  medical,  prescription,  dental,  disability,
salary  continuance,  employee  life,  group life,  accidental  death and travel
accident  insurance  plans and programs) in accordance  with the most  favorable
plans,  practices,  programs  and  policies of the  Company  and its  affiliated
companies  in  effect  for the  Executive  immediately  prior to such  Change in
Control or, if more  favorable to the Executive,  as in effect  generally at any
time  thereafter  with respect to other peer  executives  of the Company and its
affiliated companies,  (iii) provide fringe benefits in accordance with the most
favorable  plans,  practices,  programs  and  policies  of the  Company  and its
affiliated  companies  in effect  for the
                                      -4-
<PAGE>
Executive  immediately  prior to such Change in Control or, if more favorable to
the Executive,  as in effect  generally at any time  thereafter  with respect to
other peer executives of the Company and its affiliated companies,  (iv) provide
the Executive with paid vacation in accordance  with the most  favorable  plans,
policies,  programs and practices of the Company and its affiliated companies as
in effect for the Executive  immediately  prior to such Change in Control or, if
more favorable to the Executive,  as in effect  generally at any time thereafter
with  respect  to  other  peer  executives  of the  Company  and its  affiliated
companies, or (v) reimburse the Executive promptly for all reasonable employment
expenses  incurred  by the  Executive  in  accordance  with the  most  favorable
policies,  practices and procedures of the Company and its affiliated  companies
in effect for the Executive  immediately prior to such Change in Control,  or if
more favorable to the Executive,  as in effect  generally at any time thereafter
with  respect  to  other  peer  executives  of the  Company  and its  affiliated
companies; or

                  (5) the  failure  of the  Company  to  obtain  the  assumption
agreement from any successor as contemplated in Section 10(b).

                  For purposes of this Agreement,  any good faith  determination
of Good Reason made by the Executive  shall be  conclusive;  provided,  however,
that an isolated,  insubstantial and inadvertent  action taken in good faith and
which is remedied by the Company  promptly after receipt of notice thereof given
by the Executive shall not constitute Good Reason.

                  (h)  "Nonqualifying  Termination"  means a termination  of the
Executive's  employment (1) by the Company or the  Subsidiary for Cause,  (2) by
the  Executive  for any reason other than a Good Reason,  (3) as a result of the
Executive's  death  or  (4)  by  the  Company  and  the  Subsidiary  due  to the
Executive's  absence  from his duties with the Company and the  Subsidiary  on a
full-time basis for at least 180 consecutive days as a result of the Executive's
incapacity due to physical or mental illness.

                  (i)  "Termination  Period" means the period of time  beginning
with a  Change  in  Control  and  ending  on the  earliest  to  occur of (1) the
Executive's death and (2) two years following such Change in Control.

                  2. Obligations of the Executive.  The Executive agrees that in
the  event any  person  or group  attempts  a Change  in  Control,  he shall not
voluntarily  leave the employ of the  Company  or the  Subsidiary  without  Good
Reason (a) until such attempted Change in Control  terminates or (b) if a Change
in Control  shall occur,  until 90 days  following  such Change in Control.  For
purposes of the foregoing  subsection (a), Good Reason shall be determined as if
a Change in Control had occurred when such  attempted  Change in Control  became
known to the Board.
                                      -5-
<PAGE>
                  3. Payments Upon Termination of Employment.

                  (a) If during the  Termination  Period the  employment  of the
Executive shall terminate,  other than by reason of a Nonqualifying Termination,
then the Company shall pay to the Executive (or the  Executive's  beneficiary or
estate),   as  compensation  for  services  rendered  to  the  Company  and  the
Subsidiary:

                  (1)  within  30 days  following  the  Date of  Termination,  a
lump-sum cash amount equal to the sum of:

                  (i) the  Executive's  full annual base salary from the Company
and its affiliated companies through the Date of Termination,  to the extent not
theretofore paid,

                  (ii) the Executive's  annual bonus in an amount at least equal
to the average  annualized  (for any fiscal year consisting of less than 12 full
months)  bonus paid or  payable,  including  by reason of any  deferral,  to the
Executive  by the Company and its  affiliated  companies in respect of the three
fiscal years of the Company  immediately  preceding the fiscal year in which the
Change in Control  occurs,  multiplied by a fraction,  the numerator of which is
the number of days in the fiscal  year in which the Date of  Termination  occurs
through the Date of Termination  and the  denominator of which is 365 or 366, as
applicable, and

                  (iii) any  compensation  previously  deferred by the Executive
(together with any interest and earnings  thereon) and any accrued vacation pay,
in each case to the extent not theretofore paid; plus

                  (2)  within  30 days  following  the  Date of  Termination,  a
lump-sum cash amount in an amount equal to the  Executive's  highest annual base
salary  from the  Company  and its  affiliated  companies  in effect  during the
12-month period prior to the Date of Termination;  provided,  however,  that any
amount paid pursuant to this Section  3(a)(2) shall be paid in lieu of any other
amount of severance  relating to salary or bonus  continuation to be received by
the  Executive  upon  termination  of  employment  of the  Executive  under  any
severance plan, policy or arrangement of the Company.

                  (b) (1) For a  period  of one year  commencing  on the Date of
Termination,  the  Company  shall  continue to keep in full force and effect all
medical, dental,  accident,  disability and life insurance plans with respect to
the Executive and his dependents with the same level of coverage,  upon the same
terms and  otherwise  to the same extent as such plans shall have been in effect
immediately  prior to the Date of  Termination.  Notwithstanding  the  foregoing
sentence, if any of the medical, dental, accident,  disability or life insurance
plans then in effect  generally  with  respect to other peer  executives  of the
Company and its affiliated  companies  would be more favorable to the Executive,
such plan coverage shall be substituted for the analogous plan coverage provided
to the Executive  immediately prior to the Date of Termination,  and the Company
or the  Subsidiary,  as the case may be, and the Executive shall share the costs
of such
                                      -6-
<PAGE>
plan coverage in the same proportion as such costs were shared immediately prior
to the Date of Termination.  The obligation of the Company and the Subsidiary to
continue  coverage of the Executive and the  Executive's  dependents  under such
plans shall cease at such time as the Executive and the  Executive's  dependents
obtain comparable coverage under another plan,  including a plan maintained by a
new  employer.  Execution  of  this  Agreement  by the  Executive  shall  not be
considered  a  waiver  of any  rights  or  entitlements  the  Executive  and the
Executive's dependents may have under applicable law to continuation of coverage
under the  group  medical  plan  maintained  by the  Company  or its  affiliated
companies.

                  (2) The Company shall  reimburse the Executive for Executive's
expenditures  for  obtaining  outplacement  services,  provided that the Company
shall have no  obligation  to reimburse the Executive in an amount which exceeds
10% of the  Executive's  highest  annual  base  salary  from the Company and its
affiliated  companies in effect during the 12-month  period prior to the Date of
Termination.

                  (c) If during the  Termination  Period the  employment  of the
Executive  shall terminate by reason of a  Nonqualifying  Termination,  then the
Company  shall  pay to the  Executive  within  30  days  following  the  Date of
Termination, a lump-sum cash amount equal to the sum of (1) the Executive's full
annual base salary from the  Company and its  affiliated  companies  through the
Date of Termination, to the extent not theretofore paid and (2) any compensation
previously  deferred by the Executive  (together  with any interest and earnings
thereon)  and  any  accrued  vacation  pay,  in  each  case  to the  extent  not
theretofore paid.

                  4. Certain Reductions in Payments.

                  (a)    Anything   in   this    Agreement   to   the   contrary
notwithstanding,  in the  event it  shall be  determined  that  any  payment  or
distribution by the Company or its affiliated companies to or for the benefit of
the Executive (whether paid or payable or distributed or distributable  pursuant
to the terms of this Agreement or otherwise,  but  determined  without regard to
any  adjustment  required  under this Section 4) (in the  aggregate,  the "Total
Payments")  would be subject to the  excise tax  imposed by Section  4999 of the
Code (the "Excise Tax"), and if it is determined that (A) the amount  remaining,
after the Total  Payments  are  reduced  by an  amount  equal to all  applicable
federal and state taxes  (computed  at the highest  applicable  marginal  rate),
including  the Excise Tax, is less than (B) the amount  remaining,  after taking
into  account all  applicable  federal and state taxes  (computed at the highest
applicable  marginal rate),  after payment or distribution to or for the benefit
of the Executive of the maximum amount that may be paid or distributed to or for
the benefit of the Executive  without  resulting in the imposition of the Excise
Tax, then the payments due hereunder shall be reduced so that the Total Payments
are One Dollar ($1) less than such maximum amount.

                  (b) All determinations  required to be made under this Section
4,  including  whether  and when a  reduction  in the amount  payable  hereunder
pursuant to Section  4(a) is required and the amount of any such  reduction  and
the assumptions to be utilized in arriving at such determination,  shall be made
by the Company's public accounting firm (the "Accounting
                                      -7-
<PAGE>
Firm") which shall provide detailed supporting  calculations both to the Company
and the  Executive  within 15  business  days of the  receipt of notice from the
Executive that there has been a Payment, or such earlier time as is requested by
the Company or the Executive.  In the event that the Accounting  Firm is serving
as  accountant  or auditor for the  individual,  entity or group  effecting  the
Change in Control,  the Executive  shall appoint another  nationally  recognized
public  accounting firm to make the  determinations  required  hereunder  (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the  Accounting  Firm shall be borne solely by the Company.
If  the  Accounting  Firm  determines  that  no  Excise  Tax is  payable  by the
Executive, it shall furnish the Executive with a written opinion that failure to
report the Excise Tax on the  Executive's  applicable  federal income tax return
would not result in the  imposition  of a  negligence  or similar  penalty.  Any
determination  by the  Accounting  Firm shall be binding upon the  Company,  the
Subsidiary and the Executive.  As a result of the uncertainty in the application
of  Section  4999 of the Code at the time of the  initial  determination  by the
Accounting  Firm  hereunder,  it is possible  that the  reduction  in the amount
payable  hereunder  pursuant to Section 4(a) will not have been made  consistent
with the calculations required to be made hereunder. In that event the Executive
thereafter  shall  promptly  pay to  the  Company  the  amount  of the  required
reduction.

                  5.  Withholding  Taxes.  The Company may  withhold,  or in the
event of payments made by the Subsidiary,  the Subsidiary may withhold, from all
payments due to the Executive (or his beneficiary or estate) hereunder all taxes
which,  by  applicable  federal,  state,  local or other law, the Company or the
Subsidiary, as the case may be, is required to withhold therefrom.

                  6. Reimbursement of Expenses.  If any contest or dispute shall
arise under this Agreement involving  termination of the Executive's  employment
with the Company or the  Subsidiary  or involving  the failure or refusal of the
Company or the Subsidiary to perform fully in accordance  with the terms hereof,
the Company shall reimburse the Executive on a current basis, for all legal fees
and expenses,  if any, incurred by the Executive in connection with such contest
or  dispute,  together  with  interest  at a rate  equal  to the  Prime  Rate as
published in the "Money  Rates"  section of The Wall Street  Journal,  but in no
event higher than the maximum legal rate permissible  under applicable law, such
interest to accrue from the date the Company receives the Executive's  statement
for such  fees and  expenses  through  the date of  payment  thereof;  provided,
however,  that in the  event  the  resolution  of any such  contest  or  dispute
includes a finding denying,  in total, the Executive's claims in such contest or
dispute, the Executive shall be required to reimburse the Company, over a period
of 12 months  from the date of such  resolution,  for all sums  advanced  to the
Executive pursuant to this Section 6.

                  7. Operative  Event.  Notwithstanding  any provision herein to
the contrary,  no amounts shall be payable hereunder unless and until there is a
Change in Control at a time when the  Executive  is  employed by the Company and
the Subsidiary.
                                      -8-
<PAGE>
                  8. Termination of Agreement.

                  (a) This  Agreement  shall be effective on the date hereof and
shall continue  until  terminated by the Company as provided in paragraph (b) of
this Section 8; provided,  however,  that this Agreement  shall terminate in any
event upon the first to occur of (i) the Executive's  death and (ii) termination
of the Executive's employment with the Company prior to a Change in Control.

                  (b) The  Company  shall  have the  right  prior to a Change in
Control, in its sole discretion, pursuant to action by the Board, to approve the
termination of this  Agreement,  which  termination  shall not become  effective
until the date fixed by the Board for such  termination,  which date shall be at
least 180 days after notice  thereof is given by the Company to the Executive in
accordance  with  Section 11;  provided,  however,  that no such action shall be
taken by the Board during any period of time when the Board has  knowledge  that
any person has taken steps  reasonably  calculated to effect a Change in Control
until, in the opinion of the Board,  such person has abandoned or terminated its
efforts to effect a Change in Control;  and provided  further,  that in no event
shall this Agreement be terminated in the event of a Change in Control.

                  9.  Scope of  Agreement.  Nothing in this  Agreement  shall be
deemed to entitle the Executive to continued  employment with the Company or its
subsidiaries, and if the Executive's employment with the Company shall terminate
prior to a Change in Control,  then the Executive  shall have no further  rights
under this Agreement; provided, however, that any termination of the Executive's
employment  following  a  Change  in  Control  shall  be  subject  to all of the
provisions of this Agreement.

                  10.  Successors; Binding Agreement.

                  (a) This  Agreement  shall not be  terminated by any merger or
consolidation  of the Company  whereby the Company is or is not the surviving or
resulting corporation or as a result of any transfer of all or substantially all
of the assets of the Company. In the event of any such merger,  consolidation or
transfer of assets,  the provisions of this Agreement  shall be binding upon the
surviving or resulting  corporation or the person or entity to which such assets
are transferred.

                  (b) The  Company  agrees  that  concurrently  with any merger,
consolidation or transfer of assets referred to in paragraph (a) of this Section
10, it will cause any  successor or  transferee  unconditionally  to assume,  by
written  instrument  delivered to the Executive (or his  beneficiary or estate),
all of the  obligations  of the  Company  hereunder.  Failure of the  Company to
obtain  such  assumption  prior  to  the   effectiveness  of  any  such  merger,
consolidation  or transfer  of assets  shall be a breach of this  Agreement  and
shall entitle the Executive to compensation  and other benefits from the Company
in the same  amount and on the same  terms as the  Executive  would be  entitled
hereunder if the Executive's  employment  were terminated  following a Change in
Control  other than by reason of a  Nonqualifying  Termination.  For purposes of
implementing 
                                      -9-
<PAGE>
the  foregoing,  the date on which any such  merger,  consolidation  or transfer
becomes effective shall be deemed the Date of Termination.

                  (c)  This  Agreement  shall  inure  to the  benefit  of and be
enforceable by the  Executive's  personal or legal  representatives,  executors,
administrators,  successors, heirs, distributees,  devisees and legatees. If the
Executive  shall  die  while  any  amounts  would be  payable  to the  Executive
hereunder  had the  Executive  continued  to  live,  all  such  amounts,  unless
otherwise  provided  herein,  shall be paid in accordance with the terms of this
Agreement  to such person or persons  appointed  in writing by the  Executive to
receive  such  amounts  or,  if no person is so  appointed,  to the  Executive's
estate.

                  11. Notice.

                  (a) For  purposes  of this  Agreement,  all  notices and other
communications  required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when  delivered or five days after deposit in the
United States mail,  certified and return receipt  requested,  postage  prepaid,
addressed  (1) if to the  Executive,  to his residence as reflected on the books
and records of the Company and if to the Company, to Bell Sports Corp., 6350 San
Ignacio Avenue, San Jose, California 95119, attention President,  with copies to
the  Secretary  and the Chairman of the  Compensation  Committee of the Board of
Directors of Bell Sports Corp., or (2) to such other address as a party may have
furnished to the others in writing in accordance  herewith,  except that notices
of change of address shall be effective only upon receipt.

                  (b) A written notice of the Executive's Date of Termination by
the  Company  or the  Executive,  as the case may be,  to the  other,  shall (i)
indicate the specific termination  provision in this Agreement relied upon, (ii)
to the  extent  applicable,  set  forth  in  reasonable  detail  the  facts  and
circumstances  claimed to  provide a basis for  termination  of the  Executive's
employment  under the provision so indicated  and (iii) specify the  termination
date  (which  date  shall be not less  than 15 days  after  the  giving  of such
notice). The failure by the Executive or the Company to set forth in such notice
any fact or circumstance  which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company  hereunder or preclude
the  Executive  or the  Company  from  asserting  such fact or  circumstance  in
enforcing the Executive's or the Company's rights hereunder.

                  12. Full Settlement; Resolution of Disputes.

                  (a) The Company's obligation to make any payments provided for
in this Agreement and otherwise to perform its  obligations  hereunder shall not
be affected by any set-off,  counterclaim,  recoupment,  defense or other claim,
right or action which the Company may have against the  Executive or others.  In
no event shall the  Executive be obligated to seek other  employment or take any
other action by way of mitigation of the amounts  payable to the Executive under
any of the  provisions of this  Agreement and, such amounts shall not be reduced
whether or not the Executive obtains other employment.
                                      -10-
<PAGE>
                  (b) If there shall be any dispute  between the Company and the
Executive in the event of any termination of the Executive's  employment,  then,
unless  and  until  there  is a  final,  nonappealable  judgment  by a court  of
competent  jurisdiction  declaring that such termination was for Cause, that the
determination  by the  Executive of the existence of Good Reason was not made in
good faith, or that the Company is not otherwise  obligated to pay any amount or
provide any benefit to the Executive and his dependents or other  beneficiaries,
as the case may be, under paragraphs (a) and (b) of Section 3, the Company shall
pay all amounts,  and provide all benefits,  to the Executive and his dependents
or other  beneficiaries,  as the case may be, that the Company would be required
to pay or provide pursuant to paragraphs (a) and (b) of Section 3 as though such
termination  were by the Company  without  Cause or by the  Executive  with Good
Reason;  provided,  however,  that the Company  shall not be required to pay any
disputed   amounts  pursuant  to  this  paragraph  except  upon  receipt  of  an
undertaking  by or on behalf of the Executive to repay all such amounts to which
the Executive is ultimately adjudged by such court not to be entitled.

                  13. Employment with Subsidiaries.  Employment with the Company
for purposes of this Agreement shall include  employment with any corporation or
other entity in which the Company has a direct or indirect ownership interest of
50% or  more  of the  total  combined  voting  power  of  the  then  outstanding
securities of such corporation or other entity entitled to vote generally in the
election of directors.

                  14. Governing Law; Validity. The interpretation,  construction
and  performance  of this  Agreement  shall be  governed  by and  construed  and
enforced in accordance with the internal laws of the State of California without
regard to the principle of conflicts of laws. The invalidity or unenforceability
of  any  provision  of  this   Agreement   shall  not  affect  the  validity  or
enforceability of any other provision of this Agreement,  which other provisions
shall remain in full force and effect.

                  15.  Counterparts.  This  Agreement  may be executed in two or
more  counterparts,  each of which shall be deemed to be an original  and all of
which together shall constitute one and the same instrument.

                  16. Joint and Several Obligation.  Each duty and obligation of
the Company  hereunder shall be the joint and several duty and obligation of the
Company and the Subsidiary.

                  17.  Miscellaneous.  No  provision  of this  Agreement  may be
modified or waived  unless such  modification  or waiver is agreed to in writing
and signed by the Executive,  by a duly authorized officer of the Company and by
a duly authorized officer of the Subsidiary.  No waiver by a party hereto at any
time of any breach by another party hereto of, or compliance with, any condition
or  provision  of this  Agreement  to be  performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent  time.  Failure by the Executive,  the Company or the
Subsidiary to insist upon strict compliance with any provision of this Agreement
or to assert any right the  Executive,  the Company or the  Subsidiary  may have
hereunder,  including,  without  limitation,  the  right  of  the  Executive  to
                                      -11-
<PAGE>
terminate employment for Good Reason, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement. The rights
of, and  benefits  payable to, the  Executive,  his estate or his  beneficiaries
pursuant to this Agreement are in addition to any rights of, or benefits payable
to, the  Executive,  his estate or his  beneficiaries  under any other  employee
benefit plan or compensation program of the Company.

                  IN WITNESS  WHEREOF,  the Company and the Subsidiary have each
caused this Agreement to be executed by a duly authorized officer of the Company
or the  Subsidiary,  as the case may be, and the  Executive  has  executed  this
Agreement as of the day and year first above written.


                                              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:


                                                 ------------------------------
                                                     William Bracy